Mark Karpelès is a much-maligned figure in the bitcoin community. There is arguably no one considered more of a villain by members of the bitcoin community than Mark Karpelès. There was a time when he was one of the most popular figures in the community, being the chief executive of Mt. Gox, the largest bitcoin exchange platform at the time. The good days, however, were short-lived as the platform filed for bankruptcy in 2014 after being hacked at least two times.
In what has gone down as one of the most devastating crypto hacks of all time, a one-time giant of the industry was reduced to nothing, with traders jostling to recoup their investments over the course of a long and drawn out legal battle.Japanese authorities even Mr. Karpelès before being released on bail.
During a Reddit ‘ on Tuesday, April 3, 2018, Karpelès via his offered an apology to the crypto public. He attempted to set some records straight while facing renewed criticism from certain quarters over many developments that have emerged concerning the debt settlement of the defunct platform.
Admitting his faults Karpelès began by giving a brief rundown of the events that have transpired so far. He spoke of how he did his utmost to run the platform in the best way possible, saying that:
“I did my best trying to grow the ecosystem by running the biggest exchange at the time. It had big problems but still managed to hang in there. For a while. A quite long while, even, while the rest of the ecosystem caught up. At the end of the day, the methods I chose to try to get Mt. Gox out of its trouble ended up being insufficient, insufficiently executed, or plain wrong.”
He also acknowledged that in hindsight, he didn’t acquit himself admirably in the way he handled the issues that came up with the platform. Paying particular attention to what he called the “last, stressful days” before the eventual collapse of the Mt. Gox platform, he admitted that he could have done a little bit better in those circumstances.
“I Don’t Want this Billion Dollars”
Karpelès also addressed the claim that he could profit from the settlement of the platform’s debts. In a November 2017 in the Wall Street Journal, it was alleged that he could make a handsome profit from the liquidation of the platform’s assets.
According to Japanese law, bankruptcy claims are settled in Japanese Yen, and with the astronomical increase in the since 2014, there is an estimated 160,000 and bitcoin cash that will be left over after the settlement. Japanese bankruptcy law also stipulates that this leftover sum is distributed among the platform’s shareholders.
However, Karpelès has firmly stated that he wants no part of the estimated $1 billion windfall, saying:
“I don’t want this. I don’t want this billion dollars. From day one I never expected to receive anything from this bankruptcy. The fact that today this is a possibility is an aberration, and I believe it is my responsibility to make sure it doesn’t happen.”
Reactions from the Crypto Community
A number of the responders on the Reddit forum praised him for his boldness in coming out knowing full well that a lot of people have strong negative feelings about him. Some described his words as fair but noted that there weren’t any concrete information pertaining to the civil rehabilitation.
On the flip side, some investors who were burned by the Mt. Gox bankruptcy vented their frustration on Karpelès with some even going as far as to accuse him of fraud. So far, there have been 1,543 comments on the post.
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The blockchain is poised to disrupt a wide range of industries. One industry that not many are aware of is also experiencing blockchain is the hedge fund space.
While there are a number of hedge funds that have recently been launched in order to invest specifically in crypto assets, they are more focused on the profits they can generate as opposed to utilizing in order to give themselves a leg up over other funds.
This is exactly what Numerai is trying to do. This innovative hedge fund is combining blockchain technology with machine learning as well as artificial intelligence in order to create a vehicle through which investors can maximize profits.
“We’re ensembling machine intelligence from thousands of data scientists around the world to achieve breakthroughs in stock market prediction accuracy,” the company says.
The History of Numerai
While working at an asset management company, South African-born Richard Craib began to see the problems with the financial companies treated their data. Due to a number of reasons, companies were very secretive with the data sets that they had. It was evident that the best way to maximize profits and maintain an edge over their competitors. “Once you have a model in finance that works, you hide it. You hide the techniques you used to build it. You hide the methods you used to improve your data. And most importantly, you hide the data. The financial incentive for secrecy is strong.”
However, while these secretive strategies were favored by many in the asset management space, Craib they contributed to the lagging behind of the space with regard to adoption of newer and more innovative technologies.
“The stock market is probably somewhat inefficient with respect to new developments in machine learning because only a tiny fraction of the global machine learning talent has access to its data,” he said.
It was with this conviction that Craib decided to create a hedge fund that would benefit from the distribution of data to a large number of people who would be able to use it to create different models. Using these user-generated models, the hedge fund would be able to create a model which it would use to guide its investments. This innovative fund launched in December 2015 is called .
How Does It Work?
Numerai allows people to download data from the company website. Using this data, scientists are able to create models that predict the movements of the markets. The scientists use an amalgamation of machine learning algorithms and artificial intelligence in order to create these models.
What is interesting is that this data is delivered to the scientists in an encrypted form while still preserving their structure. “Ordinarily, if you encrypt data, it becomes useless to a data scientist. But new developments in cryptography are letting us share datasets securely without destroying their utility to data scientists. Structure-preserving encryption schemes allow machine learning algorithms to learn things even though blind to the raw data.” Moreover, the encryption allows the scientists to be objective because they do not have access to the raw data, therefore, they are not able to certify what they are looking at.
