In The News: Finextra

http://finextra.com/news/fullstory.aspx?newsitemid=25728

Nous trading game app lets users bet on bitcoin price

14 February 2014  |  Asif Faruque

This article includes a short video interview and notes that the app includes Bitcoin predictions in addition to standard currencies. It also talks about our business model.

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In The News: Financial Times Alphaville

http://ftalphaville.ft.com/2014/02/13/1771052/crowdsurfing-the-finnovation-wave/

Crowdsurfing the finnovation wave

Dan McCrum | Feb 13 13:45

Spark Profit was mentioned in this article by Dan McCrum who agrees that hedge funds may find this new type of feed interesting.

In The News: Nous.net’s Spark Feed Leverages Trading Intuition Rather Than Software Algorithms

http://finovate.com/2014/02/nousnets-feed-profit-leverages-trading-intuition-rather-than-software-algorithms.html

Nous.net’s Spark Feed Leverages Trading Intuition Rather Than Software Algorithms

By David Penn on February 12, 2014 1:08 AM

Next up to the stage is Nous.net, a company that operates a next generation, free trading simulator

“Nous ‘Spark Feed’ is a real-time financial data service that helps you understand and predict the markets. Uniquely, Spark Feed uses the intuitive and analytical capabilities of tens of thousands of real people, not software algorithms. Their predictions are segmented by proven trading skill and then quantitatively blended.”

In The Press: Inside Market Data

http://www.waterstechnology.com/2327474

Nous Bows Crowd-Sourced Investor Sentiment Data

by Max Bowie. February 9 2014.

Startup trading application and data provider Nous will next week unveil a feed of crowd-sourced data aimed at banks and hedge funds that delivers a view of investor sentiment based on the trading decisions of investors using the vendor’s mobile app fantasy trading game.

This article talks about various aspect of our plans, including our belief that in the short term it is often human psychology that moves the markets, and that there is no comparable analysts recommendations for short-term market movements, only medium or long term ones.

In The Press: TechNode

http://technode.com/2014/02/02/sparkprofit-invites-everyone-to-make-predictions-on-financial-markets-and-rewards-good-ones-with-cash/

SparkProfit invites everyone to make predictions on financial markets and rewards good ones with cash

By  on February 2, 2014

Spark Profit is a platform for users, being professionals or not,  to make predictions on financial markets and earn cash rewards. Those who are good at making predictions will receive weekly incomes.

Available on the Web, Android and iOS, Spark Profit is designed to fit into users’ spare time, according to Justin Short, CEO of Nous.net — the Tokyo-based startup behind the service.

It’s risk free to make any predictions on Spark Profit. But the founders of the startup will take risks to keep the platform running and make profits. They will trade, with their own money, based on predictions made by users and reward good predictors with returns.

This business model is called ”crowd-sourced alpha” by the founders. Justin Short came up with this idea 4 years ago and has applied for a patent.

With 16-year experience in building automated trading systems for investment banks, Short and his four co-founders, who are also finance and IT professionals, are confident that they are able to “find the trading signal in the noise of the crowd”.

Currently only major currency prices, including Bitcoin prices, are available for users to make predictions on. More types of financial products will be added later. The service has attracted players from more than 70 countries in a trial period last year.

Incorporated in 2012, Nous. net has been self-funded so far and is looking for angel investment.

In The Press: e27

http://e27.co/having-awarded-us15k-to-beta-users-free-app-spark-profit-goes-live/

Real-time market trends prediction app Spark Profit is finally live after a year of playtesting. How will it fare?

You might not be a clairvoyant, but new free app Spark Profit developed by Tokyo-based startup Nous.net might just be your thing. Dubbed by its CEO Justin Short as “totally free trading”, the platform pays its users real money for predicting market trends. Having been in beta throughout 2013, the app is finally live on iOS and Android devices.

In an official statement, Nous.net claims that it has awarded “US$15,000 to players in 70 countries”. Short told e27, “We saw the potential to shake up the financial industry, provide an opportunity for people to learn new skills and earn additional incomes, all at the same time.”

The goal of playing with the real-time market prediction game app is to win points for making correct predictions, and avoid losing points for making bad predictions. After players hit a certain weekly target, the more points they earn, they more money they receive. Short said that some points are then carried over to the next week. He added, “We do not have stocks in the app right now, but they will be added.”

At the moment, the company uses PayPal to reward its users, but it plans to add Skrill and Bitcoin in the near future. In fact, Spark Profit added Bitcoin predictions in September 2013 to allow players variety when other financial markets are shut. He explained, “… Bitcoin is such an unusual financial instrument – people are still figuring out what the value of a bitcoin really should be. We hope to have as many people predicting Bitcoin as actually trading it!”

Short also sees a ”huge potential for people in developing countries” where going online is a new and fresh experience for many. In 2014, users can look forward to new market, social features and tools to help them analyse and improve predictions.

He was also quick to point out how Spark Profit is different from financial trading apps such as TradeHero and StockRadars. He said, “One key difference is the way we profit (and therefore pay our users) — by using our considerable financial experience to trade our own money.”

Interestingly, Nous’ profits come from what is known as a ‘crowd-sourced alpha’ business model, which uses players’ inputs to trade in real markets. He added, “This innovation ensures that players have no risk of loss because they do not need to pay or invest in the service.”

The risk does sound a tad excessive for a young startup, but seeing how the free app has made enough to award users with US$15,000, there must be some truth in it. In reality, Short has had 16 years of building automated trading systems for blue-chip investment banks, which helps him and his team identify good trading signals.

