Background on Markets
Let me just start by saying that markets work. They coordinate people efficiently while communicating prices in a transparent manner. That’s why we have financial markets. Imagine a world where you get prices from a single person or a small group of people (sound like housing at all?). Any chance those prices would be incorrect or have artificially large profit margins built in?

Markets are probably among the first creations of man. I can imagine that X thousands of years ago, some guy living in a cave went out and decided to trade his five roots for a leg of antelope and, magically, a market price was established. So 5 roots = 1 antelope leg until demand or supply of one or both sides changes.

So we know markets work and that they have been around forever. They work because they are open, transparent, and continuous! They are living, breathing entities that are constantly communicating the net outcome of all participants opinions and motivations.

What we are doing
My-Currency is leveraging this fact that people can process information better than machines to arrive at value. The premise is that you need FULL information to arrive at value and the only way to get full information is to use a mechanism that is open, transparent, and continuous. Something that ‘sponges’ information and opinion from every conceivable corner and do battle with others.

We go further and we give you a peak into future expectations of housing at very granular levels. You are buyer or seller and trying to decide on timing? Look at our futures markets on zip code value per square foot and see what the community thinks the value WILL be.

Do models work?
Much of the way valuation analysis and modeling is done depends upon backward looking or incorrect data (e.g., XYZ house was expanded in 1995 but the tax records don’t reflect this) as well as general human biases.

Furthermore, the problem with mathematical models, called AVM’s, is that they are limited to sales information, tax records, and economic information. What about less tangible items like the fact that the house next door is falling apart and full of college students having parties? Or that the beautiful building across the street is going to be torn down and replaced with a garage NEXT year? Or just that there is more buyers than sellers at this point in time?

What we solve
The problem we are solving is that people want valuation information as well as contextual information (What is the neighborhood like? What is the community like? What do people think of the schools?). Additionally, consumers who need help have problems differentiating between various professionals – the question is who is smart? Who understands value so that I can get the best deal? Who is clearly connected to the community that I am buying or selling in to give me depth of knowledge to maximize my transaction?

If you are a professional, we provide you with the opportunity to show the world you are smart. We are only interested in revealing expertise, NOT revealing the lack of expertise. So if your predictions or contributions earn you status above median, we will reveal it giving you the opportunity to be discovered by current and future clients.

Gaming & Incentives
There seems to be concern that we haven’t thought through the gaming aspect of using markets. Let me just say, I have been a derivatives trader for 15 years and Vice Chairman of the Pacific Exchange (now part of the NYSE) and so gaming is front and center for anyone in the financial markets – its called, among other things, ‘painting the tape’, ‘cornering the market’ and ‘insider trading’. History is filled with these stories so this is nothing new and I have experienced all of these first hand. This is largely why there are regulations if the financial markets. Have you ever heard of the SEC or CFTC?

My-Currency does have anti-gaming algorithms in place but they are turned OFF because we want to observe behavior during our Alpha period. Long-term, we believe that if My-Currency can grow a large and diverse enough community, we won’t need anti-gaming algorithms because price inefficiencies (prices manipulated to achieve some real world outcome) will be exploited by people who have opposing incentives or those who are motivated by or aspire to achieve reputation. The best thing that can happen, if you are trying to make your mark with community, is to hunt down prices that are misaligned with reality and bring them back into line – and therefore earn community status (reputation currency).

Bottom line: Will there be gaming? Yes - even the financial markets observe this. Can gaming be managed? Yes – explicitly through our algorithms and organically through community.

Aggregation of users
Markets need people. If we don’t get people to come then we wont have markets. The number of people for a market to succeed is not that large – probably as few as ten. The markets for a single house have an excellent opportunity to exceed this number. A typical open house in San Francisco will get 50 – 100 agents plus their clients, neighbors and voyeurs. So the total potential audience is in the hundreds for a house. For our indexes, clearly it is even larger and has more relevancies for a broader base of users.

Also, please consider how things occur now. As a buyer or seller, you will get your valuation information from a computer model and your agent. I suppose the question is, would you rather have a small group of people who are motivated by building and maintaining a public reputation give you their collective wisdom or depend on a black box sitting in a basement in someone’ office? Perhaps the word of an agent whose skill set isn’t transparent is better?

My-Currency gives you the opportunity to both get that wisdom of crowd values as well as the wisest of the crowds vetting – that is, it gives you who makes the best predictions and who therefore who are the experts.