Artificial Intelligence Running Hedge Fund
The world’s newest hedge fund is not run by a Wall Street hot-shot. Instead it is run by an artificial intelligence built by an anonymous network of data scientists.
Numerai will use blockchain technology to make an open-sourced hedge fund that may even issue its own cryptocurrencys, Wired reported. It was even worked in an open-sourced competition in which information experts competed to design the best trading algorithms.
The experts were not competing for glory instead they were competing for bitcoin prizes and their dedication was kept anonymous. My guess is that was so they could keep their day occupations at spots like Goldman Sachs (NYSE: GS), the investment banking giant now employs 9,000 computer scientists.
Investing in Artificial Intelligence
Around 12,000 experts participated in the competition to make Numerai. To watch the system’s secrets safe the information was protected by an encrypted blockchain token called Numeraie.
Numeraie uses the blockchain ledger technology Etherum to guard particular data and uses bitcoin to make payments. The Numeraie might also serve as shares of stock in Numerai which is supposed to make money trading. The get-together at Numerai also expect that Numeraie will one day function in as a cryptocurrency as well as a trading medium.
Numerai turns the whole idea of hedge fund upside down. A traditional hedge fund is a privately held venture which a few experts trade with investors money. Its success is based upon the investing techniques of the expert traders.
Is Numerai the Future of Finance?
The idea behind Numerai is to let people invest in an artificial intelligence that will trade for them. It’s a radical concept created by a South African born Geek called Richard Craib.
Watch Numerai carefully because it may be a real game changer and provide a new paradigm for the market economy. Craib may need to replace the standard Wall Street or City investment show that rewards a few wealthy traders who engage in cutthroat competition with one based on collaboration and cooperation.
“Why is tech positive-sum and finance zero-sum?” Craib asks. “The tech companies benefit from network effects where people behave differently because they are trying to build a network, rather than trying to compete.”
His ultimate goal is to turn investment into an open-sourced software project. In the event that Craib succeeds Numerai might become the most influential financier and investment banker in the world.
It might also become the first of a legion of artificial intelligences that will one day takeover all the money related markets. One needs to consider whether governments and the people public will tolerate Artificial intelligence controlling the financial markets.