An interesting scam involving timestamps

Security
1

(This is an old idea but I thought some of you might find it interesting)

A new crypto company claims to be able to predict the daily price directions (up or down) of the top 30 companies (by market cap) in the S&P 500 with perfect accuracy.

They claim that anyone who buys into their ICO will be added to a private email list and will receive – every day – an email that says whether each of the 30 companies’ stock prices will be up or down at the end of the following day. A real crystal ball for day traders.

Naturally, people are skeptical. So the company offers to prove their capabilities the following way.

Every day, for 30 days in a row, the company performs the following incredible feat:

At the end of day X they reveal a document that perfectly predicts the price movements (up or down) of all 30 companies that day. And they also produce a timestamp (using something like Peter Todd’s OpenTimestamps) that proves that the document was created on day X-1.

That is, they cryptographically prove that for 30 days in a row they were able to create a document that perfectly predicted the price directions of the 30 companies one day before the prices made their move.

Should you invest in their ICO? If not, why not?

3 Likes
2

So the answer is that you should definitely NOT invest in that ICO.

The “proof” the company provided can be produced by anyone, without any understanding of how stocks behave.

The trick is to, every day, produce 2^30 unique documents – one for each possible collection of price movements for the top 30 stocks – and timestamp all of them. (Timestamping these 1,073,741,824 documents can be done by storing a single 256-bit hash onchain).

Then, the next day, they simply reveal the proof for the one document that happened to match whatever happened on the stock market.

In other words, the scam company is making one prediction for every possible future outcome and timestamping all of them. But later they reveal only the timestamped prediction that matches reality.

4 Likes
3

Thanks for sharing @Austin-Williams and welcome to the community.

1 Like