Numeraire (NMR) Coin: What is it? Should you trade it?

One of the features that attracts traders to cryptocurrency is its decentralised nature. It means that, instead of going through an exchange, trades are made directly between buyer and seller. Keen to take advantage of this investor interest, new crypto coins and tokens have emerged on the global market. And perhaps one of the most intriguing is the Numeraire (NMR) coin.

It has one of the more unique origin stories on the crypto market. It's also fair to say that NMR performance since its launch in 2017 has been volatile. So, what are its future prospects? Well, that depends on who you ask. But there are bullish predictions for the Numeraire coin price in the coming years. FXCM aims to help you find out if it is something you want to be a part of.

What is Numerai?

To first get to grips with the Numeraire coin, it is important to understand where it comes from. The origin lies with Numerai – a quant hedge fund formed in San Francisco in 2015. In essence, it is a software-based hedge fund that aims to predict moves in the stock market.

It is powered by thousands of crowd-sourced machine learning models and artificial intelligence (AI). With it, investors can trade on the stock market using the Ethereum blockchain. But it also gives data scientists and developers the chance to evolve the fund's predicting capabilities.

As Numerai explains itself, the 'hedge fund' needs to determine the stocks it will take a position on – and what those positions will be. Users or participants create and submit machine learning models that can look at thousands of stocks. All these predictions are then brought together.

Signals

The above is what Numerai calls "Signals". This is the term that describes those data-based and numerical predictions for how individual stocks may perform. All of the signals are compiled into one "Meta Model" that participants then use to help shape the hedge fund's trading decisions.

As a way to contribute in itself, Signals is available to participants with data of their own. With it, they're able to build their machine learning models and submit predictions from them.

Tournaments

The other, and perhaps the main, way to take part in Numerai and provide signals is to sign up to a 'Tournament'. Here, you can build models using financial data to predict the stock market. Once signed up, you download the dataset with training data and example scripts. After building your own model, you then send the predictions back.

It is a concept that is now well-established – although the current format was first introduced in mid-2019. It is held weekly and contributors can bet on their predictions for added competition.

What is the Numeraire (NMR) crypto token?

Numeraire (NMR) are the coins or tokens that are native to Numerai. NMR has the distinction of being the first ever cryptocurrency to be issued by a hedge fund – or so it is claimed. With NMR, users can stake their tokens on market predictions in the Tournament. It also serves as the key incentive to take part. If the predictions are correct, a user receives NMR as a reward.

As such, NMR's value is derived – in part, at least – from the number of people who take part in the Tournament. It is an ERC-20 token that is built on the Ethereum blockchain, which provides certain benefits to users. The key one is that, as a technical standard, ERC-20 is more versatile. Yet, at the same time, the Ethereum blockchain offers a high level of protection.

But the use of NMR is not limited to Numerai alone. It is possible to trade it with fiat currencies and other digital tokens on cryptocurrencies too.

How does NMR work?

The 'Erasure Protocol' is another important feature of NMR. In simple terms, the protocol is the method that determines what happens with the NMR staked by users. If a prediction is correct, the protocol makes sure the user is rewarded. If not, the protocol literally destroys whatever is staked by the unlucky user.

According to Numerai, the users who stake NMR and make market predictions are "on one side of the smart contract". On the other, you have Numerai – the receiver of those predictions. The right predictions are rewarded with an amount of NMR reflective of the initial stake. This model is based on the premise of having "skin in the game".

Nobody benefits from wrong predictions, however. That staked NMR is lost to everyone.

All predictions received are collated by Numerai's "Meta Model". The software will consider each prediction based on how unique and true to life they are. It then picks a select group of models, using them to trade equities on the stock market. This algorithm will then update and evolve its approach according to which models work – and which don't.

How many Numeraire coins are in circulation?

To start, the maximum total supply of Numeraire coins was limited to 21 million. There was no Initial Coin Offering (ICO) either. Instead, 1 million coins were shared between users who were already tournament participants in 2017.

Numerai founder Richard Craib wrote in 2018, that 3 million Numeraire coins were 'locked' until 2028 in order to keep growing the network – and to keep incentivising users. And then contract upgrades in 2019 saw that cap reduced to 11 million – meaning NMR can no longer be minted.

