AI is gaining control. AI image creators like Midjourney and Dall-E, as well as language bots like ChatGPT, have demonstrated the power of artificial intelligence. Already, IT firms are rushing to incorporate it into their models. Microsoft is supposedly nearing completion of a $10 billion deal with the developers just weeks before its release.
Despite its ups and downs, crypto has established itself as a significant actor in the global economy. Some people are investing all of their assets in Bitcoin and Ethereum. The cryptocurrency market will rebound in a big way, according to many.
But when combined, AI and crypto? There is untapped potential that we are just now starting to put to use. Both industries could be transformed by it.
The issue with cryptocurrency investments
Cryptocurrency operates differently from a conventional financial system. Cryptocurrency prices can fluctuate wildly. The burden of the economic slump has caused more than one coin to fold.
Many criticize the lack of regulation, yet cryptocurrency was created out of greed during the 2008 recession and a desire to avoid using large banks. The issue? There is little recourse, fraud is widespread, and crypto hackers are many. By August of last year, around $2 billion of crypto had been stolen. Many people wouldn’t ever get their money back.
All in all, investors losing money is starting to give cryptocurrency a bad reputation. The solution seeks to tighten compliance without complete regulation maybe AI.
Why crypto and AI complement each other so well
Pattern recognition is an area where AI excels. Although the idea of decentralizing money is admirable, it is not currently being implemented well. Here’s why we might be able to detect the beginnings of a lovely friendship.
Detection of fraud
Anonymity is crucial to cryptocurrencies and the blockchain. This leaves it open to a variety of frauds, including outright theft and market manipulation. These widespread cash grabs might be avoided with the help of an AI algorithm that has been taught to spot irregularities in transactions.
Risk protection
Many people believe that trading cryptocurrencies are riskier than most. After last year, it’s reasonable to assume that AI will be able to protect investors from significant losses through algorithmic trading.
AI is faster than humans in recognizing trends and making decisions. This works well for trading, and it makes even more sense when you include volatile crypto in the mix.
With bundles of crypto trades that resemble ETFs, the average retail investor can benefit from this. Not to mention that more investors will join the fray if cryptocurrency is seen as being less risky.
Automation
The biggest advantage of integrating AI with cryptocurrency may be this. Your knowledge of the subject will play a huge role in your cryptocurrency investment decisions.
The days of putting in hours of study to figure out which cryptocurrency coins or tokens to buy are over. AI might make all of your decisions, saving you important time. It might also lessen any potential human error in cryptographic data.
Where might AI and cryptocurrency go?
The crypto sector may be significantly impacted by AI in a few years. It has the capacity to manage trading choices, compliance, and risk all at once. Here are some examples of how AI might be useful to cryptocurrency investors.
Sentimental analysis
Natural language processing enabled by AI could suggest the best cryptocurrency to purchase. The AI algorithm would rapidly determine how the general public feels about different currencies if it were given access to the relevant streams of data, such as Twitter messages and news stories.
NLP may also be used to forecast prices, spot potential hazards with a crypto, or estimate future growth based on the volume of conversation surrounding it. It’s a clever AI program that might take over the cryptocurrency industry shortly.
Decentralized autonomous agents
If you are familiar with Web3, you are probably aware of DAOs. However, you might not be familiar with their cousin, DAAs. These agents are computer programs that have been coded to act as agents.
What role do these play in crypto? The DAA develops into a potent AI-driven fund manager. You shouldn’t be concerned about bias or human error. While artificial intelligence manages your cryptocurrency holdings, you may unwind.
Customer experience
AI might be employed to finally mainstream cryptocurrencies. The complexity of the technical terms and understanding required to conduct a transaction is currently one of the biggest barriers preventing cryptocurrency.
AI might produce customized recommendations based on risk tolerance, customize marketing and communications to a user’s browsing preferences, or provide curated lists of crypto-related educational materials.
After the entry barrier was removed, it might not take long for crypto to become as commonplace as Visa or Mastercard.
Security and adherence
Financial organizations could use AI to defend the banks if they can swiftly pick up on it. AI monitoring indications of financial crime would make compliance and anti-money laundering systems easier to execute.
AI-monitored real-time transaction systems might detect anything suspicious and add an extra degree of security to crypto, something banks frequently lament is lacking.
Exist any negative aspects?
The fact that AI is still in its early stages is the biggest worry. Before it becomes a mainstream, commercial entity capable of meeting the demands of a multibillion-dollar market like bitcoin, it will be years from now.
To be trained, AI needs a lot of data. That data could cause issues if it contains any bias at all. In the case of cryptocurrency, we might observe the emergence of market manipulation fueled by AI.
The riskier aspect of Microsoft’s anticipated substantial investment in ChatGPT is that it might completely remove it from the market. Large corporations may totally possess the technology, in which case they would control the cryptocurrency market. It wouldn’t be encouraging for any innovation if a small group of people controlled the power of AI.
Having said that, artificial intelligence cryptocurrency is a fascinating new prospect that is inspiring much hope in the crypto community. Given how quickly both of these sectors are developing, it’s only a matter of time before AI and cryptocurrency make some significant strides together.
