I hereby want to make an announcement for a Digital Currency Index (WORK IN PROGRESS) that can be used to indicate the current state of the market, as benchmark etc.
Feel free to shoot holes in it as you desire by just replying, but please make sure you take a look at the discussion that has been going on in this thread. I am excited about any feedback and looking forward to developing this project beyond it's Alpha stages.
If anyone with more data, capabilities etc. wants to pick this up and take it to new heights, I would be happy to cooperate and have lots of ideas (sub-indices, certificates, options...). Please contact me.
Cheers,
Smidge
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[DCX] The Digital Currency Index Project
http://dcx.smidge.comWhat is it?DCX is the attempt to create an index like the DAX, FTSE etc. that you know from real world markets for the digital currency community.
Why do we need this?Primarily as a benchmark. You can compare the performance of a stock, fund or any other security to this index, which should be a broad indication of securities that make up most of the digital currency market. In it's final form, you could regard it as "The Market" and check how a security (or your own portfolio) has performed against it, just like in the real world markets.
A fund manager for example can announce their fund's NAV being up 10% in just a week, which sounds pretty good. If "The Market", meaning a roundup of all securities, is up 25%, then the fund's performance relative to the market is pretty bad.
What is it's value?It started on Friday, August 2nd, 22:00 CET with a value of 100.00. You can check it's current value at
http://dcx.smidge.com or via the API. It's already up a few points at the time of this post
Why 8 decimal places?Because we're used to it
![Smiley](https://bitcointalk.org/Smileys/default/smiley.gif)
This might be too much and could change pretty soon.
How often does this update?Currently "only" once per minute. It cannot be used for (professional) daytrading yet, which is also not its current purpose. There will be improvements on this soon though, so that you can speculate on short term movements.
There is not enough data in there for me to plan my next move!It's been running a few hours! Just give it a few days or weeks to accumulate more data.
The current chart looks like a bunch of crapI know. There will be improvements on this soon, please note that the project is in Alpha stage. The current focus is accumulating data rather than displaying it in fancy ways.
It is also displayed as a Candlestick Chart, which describes the high/low and the opening/close values of the current data period (1 hour) at the same time. There is a lot of documentation out there on how to read it in case it confuses you.
Plus, you can always create your own charts by using the API!
Why are there no funds in it?A fund traditionally invests in other securities, which means a fund itself is a compilation of standalone securities. Including it would lead to dilution and/or overweight of some standalone securities.
Some securities are dominating the indexThat is correct. This lies in the nature of the current market and is not a problem of the index itself, I would describe it as "If ASICMINER coughs, the market gets a cold". As the index is made for the very long run, we will hopefully see worthy competition arise that evens out this imbalance.
How does it work?The index is calculated using the Laspeyres method. It is also used to calculate the traditional indices like DAX, FTSE etc. The formula is described in detail below, plus here is a simplified example (S1-S3 being the securities included, price0 and price1 are their previous and current values, mkt cap is number of shares times the price):
Name | price0 | price1 | mkt cap |
S1 | 40 | 40 | 200 |
S2 | 50 | 55 | 300 |
S3 | 60 | 60 | 400 |
![](https://ip.bitcointalk.org/?u=http%3A%2F%2Fdcx.smidge.com%2Fmedia%2Findex_formula.png&t=665&c=Tdh0jsXrW82xZQ)
The value of 103.19 means that if the securities would perform in the way described in the table, the index would rise by 3.19% in the given timeframe. In detail, security S2 has a market cap of 300 (1/3 of the total 900 in the index) and gains 10% in value. This pushes the index up by 3.19% when using the Laspeyres method.
In which intervals are price0 and price1 from the example above calculated?The interval is set to daily, which means the deviation (not the index value!) is "reset" at 0:00 CET and it begins using the new reference point from then on (for the next day).
Is there an API?A very basic one, yes:
Current value:
http://dcx.smidge.com/tickerHistory:
http://dcx.smidge.com/ticker/historyHow do the next steps & planning look like?That depends very much on community input. On my todo list is currently:
- Get as much community input as possible
- Add more securities to get a broader, more realistic depiction
- Update more often to make daytrading possible/more effective (this is also a problem of the securities not being traded frequently enough)
- Update to better charting software
- Future music: Create sub incides based only on mining, funds etc.; Issue put/call options, create certificates etc.
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Thanks 4 reading & please also take a look at my main project Smidge.Com - A virtual, actively managed, multi-asset digital currency fund:
https://bitcointalk.org/index.php?topic=259772