The New Wolves of Wall Street: Cooperating AI Entities

July 3, 2017 James Heinsman Hedge Fund News

According to Adam Smith, something called the “invisible hand” controlled the ebbs and flows of the free market. This so-called hand was the way Smith referred to the power which pushed the market towards equilibrium as huge numbers of self-interested individuals interacted with that free market.

This concept is about to take on a new type of “invisible hand.” San Francisco-based hedge fund, Numerai, is introducing a virtual currency which will be manipulated by artificial intelligence programs designed to cooperate, rather than compete, the traditional model Adam Smith based his theories upon.

Founded by South African technologist and a Cornell math major, Richard Craib, Numerai is an “open-source” hedge fund which has the potential to completely alter the singularly Darwinian approach to investing that has always characterized investing.

The currency is called Numeraire, and is a cryptographic token which will incentivize the modelling of the Artificial Intelligence that now guides the hedge fund’s trades.

The Numeraire smart contract was launched to Ethereum. Over 1.2 million tokens were deployed to a distributed network of 19,000 data scientists all over the globe. Numerai has already been trading for more than a year successfully, and now the company wants to tweak its methods. The company is hoping to come closer to the final goal of creating a completely decentralized, software-led hedge fund.

CEO Craib would like to see the Numeraire bring the open source philosophy to finance, similar to what the powerful effects networks have exhibited in such platforms as Facebook and Uber.

“Finance is totally competitive right now,” Craib said. “There’s no reason why you’d want to help your friend with a hedge fund if you have a hedge fund. But if you both held the same cryptocurrency, and it went up in value together, maybe there would be more collaboration.”

Adam Smith, artificial intelligence, crowd sourcing, Numerai, Numeraire,

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