He added that most of these competitors “only seem to reward the top few players” while Spark Profit aims to pay everyone “who does sufficiently well”. In addition, the service unlocks new features with tutorials, so users actually get educated about what they’re supposed to be doing.

Nous.net was incorporated in 2012, and has five full-timers at the moment.

What’s up with Bitcoin?

Want to know why Bitcoin’s so bubbly? We explain how it got here, where it might go – and why MtGox always has the highest prices.

bubbles

Everyone loves bubbles – until they pop

What is a Bitcoin?

Quick primer: Bitcoin is a currency, as you’d imagine. But it might be better to think of it as a virtual commodity, a digital gold. Only a limited number of Bitcoins can ever be made (“mined”) and in fact, anyone can use their computer to dig for new coins although they’re getting very hard to find. The analogy breaks down here though, because unlike every physical commodity there is no instrinsic value, no industrial use for a Bitcoin. A Bitcoin is worth exactly and only what people think it’s worth.

The limited supply of coins makes Bitcoin deflationary, certainly relative to inflationary fiat currencies. As a fiat currency devalues over time, so a loaf of bread costs more in pounds or dollars, and so should a Bitcoin. However that effect is not nearly enough to explain the recent bubble.

There is an argument that people should rationally hold Bitcoins (reasoning: few more will ever be made so it’s a inflationary hedge, additionally if demand increases so will prices so there’s no point in selling now, especially because demand has increased in the past). However we don’t feel that’s the main reasons for the recent price appreciation.

Discerning Criminals use(d) Bitcoin

There was a small jolt when the FBI shutdown “Silk Road”, a market (for mostly illegal things) that accepted payments in Bitcoin. But Bitcoin had become a speculatory instrument well before the shutdown, and it was never clear that Silk Road was really driving prices at all. The problems in Cyprus earlier this year were a much stronger indicator of what could drive Bitcoin price changes – and of how Bitcoins are useful as a store of value.

Buying Bitcoins

The most common way to buy and sell BTC (the trading symbol for Bitcoin) is at an exchange. First you’ll have to apply for an account, prove your identity, transfer some money in, then finally send an order to buy, either at a specific price or at the current best price.

For a long time, the MtGox exchange in Japan was the world’s largest. However MtGox ran into some problems with the US regulators. This has made it hard for US citizens with accounts at MtGox to get their dollars back. Other BTC exchanges do not seem to have the same issues. As we’ll explain, this is definitely why MtGox has the highest BTC prices in the world and might also have triggered the recent price rises.

Twenty Dollars

As a finance professional, one of the very surprising things about the prices on MtGox is just how much higher than other exchanges they are. No other financial markets have $20 (7%) price differences between two exchanges. It’s not just a wider spread, as the bid (buying) price is $20 higher on MtGox than on other exchanges. If some other exchange has offers to sell right now for $170 why would anyone be willing to wait to buy at $190 on MtGox? And where are the arbitrageurs?

It’s the fault of those pesky US regulators!

Our belief is that US-based MtGox account holders, wanting to get their money back into the US, realised that they could (1) open an account at another exchange (one with less regulatory problems), (2) buy BTC at MtGox, (3) transfer their coins to the new account, (4) sell the coins, and (5) finally transfer their money out. This will probably lose something from crossing the spread twice, but it’s worth it to get the rest of your money back.

The trend starts

BTC is still quite an illiquid market so it does not take much pressure to make the market move. MtGox will have come under a lot of pressure to move higher, from US account holders buying BTC to transfer them away. All the other exchanges receive some smaller percentage of those coins each and soon after get orders to sell them, creating a smaller pressure on each to move lower. Net effect: MtGox has permanently higher prices, and the market gradually moves higher — especially because a Bitcoin has no fundamental value to keep things reverting to the mean.

And so the trend started. Thanks US regulators!

Breaking the dam

Then came probably the most important part: btcchina.com. As you can probably guess, this is a Chinese BTC exchange, allowing conversions to/from Yuan (Remninbi). The cause of the bubble is not that BTC China is very cheap to trade at (although it is), and it’s not that Chinese are culturally quite fond of speculation (although they do appear to be). It’s that the Yuan is a controlled currency but the government seems to have given it’s implicit blessing on converting BTC to and from Yuan – thereby breaking the currency controls.

This is a very big deal. Within a very short time this 2 year old exchange overtook MtGox and many others to become the world’s largest. Volumes are exploding. And when you have a lot of people chasing anything, especially a commodity with a fixed supply, you end up with exponentially rising prices, a.k.a. a bubble.

All the world’s a stage

It should be noted that as Bitcoin becomes increasingly visible to the public, demand – and thus the price – is likely to increase. This is another log on the fire for BTC. Our hypothesis is that the much more rapid ramp up in prices over the last months and weeks is as much due to the additional reasons given above.

Peering into the future

At Nous we believe that the future will see mainstream adoption of many alternative currencies – and Bitcoin might well be one of those. However if MtGox solves its bank problems in the US you can expect their prices to paradoxically fall, bringing them inline with other BTCUSD markets. That could easily cause a short-lived panic.

However BTC is probably most sensitive to Chinese policy right now. Any change in the Chinese Government’s views on BTC – positive or negative – will push it around. We wouldn’t want to be holding too many coins ourselves if China suddenly decides to outlaw BTC trading or somehow restrict cross-border BTC transfers. However until then, the price could well continue to rise.

The Zero Risk Trade

Of course the only way for anyone to be exposed to the upside but take no personal risk is to sign up for GAIN and start predicting. Nous is the inventor of the world’s first and only truly free option.

Disclaimer: The above is not investment advice. Trading involves risks. In fact we recommend that you never trade your own money and just use GAIN instead.