2014 USD/mBTC Price Prediction Contest

[rpietila]

FINAL RULES 2014-4-30, THE COMPETITION HAS STARTED!
Any changes after "FINAL BETA 2014-4-29b" are in this color.
Any changes after "FINAL RULES 2014-4-30" are in this color.

This is
2014 USD/mBTC Price Prediction Contest
, a probability prediction contest for monthly USD/mBTC rates for the rest of 2014.


* Entry ONLY 50mBTC
* 25%(rounded UP) of the players get at least DOUBLE their money back!
* The jackpot for the winner is MINIMUM 1,000mBTC


S T A R T I N G   S C H E D U L E

The competition starts with special schedule as follows:

2014-4-30

The final rules and Excel prediction sheet will be made available. Available NOW.

2014-5-5 Monday, 23:59 GMT

Deadline for entry. 50mBTC must be paid with previously PM'd satoshimessage to 1GFKAW5RunZtNEQ834wTmu4dBaYG8CRbDm.

2014-5-6 Tuesday 23:59 GMT

Deadline for 1st round predictions.



S U M M A R Y

- You are to forecast a probability distribution that USD/mBTC falls in a certain price range in a certain day. There are 80 price ranges that span all the possibilities from 0 to infinity. The sum of your probabilities must equal 100%. You get points if you had allocated a higher probability to the price realized than the consensus of the other competitors. If your probability was lower, you get negative points.

- The competition consists of 8 rounds, and in each round you are to forecast the price at the last calendar day of every month yet to come in the year 2014. Thus in the first round you give predictions for all the months between May and December, inclusive (8 months). In the last round you give only 1 prediction. Therefore the total is 36 (8+7+6+5+4+3+2+1) predictions.

- Entry fee is 50mBTC per entry. One entry is enough for all the 36 predictions. One person can have at most 5 entries. Me and my staff can not enter. It is possible to skip rounds or enter late, because skipped rounds (only) result in zero points, which is roughly the average result anyway.

- I donate 1,000mBTC to the prize pot, and all entry fees also go there. 20% (rounded up) of the entries still in competition at the closing of the competition win double their money back (100mBTC). The rest (minimum 60% of the prize pot) is given to the winners as jackpots as outlined below.



D E T A I L S

- The competition is administered by me, rpietila, or my staff (currently: nikke).

- To enter the competition, the entry fee must be paid upfront, to "5-Run" address: 1GFKAW5RunZtNEQ834wTmu4dBaYG8CRbDm. The entrant must send prior PM to me indicating the "satoshi-message" of her payment, eg. "BTC0.05000724" which serves as a makeshift way to distinguish between multiple payments of same size to the same address. This must be done latest the 3rd day prior to the month from which the entrant wants to start forecasting. NB: start of the competition is special schedule.

- 5 entries per person maximum, during the whole competition. This is hard to conclusively monitor, but if caught with cheating beyond reasonable doubt (the predictions will be cross-checked etc.), the entries will be disqualified. If an entry is disqualified for any reason (breaking this rule, or scoring -20 or less points), the entrance fee is forfeited. Non-submission of a round is not a cause for disqualification, but results in zero points for the predictions during that round, which is about an average score.

- I retain the right to limit the number of entries. Once put into place, the limit cannot be lowered, but it can be raised to make room for more entries later in the game. The current limit is 50 entries.

- The entrant downloads the Excel prediction sheet and fills his entry name (eg. "wachtwoord4") and round number. This information also needs to be encoded in the filename when submitting. That one file contains all the 8 rounds and 36 predictions, and the means of scoring them. The entrant sends it by email monthly to nikke (nikolai.denissoff@gmail.com), completed with the latest round of predictions.

