It seems that AI and machine learning are having a moment; the public is more aware of them than ever before and everyone is testing their capabilities. And from all indications, there is plenty to test. AI, for example, has been applied in every sector from content creation to business.
But what about the crypto industry? Crypto lovers and those in the industry are notorious for embracing new tech and being highly experimental. What can AI and machine learning offer them? In a nutshell, both technologies can improve existing processes and even create new ones.
One of the most common uses of tech like AI and machine learning has been the automation of processes to save time and effort. More than likely, AI will be leveraged to automate processes like trading with the crypto industry. To understand this, we need to keep in mind that AI tools like ChatGPT can be programmed to behave in certain ways. This means that an AI could be easily programmed to make certain trades at certain price points or even vaguely be told to trade a token in a way that maximizes profit. The exact efficiency of these tools will need to be ironed out over time, but it could be done.
One of the biggest things in the crypto industry is price prediction. At any given time, someone is predicting when the price of Bitcoin or any other token will spike or fall. But what if we could get predictions based on the most precise data analysis on the planet? Thanks to machine learning and AI, we probably can. Both systems have the ability to recall and analyse past data down to the tiniest market movement and detect patterns that humans might otherwise miss.
This sort of price prediction also helps when it comes to non-speculative crypto use. When you look at the list of top crypto casinos in the world 2023, you’ll see that many people use crypto to gamble. And this sort of application, along with online retail, thrives on price stability. As such, being able to predict price movements means that such people can use crypto without fear of volatility will be a big help.
Anyone who has ever tried to mine cryptocurrency can testify to how much of a cumbersome and expensive process it can be. But this reveals yet another possible capability of AI and machine learning, especially when it comes to saving costs.
Applying AI to mining systems means that these tools can offer solutions on how to minimise costs. These could be through picking what chain to use, choosing the proper hardware, leveraging blockchain networks, and much more.
Simply put, AI and machine learning can analyse past mining data and determine at which points profits can be best maximised and make predictions based on these. This application is a bit more novel than things like AI-based token trading, but they seem to be on their way.
Like any industry that deals with money, the crypto industry can always stand to benefit from an improved security system. This, thankfully, is something both machine learning and AI can solve. In the case of machine learning, such a system can be used to analyse past data to make recommendations for things such as KYC requirements and the management of customer data. It can also be used to flag potentially fraudulent profiles and activities on blockchain networks before they go through. A human-led system might have some blind spots, but machine learning might be able to assist by spotting behavioural patterns that should raise red flags.
In the past, DeFi systems have been exploited by malicious users and if their behaviour within these ecosystems is analysed by AI and machine learning, it can possibly be spotted faster and stopped should they be repeated.
So many existing blockchain and financial systems depend on smart contracts, which means that they must be designed and deployed as efficiently as possible. A possible application of AI could be the designing of smart contracts initially and their testing before they are deployed.
While it might be tedious, for example, for a human to manually test smart contracts, an AI could run them through a myriad of tests in less time and with faster efficiency. When properly programmed, the AI could be on the lookout for bugs and other abnormalities. AI could also offer insight into the ways in which smart contracts could be exploited and help prevent these ahead of time.