The Numerai team holds a competition where every week where scientists download the up-to-date data available on the website, create their models then upload them onto the platform. The uploaded models are then tested in real-world markets for three weeks before winners are announced. The top 100 models are rewarded with a bitcoin payout. The platform has had over 12,000 anonymous scientists participate in the competitions so far. This way Numerai has been able to outperform the market consistently.
That is because the hedge fund uses fairly new technology in a way that allows them to benefit from the wisdom of the crowd. “No data scientist on Numerai has a machine learning model that is better than all the other models combined. So Numerai is not a search for the ‘best’ model; it is a platform to synthesize many different models with many different characteristics. Although data scientists compete to place on the leaderboard, the competition is designed to collect models. Numerai is not really a competition; it’s an invisible collaboration to build the meta model.”
The Numeraire Token
After about a year of its existence, Numerai launched its own cryptographic token on the network which is called the Numeraire . The token was introduced in order to mitigate a number of challenges that the project was experiencing with regard to operating on the network.
The first of these is that most of the applications using the Numerai platform were based on the network, therefore, using bitcoin as a payment method severely limited interoperability. “This drastically limits the extent to which decentralized applications based on Numerai can be automated and unstoppable because these applications cannot receive payment in bitcoin, they can only receive and use ether.” Thus creating a token based on the same network as its users would work to introduce a level of ease.
Moreover, the token was designed to be a financial incentive for the scientists to participate in the competition. However, in contrast to the payouts in bitcoin, the introduction of the Numeraire allowed the platform to reduce the chances of tampering with models due to the introduction of a staking function.
Scientists would stake Numeraire on a model they had created and which they believed to would work best. This is explained in the : “Machine learning competitions are susceptible to intentional overfitting. Numerai proposes Numeraire, a new cryptographic token that can be used in a novel auction mechanism to make overfitting economically irrational. The auction mechanism leads to equilibrium bidding behavior that reveals rational data scientists’ confidence in their models’ ability to perform well on new data. The auction mechanism also yields natural arguments for the economic value of a Numeraire token.”
This simply means that through the amounts staked it would become apparent which models were created honestly. Moreover, the scientists would stand to gain more if the model they staked on performed well. Explaining the move from the bitcoin network to Ethereum as well as the creation of the Numeraire, Craib :
“What we think this will do is incentivize the most important part of the hedge fund, which is to have your models work on live data. Over time, the Numeraire will perfectly incentive the users to do the one thing we want them to do, which is to make the fund go up.”
On 21 February 2017, one million Numeraire were distributed to 12,000 scientists who had participated in the platform and created models which had performed well in the market. The platform has plans to distribute more Numeraire with time. However, it is possible to purchase the token on a number of exchanges.
Price Activity And Community Response
Numeraire is . The token is ranked at 319 with a market capitalization of only $15 million. During its all-time-high in June 2017, the token was trading at $134.
The Numerai project has been received positively by the market. The company has received funding from both USV and Renaissance technologies, numbering at $6 million and $1.5 million respectively. The project was also recognized as one of the most innovative products in the awards.
Moreover, the project is advised by a number of prolific people such as Howard Morgan, the co-founder of Renaissance Technologies and First Round Capital, Fred Ehrsam
The co-founder of , Juan Benet, the creator of IPFS and Filecoin as well as Ash Fontana who is a Board Member at , the data science, and machine learning platform.
Fred Ehrsam has lauded Numerai as an innovative combination of different technologies and bringing them to widespread adoption. He stated: “This is like step two towards a fully decentralized hedge fund powered by cryptocurrency and the token model…. It’s another step towards really creating an AI hive mind where the application happens to be trading on financial markets.”
Should You Add Numeraire To Your Portfolio?
Craib declared: “We’re going to be the first decentralized smart contract powering a hedge fund. It’s never been done before, and there’s no one who’s going to be able to do it like this.”
While it is true that the team has been able to combine machine learning, data science, blockchain technology as well as the asset management space in order to maximize profits for the fund, the token is still relatively small in terms of market capitalization and has not performed particularly well.
So far, the value of the Numeraire token has not shown a correlation with the outperforming hedge fund. This means that while this hedge fund project is a success, the value of its token is seemingly not as closely linked to the project and the fund’s performance as many holders would like to see.
Should Numerai’s fund grow in the future and continue to outperform its peers, it is hard to see how the value of NMR would not increase as more data scientists would be attracted to contributing to the fund as it would be able to pay out more to contributors.
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Steemit ist ein blockchain-basiertes soziales Netzwerk, welches durch die Nutzung der Blockchain zensurresistent ist. Zusätzlich können Mitglieder andere Kreativschaffende mit der steemit-eigenen Kryptowährung Steem Dollars entlohnen. Ein vertiefter Blick auf ein Netzwerk, dessen Content in den letzten zwei Jahren signifikant an Qualität gewonnen hat. Soziale Netzwerke und Kryptowährungen – ça fait deux, wie der Frankophile…Der Beitrag erschien zuerst auf .