- The price slots are as follows (note: decimal comma and values in mBTC):

Code:

slot	minimum	maximum
80	100,00000	infinity
79	89,12509	99,99999
78	79,43282	89,12508
77	70,79458	79,43281
76	63,09573	70,79457
75	56,23413	63,09572
74	50,11872	56,23412
73	44,66836	50,11871
72	39,81072	44,66835
71	35,48134	39,81071
70	31,62278	35,48133
69	28,18383	31,62277
68	25,11886	28,18382
67	22,38721	25,11885
66	19,95262	22,38720
65	17,78279	19,95261
64	15,84893	17,78278
63	14,12538	15,84892
62	12,58925	14,12537
61	11,22018	12,58924
60	10,00000	11,22017
59	8,91251	9,99999
58	7,94328	8,91250
57	7,07946	7,94327
56	6,30957	7,07945
55	5,62341	6,30956
54	5,01187	5,62340
53	4,46684	5,01186
52	3,98107	4,46683
51	3,54813	3,98106
50	3,16228	3,54812
49	2,81838	3,16227
48	2,51189	2,81837
47	2,23872	2,51188
46	1,99526	2,23871
45	1,77828	1,99525
44	1,58489	1,77827
43	1,41254	1,58488
42	1,25893	1,41253
41	1,12202	1,25892
40	1,00000	1,12201
39	0,89125	0,99999
38	0,79433	0,89124
37	0,70795	0,79432
36	0,63096	0,70794
35	0,56234	0,63095
34	0,50119	0,56233
33	0,44668	0,50118
32	0,39811	0,44667
31	0,35481	0,39810
30	0,31623	0,35480
29	0,28184	0,31622
28	0,25119	0,28183
27	0,22387	0,25118
26	0,19953	0,22386
25	0,17783	0,19952
24	0,15849	0,17782
23	0,14125	0,15848
22	0,12589	0,14124
21	0,11220	0,12588
20	0,10000	0,11219
19	0,08913	0,09999
18	0,07943	0,08912
17	0,07079	0,07942
16	0,06310	0,07078
15	0,05623	0,06309
14	0,05012	0,05622
13	0,04467	0,05011
12	0,03981	0,04466
11	0,03548	0,03980
10	0,03162	0,03547
9	0,02818	0,03161
8	0,02512	0,02817
7	0,02239	0,02511
6	0,01995	0,02238
5	0,01778	0,01994
4	0,01585	0,01777
3	0,01413	0,01584
2	0,01259	0,01412
1	0,00000	0,01258

- The task is to allocate the total probability of 100% to the slots so that the probability of at least 0.0001% (1 in 1 million) must be allocated to every price slot. Otherwise there are no restrictions. If the total is more OR less than 100%, it results in zero points for that predicted month but no other penalty.

- The slots are of the same width in the log scale, which means that the percentage change to go up a slot is always the same (12.2%).

- The goal is to allocate the probabilities such that you have a higher probability in the slot with the realized price, than the geometric average of the other contestants. It does not matter which probability was allocated to the other 79 slots that "didn't win".

- The reference price is the Bitstamp daily volume-weighted average of the last calendar day of the month. If the exchange closes or becomes dysfunctional, I may change the reference at my discretion. My discretion may further be overruled by 51% of the contestants.

- I retain the right to make further clarifications to the rules, with the veto of the majority as per above.

- If participating in this competition is against your law or conscience, don't do it.


M O N T H L Y   S C H E D U L E

Third-last day of the previous month

Deadline for new applicants who want to enter the competition, to pay the administration fee.

Last day of month 23:59 GMT

Deadline for submitting the predictions as an email attachment to nikke: nikolai.denissoff@gmail.com.

1st day of the month

Previous month results are scored (actually: checked from the "winning slot", how many points are awarded to each entry - this is fully deterministic by now, and everybody already knows their score when the realized price is known at midnight or in most cases long before), published (nikke sends a compilation of results in the thread) and discussed. Actually, the points are not fully deterministic, because the initial formula supposes that all the entries are still in competition at the time of scoring. If eg. a 6-month long prediction by player A is included in the averages upon submission, but player A is disqualified from competition before the maturity of the prediction, that prediction does not take part in the counting of the final averages for the scoring, which (slightly) alters the average and, therefore, the scores of other entrants.

earliest 3rd day of the month

Nikke has averaged the new predictions and makes available the data. By downloading it and copy-pasting to the amber-colored cells in the current round, the Excel updates how many points you would be getting for this round, according to what slot the price falls into. This information does not change during the round: in the end of this prediction, one of these points values is yours - the one with the realized price.
You may post your new predictions to the thread and start discussion about them. (Don't do it before, because then we discuss the previous month's results!)

