Over the past few years, one of the most incredible as well as obliterating technological innovations has been the introduction of cryptocurrencies. The agility and unpredictability of the crypto market has offered a great deal of opportunities to both amateur and seasoned investors and nowadays nearly everyone who has had an encounter with this volatile market is in the grip of its limitless possibilities.
Whilst being a rather easy-to-enter principle, it is hard to master. I have had many conversations with peers who decided to invest a small sum of money to simply explore the cryptocurrency, returning empty handed. This, however, could come to an end relatively quickly. Another booming technology, artificial intelligence, turns out to be a natural fit to crypto traders. In many cases of failed crypto investments, the reason for their project to run aground was the speculative nature of crypto trading. Artificial intelligence is the exact solution to this problem. Rather than speculating and guessing what your next investment should be, through AI, well-endorsed data-based decisions can be made by anyone. You have a basic knowledge about investments but no idea where to start in the crypto market? Artificial intelligence could be your solution.
Firstly, AI gives confidence to the less experienced traders which enables more people to take a shot at crypto trading. Furthermore, AI greatly reduces the time to acquire and analyse data which would normally be done through the human mind. Whilst this is a great reason for entering the crypto market as an amateur, it also negatively affects the market for it normalises the accessible information. Lastly, AI allows users to make well-advised decisions which is a solid basis for trust in the cryptocurrency of choice. Consequently, the volumes of these currencies increase.
Naturally, the introduction of artificial intelligence to the crypto market is not going to encounter its own problems. Since AI is greatly dependent on data, the youthfulness of cryptocurrencies in general might propose issues with respect to data acquisition. Also, whilst operating largely autonomously, AI still needs a human mind to monitor and tweak the embedded algorithms. Besides these issues, there will always be the problem of the cost of the service. Once a successful artificially intelligent cryptocurrency system is built, who can predict what the price tag for access to the system will say.
All in all, artificial intelligence seems to be the future in dozens if not thousands of markets worldwide. Likely it is not a matter of ‘if’ but ‘when’ AI will be taking over the crypto markets. The only question is: will you be there to take advantage?
http://bigdata-madesimple.com/artificial-intelligence-and-cryptocurrencies-4-things-you-need-to-know/
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Thanks for your post, Ramon! First of all, I really appreciate your style of writing; nice choice of words and a good flow, which make reading your post that much better! Regarding the potential of AI for crypto trading, you indeed discuss some key advantages, which would definitely be beneficial to (some) investors. However, I think AI could also disturb the crypto exchange. You already discussed some relevant drawbacks of (current) AI systems. Besides these issues, I think that crypto trading – or any exchange for that matter – requires winners and losers. More specifically, speculation, lack of rational behaviour, and lack of information are among the major factors to influence prices of crypto, and, therefore, investors’ loss or profit. By implementing AI, which basically removes these factors, ‘players’ in the market will become increasingly equal in terms of information and investment behaviour. In short, AI would create a more ‘perfect’ market, which might undermine the forces on which exchanges and crypto trading greatly depend. Would you think such a perfect market would still sufficiently incentivize investors to buy crypto? I would love to hear your opinion on this! Thanks for your interesting contribution!