Cindicator set out to directly provide a service to the cryptoasset community and financial industry at large; a set of tools for traders and investors alike, built on a “Hybrid Intelligence” platform, discussed further below. Reading this article, you’re likely not new to cryptocurrencies or the strong emotions triggered by the extremes of greed and fear fueling price movements in these assets. As you’ve come to realize, cultivating a Twitter stream of knowledgeable traders and/or investors is one of the best ways to determine market trends and identify innovative ideas in this new sector. Other social networks like Reddit, Medium, or Steemit are also potential resources for education. However, this can be a time consuming, and typically non-linear, process where you don’t have a good metric for determining the validity of the information found. Perhaps there’s a better way?
This short article highlights Cindicator as a platform that can fill this gap for you and my takeaways from using it for over 2 months as a forecaster.
The “Hybrid Intelligence” Ecosystem
Simply, Cindicator’s platform is divided into two services:
(1) as a CND token holder, you have access to a variety of indicators that are gated at different levels depending on the number of tokens you hold. These indicators are provided via Telegram.
(2) a competitive platform for financial and technical analysts whereby you compete monthly for a share of a prize pool that’s correlated to your prediction accuracy.
While crowdsourcing knowledge in the financial industry is not new (e.g., platforms like StockTwits, InvestFeed, and Twitter), the majority of these groups, in general, follow a “herd mentality”; you may have a small subpopulation of individuals with superior skills or knowledge, but that data is inevitably drowned out by a naive public — the “noise”. What if you can turn down the noise of this community? Enter machine intelligence. The value proposition offered by Cindicator is the application of cutting edge data science techniques applied to an incentivized crowd; the service then provides technical and fundamental indicators to CND token holders. The merging of a large, currently 97,000 and growing, community of forecasters with analytic methods including neural networks, Markov chains, and Bayesian analysis provides a robust source of data, a “Hybrid Intelligence”.
Cindicator: more value than meets the eye as a forecaster
I use Cindicator as a forecaster, where every morning I’ll spend some time working through the questions touching on general market trends, technical analysis, and fundamental analysis of ICOs. Why? Using the platform provides direct value in two distinct ways.
Monetization of Your Forecasts
Firstly, top performers share a percentage of the monthly prize pool that’s directly deposited into their Ethereum address they provide at the end of the month. As a quick example, for March I received ~0.023 Ethereum for ranking 124th. There’s a direct financial award for improving your analysis of the market with zero risk. It’s similar to paper trading or backtesting a trading strategy; you can go back to historical questions and look at your results, for example.
Secondly, the platform exposes you to coins or ICOs you may not have heard of before. This is an underappreciated type of data. Consider the following as an example. I first heard of Bitcoin in 2016 and again early 2017, when I decided to actually educate myself on the technology. Exposure to the idea even a year may have had a transformational impact on choices I made in 2017. The point here is — increased exposure to new ideas, technologies, or perspectives, is highly valuable. As an intrinsic component of Cindicator, spending a relatively short amount of time on the platform could yield an idea that could become part of your investment thesis.
On top of the reasons mentioned above, you also have a chance to gain access to their indicators for a month to trial, depending on your forecasting performance.
Oh, and here’s one more, albeit subtle, reason that also yields value to a forecaster.
The natural competitiveness of forecasting on Cindicator is addictive. Leaderboards engender a desire to continuously improve your performance for those that enjoy competitive games or other pursuits; almost every new video game released, irrespective of platform, has some type of leaderboard. There is good reason for this — the motivation described above.
While the ability to see daily changes in one’s position on their leaderboard is exciting, there is another subtle reason this functionality provides value to the user. While it may not be obvious to someone that hasn’t used the platform, such a system increases self-awareness, which is an important attribute to cultivate as an aspiring trader or investor. This self-awareness is coupled with the overall market (or community, in the case of Cindicator) and can give you a benchmark to evaluate your relative performance. Again, by itself, this may not be very valuable; however, in combination with the values above, the overall “risk/reward” offered by the platform is very good. Minimal time investment, zero risk, and diverse value for the end user.
So, You Want to Trade?
Many people that aspire to trade for a living have flocked to the cryptoasset markets and some have been able to successfully extract value from this new market. Most fail — with the caveat here that this new market has a major tailwind from adoption and has therefore provided somewhat of a safety net (HODL!) for amateurs. Cindicator provides potential traders a way to forecast future price movements (a small component of what a successful trader must do) and test the waters, so to speak, of how they might do. It might be a red flag that they’re wholly out of touch with the market and, again, the self-awareness that can save a small trading account. A prediction market like this provides a unique tool to gain exposure to some of the fundamentals of trading, in a way that is both intuitive to use and robust enough to better yourself.