NB: The competition will start late for May, but 2014-5-31 will nevertheless be the first day to be forecasted. Special schedule applies for the start of the competition (see the beginning of the post).


E X A M P L E   O F   A   M O N T H L Y   F O R E C A S T


Forecasts will be made using a spreadsheet submission form where the slots are given, and the spreadsheet calculates that your probability totals equal 100%.

The data to be used for all of the competition is all in one sheet in the file.

In the rows, there are the slots numbered from 1-80 with their cutoff price (USD/mBTC) values.

In the columns, there are black bars that separate the 8 rounds in the game.

Each round has 3 data areas, green, amber and yellow/(changing color).

* Green area is where you make your predictions, each column corresponds to a prediction ending in a certain date, which is indicated.

* Amber area is where you can copy-paste the averages of the others' predictions, once nikke makes them available in the 3rd day of the month.

* Yellow/multicolor area is the one that shows how many points you stand to gain/lose in different price scenarios. This is an indication only, because the disqualification of other entrants before the prediction is evaluated may alter the score.

When you make the submission, we will only use the green area data from the round that is currently going on. Make sure the cells do not contain formulas and are rounded to 4 decimal places.


S C O R I N G

Each month (36 in total, because some months are forecasted multiple times in different points in time for different lengths) is scored in a similar way and their points are added to the grand total. The highest grand total after 8 rounds wins the prize.

- You get a guaranteed zero (0) points for a given round/month for submitting late, or not submitting at all, or submitting an invalid prediction. Also late entrants to the competition get 0 points for all the rounds/months they did not participate in.

- The valid predictions, get points as follows:

* Take a geometric mean of the probabilities of all the predictions at the "winning" price slot.
* If you forecasted better than the mean, you get points according to the following formula: Points = yours / average - 1
* If you forecast was worse than the mean, you get negative points as follows: Points = 1 - average / yours
* If your forecast was exactly the same as the mean, you get 0 points (both formulas also give this result)

Let's have an example with 10 predictions. After we know the realized price, it is found out that the predictors had given the following probabilities for it:

A: 5.0000%
B: 3.5000%
C: 3.0000%
D: 2.5000%
E: 2.0000%
F: 2.0000%
G: 2.0000%
H: 1.5000%
I: 1.0000%
J: 0.5000%.

Calculating the geometric mean: (0.05*0.035*0.03*0.025*0.02^3*0.015*0.01*0.005)^(1/10) = 1.9482%

Therefore the points are:

A: 5.0000% / 1.9482% - 1 = 1.5665 points
B: 3.5000% / 1.9482% - 1 = 0.7966 points
C: 3.0000% / 1.9482% - 1 = 0.5399 points
D: 2.5000% / 1.9482% - 1 = 0.2833 points
E: 2.0000% / 1.9482% - 1 = 0.0266 points
F: 2.0000% / 1.9482% - 1 = 0.0266 points
G: 2.0000% / 1.9482% - 1 = 0.0266 points
H: 1 - 1.9482% / 1.5000% = -0.2988 points
I: 1 - 1.9482% / 1.0000% = -0.9482 points
J: 1 - 1.9482% / 0.5000% = -2.8963 points

Tactical note: Although most of the predictions were awarded more than 0 points, the sum of points was slightly negative, in this case -0.0877. It is hard work to build yourself a positive points balance, but easy to lose it by giving a too small probability to an event, which is reasonably probable so that the others give it a higher probability. This not only destroys your game (should that event materialize, of course..) but also gives the others positive points, making it more difficult for you to catch up later.

