What does AI have to do with Crypto? A lot, apparently.
If 2021 was the year of NFTs, 2023 seems to be the year of AI. Everyone is jumping on the bandwagon, even though artificial intelligence dates back several decades, with its origins traceable to the mid-20th century.
ChatGPT, Google’s Bard and Perplexity are all quite popular and well-known tools, and whether you fear the worst (job displacement) or are optimistic about the future (streamlining daily tasks), there is no doubt that an AI world is something we should all brace ourselves for.
As someone working in the Web3 space, I recently started to wonder what the intersections between crypto and AI are, and what impacts (both good and bad) might arise from the convergence of seemingly unrelated technologies.
With that said, let’s take a look at what AI has to do with crypto!
Some of the ways AI may impact Crypto
#ANALYSIS
If you know anything about crypto trading and investing, you will know that it is a full time job if to be executed properly and that analysis is absolutely key to success. AI-powered algorithms have the possibility to analyze vast amounts of data and market trends, hence able to develop more sophisticated trading and investment strategies.
The tech can also track and analyze social media sentiment, news articles, and other content to gauge market sentiment and predict price movements. This analysis can provide insights that traders and investors can use to make informed decisions.
#RISK AND FRAUD ASSISTANCE
We have all heard time and time again that the crypto market is volatile and to “do your own research” in order to be fully aware of all the risks involved.
Fortunately, AI can be used to assess risks factors and market volatility, all helping traders to manage risk more effectively — by assisting in identifying potential threats, investors can take precautionary measures.
On a similar thread, fraud and security cannot be underestimated and it is likely that artificial intelligence tools can detect fraudulent activities and anomalies. If there’s one thing that AI tools are good at, it’s identifying patterns and behaviors, and that is quite relevant when trying to track suspicious transactions.
#EXECUTION & AUTOMATION
Perhaps one of the most exciting possibilities for those actively trading and investing is the algorithms that AI tools have. With the potential to optimize order execution by analyzing market liquidity, it can be used to choose the best times to execute trades.
Similarly, AI models can be used to create predictive models for various aspects of the cryptocurrency market, such as predicting the adoption of specific tokens or the growth of decentralized applications.
#FROM THE USER PERSPECTIVE
Apart from the obvious means in which AI can assist in trading and investing, there are several ways in which we can make the user experience easier in the world of blockchain using artificial intelligence.
“Binance, a cryptocurrency exchange which got its start in China, recently introduced an AI-powered chatbot called Sensei. The chatbot is designed to enhance the learning experience for Web3, blockchain and cryptocurrencies. Chatbots could soon be capable of more than just educating users. They should create a more personalised experience for users as they navigate the blockchain world by offering tailor-made tutorials, recommendations and support,” writes Lily King, chief operating officer of Cobo for South Morning China Post.
“One key driver for users is having low costs and high speeds, especially for those in the DeFi world,” says Fiat24 co-founder Yang Lan. “I believe that AI will be used to optimize blockchain technology, specifically in the areas of improving the speed and efficiency of transaction validation. It can enhance scalability and energy efficiency by identifying and resolving bottlenecks and optimizing network parameters. This, in turn, will reduce transaction costs and enhance overall performance, making blockchain technology more accessible and efficient.”
#Key Takeaways
The symbiosis of AI and blockchain is a match made in tech heaven and we are only now on the cusp of realizing the various potentials of the crossovers. There are so many areas of crypto which can be improved by putting artificial intelligence technologies to good use, from security to trading and even mining.
Despite the fact that they are two radically different trends, researchers are actively discussing the benefits of combining the two technologies. PwC predicts that AI will add $15.7 trillion to the global economy by 2030, resulting in a 14% increase in global GDP. Gartner predicts that by the same year, business value added through blockchain technology will rise to $3.1 trillion.
Let’s not underestimate the power of this convergence and bear witness to the next level in the world of cryptocurrencies and digital assets at large.
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