As of August 2022, the circulating supply stood at 6.1 million.

What affects the Numeraire price?

It has been quite a journey for the Numeraire price since first arriving on the market in 2017. It first listed at USD35 – before rocketing to nearly USD169 within two days. Since then, the price has failed to reach such heights. Despite brief spikes in its value in the years that followed, data from CoinMarketCap shows that NMR opened at USD 17.50 on 20 August 2022.

The value of NMR is exposed to the broader market volatility that crypto traders will experience with other digital currencies. Some of the sharp movements in its price since first launching are reflective of that. It includes, for example, a combination of factors that lead to USD 1.5 trillion being erased from the value of major cryptocurrencies at the start of 2022.

Of course, unique features will also affect the overall Numeraire price on trading exchanges. It includes demand from the users taking part in the Tournament and a finite supply of coins. An announcement in August 2020 that Coinbase was to support NMR also drove up its value. That gave users the ability to buy, sell, send, receive, and store the token.

How to buy and use Numeraire

As stated above, one of the main ways to obtain Numeraire coins is to become one of its users. By doing so, you can make market predictions as part of the Tournament or contribute Signals. In return, you can be rewarded with NMR – and then stake it to win more.

Now, however, you also have the option of trading NMR on exchanges.

One way is to buy and sell Numeraire coins in exchange for fiat or digital currencies. You could otherwise choose to store NMR in a wallet and use it to trade on the cryptocurrency market. In doing so, you'd predict the difference between the buying and selling price in order to profit.

If you are looking to trade NMR, it is always worth considering how you plan to store it. Due to the nature of the token, Numeraire coins can be stored in any wallet compatible with Ethereum. So, you can store it in an online wallet or software – or opt instead for a hardware facility.

Is it a good idea to invest in Numeraire in 2022?

The significant movement in the value of the Numeraire coin since its launch might appeal to a certain type of trader. In the short-term, however, it might equally be sensible to consider how the token is yet to regain significant ground on past highs. It was certainly the case in 2022, at least. But that does not necessarily mean it isn't a good idea to invest in Numeraire.

In the first instance, the Tournament could be an appealing option if you're a data scientist or a programmer with an interest in share trading. It gives you the chance to create models, predict outcomes, and potentially win NMR based on what you stake.

Other traders may still look at the past volatility in the Numeraire price and think it is worth the investment. As with all other forms of trading, it comes down to your strategy and risk appetite. And it is worth remembering that Numeraire is yet to regain much of its lost ground. So, buying now could generate healthy Numerai returns when its value (or the wider market) rebounds.

Numeraire price prediction

If you think now is the time to invest in Numeraire, the key question is what its price is likely to be in the months and years ahead. There are various Numeraire price predictions to help inform your decision. The good news is that most, at this point in time, see a long-term upward trend.

• On the more bullish side, PricePrediction.net believes NMR could move back past the USD 100 mark as soon as 2025-26 – despite its relatively low value in 2022.
• TechNewsLeader.com also has bullish expectations. In its view, NMR could be worth as much as USD 107.88 in 2027 and USD 432.18 in 2031.
• DigitalCoinPrice.com believes NMR will make slow gains until 2027 (including a predicted dip in 2026). But the long-term view is that its price could hit USD 100 in 2031.

For any trader, it is always important to remember that any crypto investment is risky. And that applies to NMR too. Any price prediction or forecast is no guarantee of performance. The market remains volatile too, which means it is wise to do your own research before investing.

Is Numeraire the right investment for you?

So, now you know a bit more about Numeraire, its current price, and its recent performance. Is it the right investment for you? This is something that only you can answer. Like all decisions of this nature, you must base your moves on your unique situation and preferences. Above all else, you need to make sure that you do not risk more than you can afford to lose if you invest in Numeraire.

It is, however, another example of why investors find crypto trading so appealing. The volatility and sharp price movements can create opportunities to return a profit on an initial investment.

At FXCM, you can trade some of the leading cryptos with zero commissions. If you are thinking about creating, diversifying, or hedging a portfolio, get real-time crypto quotes and trade using our award-winning app. With leveraged positions, go long or short on crypto with just a fraction of the underlying price as an initial deposit. Ready to get started? Open your account today.