A winning tactic is not only to have a solid overall understanding concerning where bitcoin price is heading, but also to avoid losses by allocating enough percentage to events that the others feel are likely to happen. Bitcoin price is determined by the market after all, and one of the grander aims of this competition is to harness the wisdom of the crowds in forecasting the price.

Some have suggested a "lucky number" tactic as a way to victory - I don't believe before I see it! (You would be rich by now on your own account...)

- If your point total goes to -20 or worse, you are disqualified from the game immediately and your possible next round prediction is forfeited. It is hardly possible to get -20 points if there is any realism in your predictions. This rule is to weed off the desperate and unrealistic "predictions" that result from people who were just gambling in the first place and the gamble went sour.


D I S T R I B U T I O N   O F   T H E   P R I Z E   P O T


All BTC in the address 1GFKAW5RunZtNEQ834wTmu4dBaYG8CRbDm at the closing of the year 2014 consists the prize pot. If there is outgoing transfers during 2014, their sum is added to the prize pot, of course.

The prize pot is distributed as follows and following order:

1. The number of entries still remaining in the game after round 8 is calculated (entries eliminated because of -20 point total don't count). 25% rounded up is taken from this number. We take entries with the best score until we reach this many. Every one of them is allocated 100mBTC from the prize pot.

2. The winner is allocated 60% of the remaining prize pot.

3. The second-best entry is allocated 1/2 of the remaining prize pot, the third-best 1/2 of the remaining and so on until we reach the last entry who was allocated 100mBTC in phase (1).

4. The remaining petty sum is added to the winner's jackpot.

5. If the winner by this calculation would receive less than 1,000mBTC, rpietila pays the balance from his own pocket.

An example of how the prize pot of 3,314mBTC is distributed if there are 23 entries in play after round 8:


1. Winner 100+1628+33 => 1761mBTC
2. Place 100+543 => 643mBTC
3. Place 100+272 => 372mBTC
4. Place 100+136 => 236mBTC
5. Place 100+68 => 168mBTC
6. Place 100+34 => 134mBTC
7.-23. Place 0 => 0mBTC


The OP is updated, but the discussion in the thread is not, so just skip the thread, it will only confuse you.

[rpietila]

Ideas:

- Perhaps also the 2nd and 3rd place should receive some of the prize pot, like in poker tournaments.

- Disqualifying entrants whose point total reaches -100 points

- Bonus for keeping in the black = having a positive score each round

[CoolStoryBro]

Despite your efforts, it's still not very clear for (at least) me.

What if persons used 30 different values for prediction and I used 3?


Bother to give few examples on real values?
like, what if my predictions are:

380 - 33%
440 - 27%
560 - 40%

As I understand, geometric mean would be (0,33*0,27*0,4)^(1/3) = 0.329
And lets say actual price was 486

So what?

[sgbett]

so does "any number of classes" mean i can have 2 guesses?

e.g.

over (10 x price) : 50%
0 - (10 x price) : 50%

I'm sure i'm not the only person that will enter the competition looking to win by gaming the scoring system

Perhaps you need some way of punishing overly broad ranges (or rewarding tight ranges)?

or perhaps simpler, a maximum range size, or standardised ranges?

[rpietila]

Despite your efforts, it's still not very clear for (at least) me.

What if persons used 30 different values for prediction and I used 3?

You are required to assign a probability to each of the values "slots" from 0 to 491 (cents per mBTC). The probability must be at least 0.0001%.

For your (and mine) convenience, it is possible to group the slots that in your opinion are equally probable, like I did in the example in the OP. If you give eg. 10% probability to the range 0.60-0.69 (which consists of 10 slots), the probability per slot is 10% / 10 = 1%.

You are free to give different probabilities for each of the 491 slots but many will find it better to group them. The grouping does not affect winning chances because the total percentage is divided equally to all the width of the group before applying it in the calculation.

Bother to give few examples on real values?
like, what if my predictions are:

380 - 33%
440 - 27%
560 - 40%

As I understand, geometric mean would be (0,33*0,27*0,4)^(1/3) = 0.329
And lets say actual price was 486

So what?

