The Role Of Artificial Intelligence In The Cryptocurrency World!

AI or artificial intelligence, in the form of chatbots who can trade, has gained prominence in this field.


AI Plays An Important Role In Cryptocurrency Trading

Cryptocurrency is the digital currency of people who wish to keep their money away from the restrictions of the government. Though not yet accepted as legal currency in most currencies, it is immensely popular among the wealthy across the globe. In fact, there is bitcoin and stock trading of cryptocurrency.

The extremely dynamic and constantly in flux nature of the bitcoin and cryptocurrency market makes it a very risky place to trade unless you are constantly updated of the market trends and activities. If you miss a trend, you risk losing a lot of money. For this specific reason, AI or artificial intelligence, in the form of chatbots who can trade, has gained prominence in this field.

Moreover, emotion is one of the biggest challenges to overcome when it comes to trading. The vast gains and unregulated swings in the cryptocurrency market have the potential to upset even seasoned traders. Human psychology becomes the crucial link in cryptocurrency investments and can hamper the decision-making capacity. As such, it can be said that human emotions can be at times irrational and bad decisions, as a result, can cost a lot of money.

AI In The Cryptocurrency World

This is where machines come in. They have more discipline in such scenarios as machines have no emotions and hence, can be rational in decision making. In a scenario where a human is facing cognitive dissonance making good decisions, let alone investment decisions is not possible. Automated trading technologies are designed to remove the emotion and bias aspect from the trading equation.

These technologies can, therefore, break the risk into its simplest elements before proposing a trading decision. It is similar to the binary if-then function in computers.

With advancement in the AI and Big Data technologies, the fruitfulness of automated trading has increased manifold. This is because there is immense data in the field of investment and this data can be eschewed by the bots to determine trends. Moreover, the cryptocurrency world, much like institutional markets, generates large amounts of data everyday.

With the help of big data and AI tools, it is now possible to evaluate and analyse this data in very short times to determine the course of action for investment in cryptocurrency.

High frequency trading is a result of these expedited executions which are performed by extremely complex algorithms which make instantaneous decisions with regard to buying and selling. Predefined rules guide these decisions. Obviously, technology is quicker in calculating risk and decoding information and hence, is very useful for the investment segment whether institutional or cryptocurrency.

With the fact that cryptocurrency is completely digital, the use of AI becomes even more natural.

Blockchain Technology Levels The Playing Field

One of the things about cryptocurrency or the blockchain technology is the fact that it levels the investment playing field for all players. The transparency in data sharing in blockchain technology leads to a market scenario which cannot be paralleled even in the centralized exchanges. Since the market is still untouched by institutions and regulatory norms, machine learning and AI become more useful introductions.

AI and machine learning tools and technologies help comb the internet for the widespread trading sentiment thereby culling the best potential opportunities for their users which are devoid of the human bias or emotion. These tools can identify patterns and analyse multiple variables at the same time to come out with actionable strategies. These strategies can be used to create money through the token system of cryptocurrency.

One of the examples of AI and cryptocurrency that has gained popularity is that of Daneel Assistant Company. They use IBM’s Watson for data intelligence solutions which help investors make better and more informed decisions. Watson is a renowned tool for its ability to interpret natural language and emotions. It’s proven success across other fields has made it a natural choice for the cryptocurrency market as well.

The decentralized structure, different infrastructures and several information sources of the cryptocurrency market make AI a great support system for it.

About the Author: This article is contributed by Amit Dua – Co-Founder & CEO at Signity Solutions and ValueAppz.

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