Numeraire: A Hedge Fund Cryptocurrency Designed to Promote Collaboration – Crowdfund Insider


A year ago, Numerai premiered itself as a “new kind of hedge fund built by a network of data scientists.” Unlike a traditional fund that makes trades based on human decision, Numerai lets anonymous programmers write open source trading algorithms based on data provided by Numerai.  They pay their programmers/data scientists bitcoin based on how well the programs perform in the market. This obviously creates competition amongst the data scientists as programs that are better able to make accurate predictions will outperform others and earn more bitcoin.

Cryptocurrency Made By a Hedge Fund

A few months ago, Numerai debuted their very own cryptocurrency in order to not only combat the competition within their own fund but to destroy the very competitive nature of Wall Street itself. Called Numeraire, the new cryptocurrency is in essence very similar to bitcoin. However, the system in which it gets paid out creates new incentives for the data scientists. Numerai initially distributed 1,000,000 Numeraire tokens to 12,000 data scientists. The data scientists can then “bet” their coins on how well their algorithms perform. If an algorithm does well, the data scientist gets paid in bitcoin, like before, but also gets their Numeraire tokens back. If the algorithm does poorly, the data scientist loses their Numeraire and doesn’t get paid anything.

Designed For Collaboration

Here’s the interesting part: when an algorithm does
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