Your example is entirely misconstructed, sorry Refer to the OP for a better understanding.

so does "any number of classes" mean i can have 2 guesses?

e.g.

over (10 x price) : 50%
0 - (10 x price) : 50%

I'm sure i'm not the only person that will enter the competition looking to win by gaming the scoring system

Perhaps you need some way of punishing overly broad ranges (or rewarding tight ranges)?

or perhaps simpler, a maximum range size, or standardised ranges?

Like explained above, in the "atomic level" your task is to allocate one million "probability units" to (approximately) 491 slots, so that the slot where the "ball" (Bitcoin price after 30 days from the prediction) falls, contains more of your "probability units" than the other players'.

There is only the minimum of 1 PU (=0.0001%) per slot. There is no maximum, so if in your opinion it is wise to put 999510 PU's in the slot labeled as 65 (and leave all the others with the minimum) you are free to do it.

Let's calculate it out: assume that the slot is a very high probability one, and there are 20 forecasters in the game, and the others have given it a geometric average of 4% probability. You go for 99.95%. If you win, you get 20.2734 points. But the probability of winning (wisdom of crowds) was only 4%, which is 1/25. You would need at least 25 contestants to have a +EV.

If you're out of luck and any of the other 490 slots is realized, such as one with the average 1% probability, your guess of 0.0001% would net you -6308.5374 points.

* *

The grouping of slots is a user interface convenience, which you are free to use or not.

The system punishes reckless behavior, which is giving way too little probability for an event which actually has a chance to happen (only if it happens, of course). Insuring against these is easy, just give a little more weight to them.

The system rewards lucky guesses (especially on events that were not deemed probable by the others (see "reckless behavior" above)), but their EV (expected value = long term success) is still negative. Making a lucky number in a tight band (even a single slot) however does not mean that you need to sacrifice your whole prediction, even a few % will win big if the others

If others introduce volatility to the guesses, making a conservative range of estimates yourself can actually give you a positive outcome over the whole range. In the trial round in my thread, my personal estimate will net a positive score if anything below $3000/BTC happens in 2014-5-17. This is because many of the others were playing bull and bear. Whichever happens, the correct forecasters will win big and the others lose big, but I will make a few points regardless. After 8 rounds the hotheads have hopefully made a few bad guesses negating the good ones, and I will win

You are sure that you can "game the system", but I am equally sure that the Prediction Contest has very intricate tactics in many levels of the rules, which make sure that the best forecaster will win! After all, points are awarded relative to others

[sgbett]

I am not *sure* I can game the system. I'm just saying that people will try - Its human nature so I was pointing out what I thought was a fairly obvious way of scoring points.

I see now I missed the width multiplier.

if I rephrase like your example...

Code:

              Prob.   Width   P/slot
4,9  -	 inf   49%      inf      49%
0    -	 4,89  49%      490       1%

then i'm guaranteed to hit, its now just a question of what i score.

Would I be right to assume that its the "P/Slot" figure that is used to award points rather than the  "Prob." figure?

eg assuming geomettric avg was say 2%

I get 1% / 2% - 1 = 0.5 pts

rather than 50% / 2% - 1 = 24 pts

perhaps this was just obvious to everyone except me

[sgbett]

btw I'm totally entering thats why i want to figure out how best to win hehe

[rpietila]

I am not *sure* I can game the system. I'm just saying that people will try - Its human nature so I was pointing out what I thought was a fairly obvious way of scoring points.

I see now I missed the width multiplier.

if I rephrase like your example...

Code:

              Prob.   Width   P/slot
4,9  -	 inf   49%      inf      49%
0    -	 4,89  49%      490       1%

then i'm guaranteed to hit, its now just a question of what i score.

Yes. You will always hit at least 0.0001%, because that is the rule. (Stemming from the requirement to have all positive numbers for calculating the geometric average.)

