Trading is fundamentally driven by human decision-making, which is influenced by a variety of different factors.
Contrary to what we may initially assume, traders do not make investments based on their belief in an asset’s price – or even their belief about an asset’s future price, for that matter.
The most notable factors determining what position a trader will decide to take are their perceptions of what other people believe about an asset’s future performance, and their confidence in this decision.
Can We Really “Beat the Market?”
There are many different theories about the investment market. One such theory is the Efficient Market Hypothesis (EMH), which states that it is virtually impossible to “beat the market,” because stocks always trade at their fair value on exchanges.
The theory behind this is that market efficiency causes existing share prices to always reflect all relevant information. Hence, this makes it impossible for investors to either purchase undervalued stocks or sell them at an inflated value.
It suggests that the only way an investor can possibly obtain higher returns is by purchasing riskier investments.
However, with the introduction of the blockchain, we could be about to witness a brand new era of capital markets that will be unlike anything we’ve seen before.
90 percent of Participants Lose 90 percent of their Money within 90 Days
Generating sizable returns from capital markets is a challenge for both professional investors and retail traders alike.
Unfortunately, right now there are no reliable mechanisms in place for investors to measure the market sentiment.
Similarly, as a result of hype and excitement, many retail traders are irrationally participating in capital markets. However, very few people have access to the information required in order to make an informed decision. As a result, are forced to either make a guess based on their own judgment or to measure sentiment from the public using news sources.
This leaves retail investors with no safe way to involve themselves and participate in financial markets without taking risks they don’t yet understand.
As a result, many retail investors end up choosing not to take the risk. Out of those that do, many of them end up losing money.
Bridging the Gap Between Institutional Investors and Retail Investors
The solution to this problem is to connect institutional investors and retail traders in a way that is mutually beneficial for both parties. This is exactly what Sharpe Capital aspire to do.
The Sharpe platform allows retail investors to benefit from sharing their market insights by rewarding them with monthly payments. This allows retail investors to participate in the process – but without the downside risk of loss.
Institutional investors can then use this data to gauge the impact of investor sentiment.
Connecting institutional investors with retail investors will benefit both parties. First off, it significantly reduces the barrier to entry to capital markets for retail investors. Secondly, the tokenized ecosystem allows shared value to be distributed fairly amongst participants.
It provides many of the benefits of investing, but without the risk of potential loss.
Monthly payments of ether will be sent to participating users. This will act as proof-of-stake in the Sharpe ecosystem. The amount of ether each user receives will be proportional to the number of SHP tokens they hold and the accuracy of the sentiment they provide.
The main crowdsale began November 13. It was previously scheduled to run until December 13, but has now been extended until February 5, 2018. After this token generation event ends, there will be no further creation of SHP tokens.
Sharpe Capital’s Alpha platform will be released on December 11. This will allow users to begin giving predictions immediately. The first ether service fees will be paid out to users on January 13, 2018, before the token sale has concluded.
The Future of Cryptocurrency Markets Within the Traditional Financial World
The overall mission of the Sharpe platform is to create a fully decentralized autonomous organization (DAO).
It is predicted that this will stabilize financial markets and integrate cryptocurrencies within the traditional financial world, ultimately lowering the barrier of entry to investors and making it accessible to a much wider audience.
Sharpe Capital are hoping that the foundations they lay down today will mark the start of something that will ultimately be much bigger in the future.