Sharpe Capital wants to shape the financial market to its advantage by combining methods of machine learning, decentralized crowd sentiment & trustless ledger system.
Stock prices are the result of collective knowledge of all market participants but people have a tendency to buy high and sell low because as human beings, we often make financial decisions based on emotion rather than on rational objectivity.
Sentiment is one of the components that can drive stock market prices, both in the short and long-term. The same applies to blockchain assets, which are mostly driven by Hype, Speculation and FOMO (fear of missing out). It is important to have the ability to aggregate sentiments from the crowd and share reliable results. The future is that anyone can easily collect and share credible conclusions from crowd-sourced sentiments.
James Surowiecki identified three factors that make a crowd “wise” on his book The Wisdom of Crowds: diversity of opinion, independence, and decentralization. Wisdom refers to the collective intelligence, the ability of the crowd to perform better than experts in solving various kinds of problems. Instead of chasing the expert, it is better to rely on the wisdom of crowds to aggregate individual sentiments which provide mass intelligence while avoiding the distortion of centralized authority.
But the problem is we can not rely only on crowd sentiments because there were many moments when the crowds sent the wrong message to the market. So the future is by definition uncertain. Ideally there should be several indicators to provide the same signal.
Sharpe Capital combines machine learning and direct sentiment crowdsourcing in a single platform doing sentiment analysis.
Machine Learning is the subfield of Artifial Intelligence that learns and adapts automatically through experience. It focuses on prediction, based on known properties learned from the data. The learning algorithms are used to predict the outcome based on the data.
Sharpe Capital using Artificial Neural Networks (ANN) which are inspired by the behaviour of the human brain and have the ability to uncover opportunities in equity market & blockchain assets, that traditional technical analysis methods unable to uncover. ANN consist of different layers for analyzing and learning data. The more layers in a neural network, the more is learned and the more accurate the pattern detection which lead to less risk and better returns.
Sharpe Capital prefers to utilise their own expertise in AI & machine learning, and augment this with real human input from the community of participants.
The Sharpe Platform
The platform allows participants to offer, assess and get rewards on market sentiment, through collective wisdom and insight. All process through smart contracts on the Ethereum blockchain network, guaranteeing a process of fairness and transparency.
Having said that, the highest quality sentiment comes directly from participants utilising a proof-of-stake, in which the willingness to own SHP tokens (Sharpe Capital Token) provides an indication of a participant’s confidence in their sentiments, and proof-of-reputation, in which the system weight indications based on the participant’s historical accuracy, encapsulated in their reputation score.
Sharpe Capital is delivering meaningful intelligence data through sophisticated Artificial Neural Networks processing, Linguistic analysis, and powerful platform of crowd-sourced market sentiment.
It does not matter if you are a cryptocurrency enthusiast, self-directed investor, a trader, a hedge fund portfolio manager, a research analyst or just interested with the crowd-sourced market sentiment. Member of the crowds are not driven by the same motivation and since markets and people are not rational beings, Sharpe Capital’s model is focused on measuring affect-driven and emotional responses (cognitive processes).
Over time Sharpe Capital’s algorithm will learn which types of assets our users are better at providing sentiment on, and they will be shown more of these assets. So participants will end up seeing the things they know most about based on their track record of predictions.
There are 3 (three) things that will factor into how much Ether a participant will get for providing market sentiment:
1. The amount of sentiment
2. The accuracy
3. The proof-of-stake (number of SHP tokens held)
In the event of a participant’s correct sentiment, his reputation score increases. The higher a person’s reputation score the more ETH he receives every time he is correct.
With Sharpe Capital’s fair approach, someone with a low reputation will still earn a payment for providing “inaccurate” sentiment. Unlike a prediction market there are no losses for incorrect predictions, merely a reduction in the users immutable reputation score, and consequently, the size of future payments.
Sharpe Capital uses quantitative algorithms to rank and score individual reputation based on the accuracy of their equity market & blockchain assets sentiment.
Trustless Ledger System
The ability to manipulate trade accounts and electronic data which led to the collapse of Barings Bank in 1995, should be prevented from happening again. Sharpe Capital creates a decentralised and immutable trade ledger which digitally synced between market participants with built-in cryptographic safeguards to keep anyone from altering data that’s already been recorded. The Trustless Ledgers System (TLS) is designed to ensure that everyone involved in a transaction has the same record of what’s taken place without the need to periodically reconcile records, making it accessible and verifiable by anyone.
This will reduce the need for human intervention and the potential for error which in the end gives mutual trust between trading partners without intermediary because they are looking at the same records in the same format.
The TLS is the first of its kind, creating an immutable record of investment fund profit and loss accounts in real-time. This blockchain-driven computerised system eliminates the possibility of undetected fraud, with the public aspect of the ledger enforcing social conditions not conducive to even attempting such acts of fraud and deception.
Sharpe Capital releasing the use of TLS to any interested parties, free of charge.
Sharpe Capital is the first financial markets protocol that offers democratic model by establishing a consensus based community governance structure. It facilitates voting, which allow the community to change terms such as reward payments and dividends.
Participants that own SHP may propose motions that the whole community then votes on, using smart contracts to guarantee a fair and transparent vote.
SHP can also be used to gain access to proprietary sentiment data & trading platform. On the Sharpe platform, participants receive rewards for their insights, while hedge funds/capital market investors can purchase access to the data feeds, models and cloud architecture.
To provide each participant with a fair opportunity to acquire SHP Token, Sharpe Capital will distribute the tokens through public crowdsale which will start on Monday, November 13, 2017 at 14:00 GMT.
Sharpe Capital sets a good example of community driven development in fintech industry.