You may have heard of Numerai — the unorthodox hedge fund that crowdsources predictive stock market models from data scientists around the world. It is now seeking more brain power and announced today that it is giving away $1 million worth of cryptocurrency to Kaggle users who sign up. The San Francisco-based hedge fund incentivizes its community members by giving them digital tokens they can stake during tournaments to express confidence in their predictions. The best trading algorithms are then selected based on how they perform on the live market, and their creators are rewarded with more tokens.
Looking at most Wall Street hedge funds’ models, it’s fair to say open, collaborative efforts aren’t at their core. Movies like Wall Street, which portrays a greedy Gordon Gekko, and The Wolf of Wall Street, which highlights the derailing decadence of power and money, paint a rather unflattering picture of egocentric traders and financiers. Numerai founder and CEO Richard Craib is looking to change that.
The 30-year-old South African wants to create a more open and decentralized ecosystem for hedge funds. Rather than restricting access to trading data, Craib encrypts it before sharing it with his global network of data scientists, which effectively prevents them stealing and replicating the trades on their own. They can, however, use the shared information to build predictive models for the hedge fund.