• Content Writer, at Morpher Labs


• 18.08.2023 11:30 am
undisclosed

Mentioning the convergence of AI and crypto may seem a bit overwhelming, but it's a thrilling concept to explore. Far from being unrelated or antagonistic, these two fields are discovering profound synergies that can redefine the boundaries of technology and economy. Let's delve into the intertwined world of AI and crypto and their emerging collaborative innovations.

To appreciate this convergence, it's essential to understand the individual strengths and purposes of both AI and crypto.

Starting with AI: Recall the essays from the 2010s proclaiming, “Software is eating the world.” Fast forward to 2023, AI has eaten software. This transformative nature of AI enhances software capabilities beyond our wildest imaginations. Whether it's Siri answering our questions instantly, Tesla's autopilot driving cars on its own, or Spotify's algorithms suggesting the perfect song for our mood, AI boosts what we can do. Now, even small groups using AI can match the big players in the industry. For our discussion, let's consider AI as the epitome of online automation, providing boundless possibilities in the digital realm.

On the other side of this synergy lies crypto. It promises a solution to longstanding financial and transactional dilemmas, particularly the principal-agent problem. Crypto dreams of an inclusive financial landscape, granting everyone a stake in the colossal economy of the internet. It's about making finance ubiquitous – where once people connected online via phones, now they can effortlessly transact and earn with crypto. Beyond simple transactions, crypto enables users to have a stake, granting equity in online ventures. From a security standpoint, crypto offers something AI doesn't: irrefutable authenticity. AI cannot replicate or forge digital signatures, ensuring the integrity of crypto transactions. For our exploration, envision crypto as the digital sentinel, embodying scarcity and security in an increasingly automated world.

AI's Growing Role in Cryptocurrency Trading

As we already know, AI's capacity to process vast amounts of information far surpasses human capabilities. Finance companies have especially made use of that, by decreasing their amount of human traders and implementing machines for trading. 

With this artificial addition to the team, there might be many more ways on how to understand complex trading patterns, such as candlestick patterns. For the uninitiated, these patterns look like little candle drawings, but to a seasoned trader (or an AI), they're vital clues about where the market might head next. 

But the transformation doesn't stop at chart patterns. The depth and breadth of financial markets present myriad opportunities for AI-driven innovation. For instance, AI could overhaul risk assessment by synthesizing vast amounts of data points—ranging from geopolitical events to minute shifts in consumer behavior—providing traders with profoundly holistic risk profiles. Or, in the realm of derivatives, AI might conceive entirely new financial instruments tailored to the unique needs and risk appetites of investors, much like how personalized medicine is revolutionizing healthcare.

With future superior AIs, it might actually pinpoint the optimal moments to buy or sell cryptocurrencies to maximize gains. For example, if a stock is surging, AI might highlight recent news or company announcements that influenced that surge. This is particularly helpful for beginners, breaking down the often complicated world of trading into bite-sized, understandable insights. Plus, there's no need to be tied to the news cycle constantly. When traders want a deep dive, AI can guide them to the latest, relevant news articles, ensuring they always have the best information at hand. In essence, AI is making trading more accessible, informed, and efficient for all.

With systems like this actually being able to work 24/7 basically, we might see a future where many individuals have their AI "assistants" managing cryptocurrency trades. These AIs could provide a passive source of income, automating the intricacies of trading while individuals go about their daily lives. Just as other sectors have embraced automation, the world of cryptocurrency trading is on the brink of its own transformation.

Personalized User Experience in Crypto Platforms

Not only does AI change how investment companies approach financial markets, but also for retail traders there are many AI tools that enhance the experience. A noteworthy case study is the "ChatGPT Portfolio''. This initiative suggests that ChatGPT may possess capabilities to make stock selections with comparable precision to that of established hedge funds. Investors have entrusted approximately $33 million to this program, reflecting their confidence in ChatGPT's algorithmic recommendations.

Additional platforms, such as Composer, further enhance this approach by enabling greater strategy personalization. Users may submit queries such as, "Which stocks align with a forecast where AI plays a significant role in the future?" Consequently, they receive stock suggestions that mirror insights typically provided by experienced market analysts. As an interesting example you could create portfolios according to a certain worldview, or even ask for a very unique portfolio like the “Activist Short-Seller Portfolio” where the AI would quickly go through all the recent short-selling activist portfolios and give you the latest insider picks. 

For investors who may not have deep technical acumen but possess a forward-thinking perspective, this change is perfect. It allows you to focus on what's important, a certain vision and knowing where to place your bets in the market. The AI responds by devising a well-considered, customized investment strategy, serving as a bridge between intricate market analytics and the objectives of mainstream investors.

Future Prospects: What Lies Ahead

AI is enabling the rise of a pseudonymous crypto economy. The pseudonymous economy is an economy where we mostly interact preserving our real identity. Smart-contracts will ensure the completion of the agreement and people will be able to choose how they want to present themselves online. With AI filters, people can alter their appearance and voice, creating digital personas that can interact in the online world. Crypto complements this by providing a digitally-native currency that these personas can use for transactions. 

Today, while individual nations such as China and the US boast formidable economic clout, the burgeoning internet economy stands unparalleled. It transcends borders, connecting billions of users and facilitating a myriad of transactions daily. Interestingly, cryptocurrency has emerged as the native currency of this digital realm, presenting an opportunity for seamless, decentralized financial interactions. Nations like India are poised at the cusp of this digital revolution. Projected to soon constitute the majority of global internet users, yet with only about 50% of its populace online, the potential scale of India's participation in the internet economy is staggering. Reflecting upon a mere decade ago, when less than 8% of the populations of countries like India and Pakistan were internet-enabled, this growth is nothing short of phenomenal. AI stands as a game-changer in this context, democratizing opportunities. Even individuals without prior technical prowess can now create high-quality digital content or develop software, thanks to AI tools. Yet, a fundamental question looms - how can these digital contributors, many of whom lack traditional bank accounts, be compensated for their work? Cryptocurrency offers a compelling solution, heralding an era where the global economy is not only digital but also inclusive, bolstered by AI-driven contributions from every corner of the world.

Conclusion 

The next decade will not be without challenges. As the interplay between AI and cryptocurrencies deepens, concerns about security, privacy, and the potential for AI-driven market manipulations will arise. Rules are changing quickly because of tech. With these changes, there will be problems, but also great things. We expect better blockchain thanks to AI. Our crypto wallets will improve, and we'll have top security. More people, even from distant places, will use the internet because of AI. Both technologies AI and Crypto will have profound impact and we still do not quite know how they will work together. Perhaps these two quotes by exceptionally smart individuals will shine some light on the future, so you can make up your own mind: 

“AI will be the best or the worst that has ever existed for humanity." Elon Musk

“Things that look interesting to smart people usually do so because they are rich with product possibilities. These possibilities eventually become reality. Toys become must-have tools. Weekend hobbies become mainstream activities. Cynics sound smart but optimists build the future.” Chris Dixon

AI and crypto are big game-changers. Everyone, from makers to users, must be smart and safe. These tools can change our world, making things easier and better for many. But with these big steps, we need to be extra careful. Safety, privacy, and doing the right thing should be our top goals. This is an invitation to all stakeholders: let's collaboratively forge a future that is not only technologically advanced but also grounded in principles of fairness, transparency, and inclusivity.