Gamers are playing the stock market with someone else's $50,000

Gamers are playing the stock market with someone else's $50,000
Posted at 11:51 AM, May 31, 2017
and last updated 2017-05-31 08:45:12-04

(RNN) - Online video game streaming service Twitch has played host to several unique projects, but the latest - which involves $50,000 of someone else's cash - is particularly noteworthy.

StockStream is the latest interactive channel on Twitch. It allows users to buy and sell stocks using another person's money.

But who would be willing to put their hard-earned cash in the hands of thousands of complete strangers?

Channel owner and software engineer Mike fronted $50,000 from his own pocket to make the stream a reality. Mike withheld his last name to remain anonymous.

“I'd seen the idea posted around on some subreddits, so just decided to build it," Mike told Polygon. “I just read peoples buy/sell commands from the chat window, do a simple counting of each vote, take the top vote and place that trade. That part of the system was actually easy to build — the tough part was building the UI and getting the system to a stable point where it was ready [for] long-term usage.”

All buying and selling is done through the Twitch chat, which allows users to post commands like "!buy TSLA," signifying a vote in StockStream's system for a purchase of automaker Tesla's stock. After five minutes, the votes from each user are tallied and the stock with the highest vote count gets sent to a review process that scores that trade's return on investment.

Each Twitch user participating in the stream has a numerical point value assigned to them. If they vote for a trade that ends up profitable, they gain points; if they voted for a trade that lost value, they lose points.

When selling trades, the system works in reverse.

Mike said he was worried about losing cash at first.

“Before today, I was a bit skeptical — thought I might lose money quickly, but things seem OK,” Mike said. “Now that a lot of the money is diversified, the swings in value should start getting bigger. I ran some simulations with some made-up data, and calculated that it would last at least a couple months."

Here's a whole day of trading from May 30.

According to regulations imposed by the Financial Industry Regulatory Authority, the stream must stay above $25,000. This is meant to mitigate the devastating consequences of bad day trading.

As of Wednesday morning, the stream sat at $38,260 in liquid cash. And surprise, surprise: the $50,000 Mike initially invested has grown to $50,134.

Twitch's interactive streams began with "Twitch Plays Pokemon" in February 2014, where users had to work together to complete Pokemon Red by putting commands in the chat, like StockStream's method of action. The social experiment has spawned numerous channels dedicated to the idea.

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