Numerai’s Numerai Coin —The Artificial Intelligence Hedge Fund Token
Numerai Coin (NMR) is a cryptographic token designed to coordinate machine intelligence and overfitting. The token was created by Numerai.
What is Numerai Coin?
Numeraire coin, found online on Numer.ai, is a cryptographic token that solves crucial problems in the machine learning industry. In particular, machine learning competition is prone to intentional overfitting.
Numerai is the creator of the Numeraire token. Auctioning leads to a balance in bidder behaviour, and it demonstrates the confidence of rational data scientists and the ability of their models to achieve results with new data.
With the auction mechanism, you can also see natural arguments for the economic value of a Numaire token. This bidding and AI system lead to the creation of a hedge fund with artificial intelligence. In a recent report, Forbes stated that the Numeraire coin was “the world's first cryptocurrency issued by a hedge fund”.
The Company of Numerai Coin
The company was founded by Richard Craib, a 29-year-old from South Africa. Craib and his team developed the technology that masks the fund's trading data before they shared it with a large community of anonymous data scientists.
Numerai has created a platform that encourages financial entrepreneurs, such as hedge fund managers, to collaborate anonymously to improve the management of hedge funds. Together, this organization anonymously created a machine learning AI that is able to efficiently manage finances better.
The reason why Numerai created the Numeraire token is that most financial organizations don't work together for mutual benefits. It is a very competitive industry that rejects the exchange of information.
On the other hand, Numerai has developed a system that allows data scientists to work with encrypted, anonymous blockchain technology in order to continuously improve machine learning artificial intelligence. Let's take a closer look at the technology and platform behind Numeraire coin.
How Does The Numerai Coin Technology Work?
In essence, Numerai uses artificial intelligence to build an intelligent, autonomous hedge fund that operates on an anonymous basis, based on data collected by anonymous data scientists. The platform relies on a method similar to homomorphic encryption.
The technology ensures that scientists cannot see the details of the company's stores. However, scientists can create models of machine learning, analyze trades, and theoretically, learn how to trade financial securities more efficiently.
In essence, Numerai raffles detailed trade data to data scientists. However, before giving this data, it is converted to an abstract form. Scientists can create the machine learning models from the data “without really knowing what they're doing”, as explained by Craib in an interview with Wired.com.
The data scientists remain anonymous. Craib and the team behind Numerai do not know who the data scientists are before they're recruited online. The data scientists are paid for their work with a digital currency to ensure anonymity.
Numerai Coin – How Are Data Scientists Paid?
Any of these anonymous scientists can provide predictions to the Numareire team. When these predictions work, the data scientists are paid in Numeraire tokens, which is a completely anonymous payment method. Ultimately, as mentioned above, this leads to the more efficient trading of financial instruments.
Numeraire coin is not the first company to study the use of machine learning algorithms in hedge fund management.
Major Wall Street names, such as Renaissance and Bridgewater Associates, along with tech start-ups similar to Numeraire, have also explored the use of machine learning in hedge funds. However, what differentiates Numerai, is its efforts to promote the creation of machine learning algorithms.
Numerai Coin – The Numaire Cryptographic Token
Numerai has created a cryptographic token called Numeraire. This token is an ERC20 Ethereum Token. Like other Ethereum tokens, it is represented as a Smart Contract on the Ethereum Blockchain. The source code for Numeraire tokens is available to the public.
All stamped Numeraire coins are sent to Numerai. With Ethereum's smart contracts, Numerai has ensured that there will never be more than 21 million Numaire tokens in circulation.
Numerai Coin – How Are Numeraire Coins Used?
1 million tokens will be sent to data scientists based on their historical ranking on Numerai’s leaderboard. After the initial distribution, the smart contract will issue a set number of Numeraire coins each week until the maximum amount is reached. The data scientists can receive Numeraire coins on an ongoing basis for good performance in Numerai's machine learning competition.
About Numerai Coin
Numerai was created by Richard Craib and his team of developers. Craib, 29 years old, studied mathematics at Cornell University in New York before working for an asset management firm in his native country, South Africa. Other key members of his team, include Geoffrey Bradway, Xander Dunn, and Joey Krug.
Numeraire's white paper was published online on February 20, 2017. In addition to the core team, Numerai relies on a network of data scientists. In December 2016, Wired reported that an estimated 7,500 data scientists were involved in Numerai's hedge fund brain development project.
Numerai Coin in Conclusion
Numerai is a unique platform that encourages users to develop smarter machine learning algorithms that can help manage hedge funds. The innovative start-up is based in San Francisco and aims to solve crucial problems with hedge funds and the learning communities of machines.
Machine learning competition is prone to intentional overfitting. Using the Numeraire coin cryptocurrency, the company has created an auction mechanism that makes over-adjustment economically irrational. It brings the benefits of network effects into the world of high finance, which is something that has never been done before.