One of the most argued factors about cryptocurrencies is the pace at which their market is growing. Some argue that a wider market, both in users and options, would benefit it greatly, giving it a better reputation and recognition. But, on the other hand, this growth can achieve a rate in which the number of currencies and exchange platforms becomes overwhelming, leaving new users stranded.
Where should they start? How can they be sure they’re investing at the right time? Or the right currency? And that’s not even mentioning the time and resources they would have to invest into analyzing the available options.
A Replicable solution
Considering these issues, the Cryptoindex Group decided to look at an analogous system due to the similarities (in quantity of users, options, and volatility of values): the stock market. More specifically, at the stock indices like the Dow Jones, which compiles the values of the top 30 companies in a weighted average. Not only does this index work as a representation of the general state of the market, but also works as a useful alternative to newcomers, diversifying their investment without having to individually analyze each one of the 30 companies.
But how can this concept be applied to cryptocurrencies? The group lead by Vj Angelo came with the concept of Cryptoindex 100: an index that compiles the values of the 100 top performing cryptocurrencies in the current month.
Artificial intelligence for human convenience
They do this by feeding several different factors into a neural network known as “Zorax”, which receives inputs every second in order to constantly recalculate the weights of the conforming cryptocurrencies. According to these weights, the cryptocurrencies compiled in the index change once a month, ensuring that the top 100 cryptocurrencies are always considered.
A great advantage that this algorithm has before others is the analysis of what they call “Sentiment Data”, which includes factors that are external to the trading itself, but still have a powerful influence over certain cryptocurrencies. These include Twitter posts, Telegram chats, Github presence, Reddit responses and others, and can work in the benefit of a certain currency (numerous social media interactions and constant Github presence indicates relevancy) or to its detriment (low count of Github posts mean lack of development, for example).
But all this processing is only possible thanks to the neural network that is implemented with “Zorax”. A neural network is a computer system modelled (and fittingly named) after the human brain. With it, several inputs are processed through one or more layers of filters, assigning a weight to each input and the output of each of the layer’s nodes. The resulting output manages to faithfully compile the information provided by every input in a comprehensible manner, in this case: the Cryptoindex 100 composition in percentages of other cryptocurrencies.
Combined with a machine learning algorithm, “Zorax” can reevaluate the individual weight of different values during the training and operation phases, calculating a more reliable value for each currency within the final index.
Once a month, the program evaluates the 100 cryptocurrencies that are comprised in the index and replaces the ones it deems too volatile or not engaging enough, and then proceeds to find new, promising currencies to replace those that were excluded. This grants the users a free flow of their investment, while avoiding some of it to be stagnated or lost in currencies that naturally disappear from the top market spots.
With the index as a base, the Cryptoindex Group also stablished a platform in which they offer the necessary tools to track, analyze and forecast the values of the index itself and many different currencies, giving its users the means to further develop their portfolio (much like Bloomberg does for the stock market).
Furthermore, they’ve developed the Cryptoindex 100 Token (CIX100). A token that functions exactly like any other, and its value is directly linked to the index. Currently in its initial sale stage, the value lies at 0.0001 BTC per 1 CIX100, and purchasing it (minimum of 0.01 BTC = 100 CIX100) grants 3 months of free use of their platform tools and bonus tokens per sale for early investors.
Given all the additional benefits related to the index and considering that its risk are inherited from the cryptocurrencies themselves, it’s very difficult to argue against its usefulness and necessity in a market where more options leave us with less time to review each one of them.
The sale stage is expected to end on April 2019, or when the limited number of 300.000.000 units are sold. Get more info at https://cryptoindex.io/