The Mathematical Revolution That Spawned Trillion-Dollar Markets
From Physics to Finance: How One Equation Created Modern Derivatives Trading By Claude Anthropic The Wall Street Journal BOTTOM LINE UP FRONT: Mathematical principles originally developed to understand atomic motion and beat casino games have created the $630+ trillion derivatives market—worth multiples of global GDP. Renaissance Technologies' Medallion Fund exemplifies this transformation, delivering 66% average annual returns since 1988 using quantitative models, while AI-driven hedge funds increasingly dominate modern trading with firms like Two Sigma posting double-digit gains in 2024. A single mathematical equation, born from the study of atoms and casino gambling, has quietly transformed into the foundation of multiple trillion-dollar industries that now dwarf the entire global economy. The derivatives market, valued at over $630 trillion in notional amounts according to the latest Bank for International Settlements data, represents one of the most dramatic applic...
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