In your example your P(slot) is actually 0.1000% instead of 1%. You would do pretty horribly if the price does not do anything special and falls in the range where people have forecast ~2% per slot. In the test round, the geometric average of 16 predictions in the $0.60/mBTC area was about 1.4%.

Would I be right to assume that its the "P/Slot" figure that is used to award points rather than the  "Prob." figure?

Yes. Like I tried to explain, P/slot is what counts, but some might prefer to think of it in larger blocks. I don't care, it is not really that much harder to make a true distribution of 491 slots, but for those who don't use Excel, the option to compress it might come in handy.

perhaps this was just obvious to everyone except me

It is exactly this kind of questions that we need to make everything obvious for the lurkers also, before the contest starts. But I take refuge in the fact that it is possible to enter the competition after one (or even several) rounds have passed, or re-enter with a new horse if you fail a prediction with the old one

[sgbett]

i think i see now.

the width represents the fact that you have bet [P/Slot] on every price within the range so then [Prob] = [P/Slot] * [width]

clear as a bell!

RE: dates....

For this month I must wait til 28th when you'll give us the top bracket, then PM you predictions by 23:59 GMT on 30th? and these predictions are for VWAP on 31st May.

I better fire me up a copy of excel!

[dnaleor]

interesting game. I am not sure yet. 100 mBTC seems to be above my budget.

[rpietila]

There is a possibility to make the scoring simpler:

- When it is known which slot wins, the contestants' probabilities for that slot are summed up. Everybody gets points according to what is their "share" of the correct guesses (perhaps scaled to the average of 1).

In the example far above, the players A-J get points in proportion to their guess (5% gets 10 times the points of 0.5%, and nobody can get negative points).

The system here described is actually just using simple average instead of geometric average in scoring.


In my opinion this has however many downsides:

- Makes the system much more gameable, because anticipation of other players betting heavily a certain range makes you hesitant to bet it, regardless of your estimation of its probability.
- Dull and not enough action, because not possible to get negative points.
- Prone to lucky number strategy, because unbalanced guesses not enough penalized.
- Not elegant to handle cases where people skip rounds etc. (should they get an average score for missed rounds??)

[CoolStoryBro]

I think you need to make promotion contest (no entry fee)  for few month and only then put on serious one.

Otherwise system doesn't look intuitive and "easy to get on" - as it now, you will get only "math" guys to participate. Indeed administrative with current system would be quite a nightmare, so you need to make some restrictions as well (so you an just copy-paste results into one big spreadsheet to get all results).

For example, restrict price ranges to 7 (not less and not more) but still use that geometric average thing.


At this moment audience is not ready - only elitists will enter.
Need more attention for regular Joes like myself!

[bitcoinsrus]

Or what about like a bitcoin lottery or something.  You are well trusted in the bitcoin community and if like 10-50 of us would send like .01-.1 to a address you control, at the end of the month there could be a random selected winner (to which you could take a small % for your hosting).
Would be fun.

[K128kevin2]

I think it would be better if this were made much simpler and the fee to enter were either nothing or something very small. Definitely not 0.1btc, that's a lot. That means all you need is 21 people to enter for you to make a profit.

[rpietila]

I think it would be better if this were made much simpler and the fee to enter were either nothing or something very small. Definitely not 0.1btc, that's a lot. That means all you need is 21 people to enter for you to make a profit.

My secret aim is not to make profit (for either me or you) but to get intelligent and statistics/probability/math/Bitcoin-oriented people to enter thought-out predictions so that the aggregated data of the predictions could be used in making informed trades by both me and all who read this. This would go out to the world as an indication that Bitcoin folks really can forecast its going up (so that it is not random shouting "CCMF!12") and also will be really interesting how accurate the next bubble top forecasting and the following decline will be.

The rationale behind a high fee is to reduce the number of entrants, increase the quality of forecasting, make administration easier and enable me to offer a competitive prize.

Simplifying the method can be done without affecting the essentials. 7 categories would be a bit gamey, I'd like 20 more. The historical range (alone) for Bitcoin is -65%...+765% per month and needs to be adequately captured with the choices.

