Artificial Intelligence (AI) is the process of enabling machines to think and act like humans by integrating human intelligence in machines. It also involves the study of benefits & applications of machine intelligence in the real world.
Many experts believe that AI could effectively disrupt the crypto trading industry by providing traders with actionable data based on a thorough and automated analysis of the historical trading records. These data can help closely predict the outcomes of future trade events.
Cryptocurrency trading is now a fully-fledged activity, followed by thousands, if not millions, of traders worldwide. All these traders are constantly looking for ways to improve their trading abilities and acquire better resources in order to increase the profits from crypto trading.
If you are one of these traders and wondering whether and how AI can revolutionize the crypto trading industry, this article is all you need right now.
For almost a decade now, organisations have been experimenting with the use of AI for crypto and digital trading.
AI, when integrated into traditional trading systems, can effectively automate the tasks such as data management, reporting and analysis. It can also use past data and trends to predict future trading trends and even results.
AI in integration with machine learning can even be programmed to learn new things from the available data and adapt itself to modern trends. This is particularly useful in data-driven industries like asset trading.
Artificial Intelligence learns new things based on data with the help of neural networks. Neural Networks are like connections within an AI-based system that enable the system to learn to perform a task by seeing/following an existing example. This removes the need to program the system and enables it to adapt to dynamic situations.
Neural Network is a term inspired by the neural networks in the human brain to suggest that these artificial networks work more or less the same way. Just like the human brain that can learn new things or tasks by seeing, neural networks in AI can also learn to perform a new task based on the information/data fed to them.
In the crypto trading space, neural networks can theoretically enable AI to develop & implement its own trading strategies by reading & analysing the available data to drive even more successful trade results.
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In any kind of trading, automated bots or AI has an obvious edge over humans.
Humans take trading decisions based on emotions. Such decisions may be impulsive and taken in haste. On the other hand, AI makes trading decisions through proper calculation and in an automated manner.
Human-based trading works on a fixed schedule, and not round the clock. The crypto trading market using AI, on the other hand, can be open 24/7, which is certainly a more profitable option.
Since AI takes decisions automatically and based on data, it’s much faster than humans, who may tend to overthink things rather than acting on time.
Traditionally, the use of computers in trading has been limited. It’s because we always believe that nothing can replace human intelligence and emotions in a trading decision. And most of the time, we are even true. But who says that AI cannot make it better.
One of the reasons why human-based trading has always been able to give only limited profits is our very basic nature of making errors and also the humans’ need to sleep. Because we are driven by our emotions and have limited attention span, many times our decisions do not bring the results we want. And as I said above, humans, unlike machines or AI, cannot work 24/7 and need to sleep.
AI, on the other hand, can handle everything automatically, has zero probability of errors, does not need sleep and can even learn to grow itself. So, it’s obviously a better trading mechanism compared to humans.
Now, many people confuse AI trading with bot (robot) based trading. But, these are two different things. Let’s see how.
Bots are software programs that can be designed to do specific things. In the crypto trading industry, bots are used to automatically process trades based on the available data or trends.
Bots are only capable of automating a process based on the underlying instructions or program, but they do not have their own thinking capability and cannot adapt themselves to dynamic or changing market conditions.
AI, on the other hand, can automate a task as well as adapt itself based on the changing trends to achieve better results. Basically, it is designed to learn and adapt.
Since bots have limited learning capabilities, they are inferior to artificial intelligence and/or machine learning when it comes to learning & adapting themselves based on market trends.
If you are wondering where you can see the real example/s of a crypto trading platform that uses artificial intelligence to analyse and improve the end results, check out the Cowrium project.
Cowrium is a blockchain platform that consists of multiple projects or solutions based on real-world problems. For instance, they are building a system called the Cowrie Stability AI, which uses artificial intelligence neural networks to predict the market and suggest a solution based on the analysis of the previous trading data.
The idea is to enable traders to come up with a foreseeable solution through the deep analysis of available data. Thanks to the integration of ML and Neural Networks, the system can also adapt itself to suggest better solutions based on the market trends.
The Cowrie Stability AI system is still in the testing phase, and the real market scope and usability will only be known after the official launch (probably later this year).
There are a number of other companies that are experimenting with the use of AI and machine learning in crypto trading. The best examples include RoninAI (An AI-driven trading platform that delivers trading signals based on analysis of market trends), AiTrader.Ai, and AutoNIO.
But, as I said, most of these projects are under development or testing, and more about the actual impacts of AI on crypto trading will only be known in the coming future. Till then, let’s keep trading with the available tools and options.