by Satavisa Pati
February 27, 2022
Making money in the crypto market can now become a lot easier than before with the help of AI
The high volatility of cryptocurrencies not only increases the risks of crypto trading but also makes it more profitable than any other form of investment. Prices are subject to frequent fluctuations throughout the day, which, if calculated correctly, allows traders to earn a stable income. To calculate the patterns of the dynamically changing crypto market, it is necessary to process vast amounts of information, which artificial intelligence and machine learning systems can help with. Even now, billions of dollars worth of conventional assets, stocks, and bonds are being managed with the help of AI technologies. The use of ML and AI systems in the crypto market is not so widespread, but these technologies are being actively implemented in the cryptocurrency space, developing in three directions.
1. Use of Decentralized Platforms
Using a decentralized platform for creating peer-to-peer prediction markets is based on the experience of network participants. Nevertheless, it allows it to make fairly accurate predictions on cryptocurrencies. Augur announced the creation of its 1,000th market on August 16 of this year. Augur was developed by the Forecast Foundation, a nonprofit organization, to form accessible sources of public forecasting.
2. Use of Neural Networks
Neural networks help in making predictions about the dynamics of the cryptocurrency market. The system itself monitors exchange rate fluctuations, compares them, and predicts changes for the next day. It can improve the system by including technical and fundamental analysis in it. It can make life much easier for novice crypto traders who have not yet had time to learn the full scope of information. Of course, it is impossible to rely on prognostic platforms for everything, but they can take the lion’s share of technical analysis of the market and conduct it with high accuracy.
3. Market Sentiment Analysis
Determining the sentiment of the cryptocurrency market requires processing a lot of different data. This includes articles, blogs, forums, and even comments under them. Senno, a platform based on blockchain and artificial intelligence technologies does the analysis automatically and is able to give the result in a short time. The system also applies elements of machine learning in its work.
4. Connecting with the Right Broker
One of the problems of the cryptocurrency market is the lack of liquidity. Strong exchange rate fluctuations make digital currencies not very attractive as business payments. The difference between supply and demand is often compensated by high fees from exchanges and banks. To solve the problem, platforms like TradeConnect, which uses machine-learning technology, are being used. It uses a side-matching protocol and helps the customer find the right broker and bank, transact directly, and pay minimal fees.
5. Use of Virtual Assistant
Individual companies are specifically engaged in the development of AI platforms related to the provision of services in the cryptocurrency market. For example, the Money Token team created AI assistant Amanda, which will lend to members of the cryptocurrency community. The virtual assistant will be able to provide loans against cryptocurrency collateral and deal with full support – from the moment of application till full repayment of the loan.
6. Maintaining Security when Using Cryptobots
It is necessary to be careful when entrusting someone with the API keys of your exchanges. Only trusted services with a good reputation deserve it. After all, the API key is a kind of permission to use your account, including trading through it and the withdrawal of funds. Any bot requires the API to work, that in itself is not a sign of fraud. Examine each platform carefully before you start working with it. Find out what security methods are used there. Always activate two-factor authentication to limit account access.
7. Making Automated Trading
Robots are mostly used to automate trading on exchanges. Such implementation of algorithms is due to a good set of advantages of speculative activities carried out through crypto bots. The trader does not need to incessantly monitor the virtual currencies market and constantly calculate the moments to open positions. The use of crypto robots to trade digital assets eliminates the fear factor and the element of emotional state in trading decisions. Most novice crypto-traders lose deposits solely due to psychological and emotional instability and neglecting the rules of their own trading strategy;
8. Data Monetization
The process of data monetization is going to help smaller companies to easily do their crypto trading. As of now, developing and growing AI is costly for organizations, especially those that do not own data sets. A decentralized market would create space for such companies for which it is otherwise too expensive.
9. Making Diverse Datasets for Blockchain
The combination of Blockchain and AI can create smarter and decentralized networks to host various data sets. Creating a blockchain API would enable the intercommunication of AI agents resulting in diverse codes and algorithms to be built upon diver data sets, ensuring development.
10. Smart Computer Power
Using machine learning codes helps users to upgrade the operations and retrain when the right data is received. It enables them to tackle the tasks more efficiently and intelligently.
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