[K128kevin2]

My secret aim is not to make profit (for either me or you) but to get intelligent and statistics/probability/math/Bitcoin-oriented people to enter thought-out predictions so that the aggregated data of the predictions could be used in making informed trades by both me and all who read this. This would go out to the world as an indication that Bitcoin folks really can forecast its going up (so that it is not random shouting "CCMF!12") and also will be really interesting how accurate the next bubble top forecasting and the following decline will be.

The rationale behind a high fee is to reduce the number of entrants, increase the quality of forecasting, make administration easier and enable me to offer a competitive prize.

Simplifying the method can be done without affecting the essentials. 7 categories would be a bit gamey, I'd like 20 more. The historical range (alone) for Bitcoin is -65%...+765% per month and needs to be adequately captured with the choices.

Okay that makes sense actually. Good luck, I'm curious to see how it works out

[rpietila]

I need to get at least one other player in the first round (apart from sgbett) to make the scoring formula work I am sure that more will follow in the other rounds when they see how it works and hopefully this gains the academic popularity that I am aiming for.

One way to do the classes would be to make them equi-probable:

1259   or more
836 - 1258
677 - 835
600 - 676
531 - 599
490 - 530
450 - 489
411 - 449
358 - 410
357 or less.

It may not be immediately obvious, but according to Bitcoin's historical price developments, it is equally probable that a 30-day period starting at 490 will end up in any of the ranges above (there is an equal number of instances in each of them in the historical data).

[birr]

Okay, you want to use the wisdom of the crowd to get a bitcoin price prognosis.  Excellent idea!  You may get a pretty darn accurate prediction, if you get enough contestants.  Unfortunately, I am  not likely to be one of them, because

* It would take me a lot of time to understand how the heck this contest works.
* I'm kind of too cheap to shell out for it.

You might get quite a few more contestants if you dumb it down.  Put up a page with a histogram you can easily manipulate through a GUI to adjust the location of the peak (or peaks), the standard deviation, and how fat the tails are.  Maybe you can do that without sacrificing the underlying sophistication of the math behind your contest.  Lots more work, of course, but it might be worth it, if it garners you hundreds of contestants instead of a few mathletes.

[rpietila]

There are not so many markets for bitcoin derivatives (tell me if you find any). It is tricky to organize them, the following reasons come immediately to my mind:

- Instead of speculating with going long, you should just buy bitcoins. Much less counterparty risk, guaranteed effect in the economy, like an option that never expires.

- Shorting would be a useful option for many (eg. ones who don't want to trigger capital gains, or not relinquish control of their coins even for the duration of being less than 100% long) but the harder part is to find a matching long. If it is done with actual loaning of coins and selling them to any buyers in the market, it works.

- Betting against the book (MPEx) requires the book have an enormous stash of coins or good risk mgmt (preferably both).


Derivatives would give a lot of important information to the markets though. With this competition I was hoping to construct this information artificially as an aggregate of the guesses of the participants. To make it possible to lower the handling fee, the system should be totally automatized and parametrized. Is there anyone who sees what should be done and knows how to do it?

Exempli gratia:

- web interface with username,passwd login

- prediction tab, which lists each maturity (1,2,.. months) in the columns and each price range (30 in total) in rows

- in each cell you can add probability by "+", reduce by "-" or write a value. Auto-adjustment to total 100.00%.

- API, with which you can auto-update the probabilities.

- Every day the system checks what are the current probabilities and they will be matched against each other at maturity. You don't need to update them every day of course, not even every week or month but only as you want. (In detail: when the month closes and points are awarded, they will be awarded differently from each day, starting perhaps up to a year in advance. So every day you forecast every future month. Every day will count as 1/360 of you score for that month.

- Publishes all aggregate info in a public sheet which both the contestants and market players can read

How much you asking? 

[yenom]

Okay, you want to use the wisdom of the crowd to get a bitcoin price prognosis.

The current bitcoin price is the wisdom of the crowd.