Why haven’t you signed up yet?
Value Tied to Adoption — A Closer Look at Cindicator’s Future Prospects
When looking at any blockchain protocol coin, token, or other cryptoasset, one of the main drivers of my fundamental analysis is how adoption of that platform drives intrinsic value. In other words, are there positive feedback mechanisms that will not only drive growth, but also coin or token value — as, usually, I’m evaluating cryptoassets from the perspective of an investor or risk-limiting swing trader. Bitcoin itself is a great example, where numerous analyses have evaluated its price performance in concert with network value, measured through transaction value and other metrics.
While Cindicator is not a native blockchain protocol, it can be evaluated similarly from the context of adoption. Their token offering last year was overall a fair offer and, unsurprisingly, has translated into current returns of 9x, 4x, and 4x (USD, ETH, and BTC, respectively) for ICO investors. Such ROIs are becoming increasingly uncommon due to the overall prevalence of ICOs and the general lack of reasonable development timeframes that produce functional platforms. While in and of itself, this highlights the team’s positive momentum, the “Hybrid Intelligence” ecosystem being cultivated at Cindicator produces a network that will naturally become more valuable with adoption and time. As forecasters increase in number, so does the sample size for machine learning techniques and subsequent quality of analytic conclusions. Furthermore, as the database of information grows over various market cycles so to does the robustness of the data analytics as a result. The team is already beginning to see increased accuracy of their models through application of neural networks.
This is roughly 6 months in and already they’re able to provide meaningful indicator accuracies that can be coupled with risk management strategies to afford traders a unique edge. You’ll be hard-pressed to find similar positive outcomes from the majority of ICOs.
We’re Still in the Early Days
The growth of private and public funds entering the cryptoasset sector is growing at an astounding rate, even though a recent article by Bloomberg indicates “The Crypto Hedge-Fund Bubble Is Starting to Deflate”, a very narrow-minded conclusion from incomplete data. However, these narratives are prevalent among big financial institutions staring at an inevitable disruptive industry. See the chart they provide below. The trend is obvious — up. Keep in mind that it’s still not east to build a fund dedicated to cryptoassets for the vast majority of financial institutions because the regulatory environment is not well defined yet. When this changes, watch out… in the words of Novogratz, “the herd is coming”.
This growth will inevitably increase the competitiveness of investing in and trading cryptoassets. One of the reasons for this increase in competition will be an increasing allocation of computational power to analytic methods to “beat the market”. Cindicator is one of the first to market in this arena and offers a marketable product with a defined target audience — to individual traders and, eventually, institutional funds alike.
While one might argue that institutional funds will have their own diverse set of methods and tools for market analysis, they will likely lack the crowdsourced community that Cindicator is building — a unique database that will have additional intrinsic value. Now, the manner in which Cindicator will tap this market is not yet fully ironed out. But, as an early investor or contributor in any novel endeavour you realize this already. Services that benefit the cryptoasset ecosystem (whether it be end users or general investors) will be directly impacted by adoption of cryptoassets and become part of this positive-feedback mechanism that increases value.
The “Tokenized” World
As a final point, many hardcore cryptocurrency advocates will argue that so-called “utility” tokens (those tied to ability to use a product or service alone) serve little purpose in the decentralized future. While they have a very real argument, the reality is utility tokens develop the infrastructure of a barter-style economy. One where you can exchange services directly without the need for fiat or other centralized systems. They aid the scaling problem by building smaller networks that can be easily accessed by the main cryptocurrencies, like Bitcoin, and also act to dampen risks to the entire cryptoasset ecosystem by isolating services within distinct networks. Perhaps one day you will decide you no longer need access to Cindicator — you’ll easily be able to swap those tokens (we’re now on the verge of near complete decentralized trading paradigms, brought on by AirSwap, Bancor, and others) for others that will provide a different service.
This type of economy will have a significant impact on end users and service providers alike, increasing efficiency, security, and globalization. Cindicator is an important piece of this developing puzzle and I’m excited to see how they will grow within this new economy.
If you’ve enjoyed reading this article or learned something new, please give a clap! This article is a collection of my thoughts and opinions alone and is not investment advice.