Since its launch in November 2022, ChatGPT has created a wave of hype and speculation about the various ways artificial intelligence (AI) could be used to revolutionize cryptocurrency trading. That led to the big boom in AI crypto tokens in early 2023, as well as the search for possible integrations with ChatGPT for crypto traders.
Here is an overview of the latest tools and techniques. These can be divided into the following three categories: cryptocurrency trading bots, decentralized finance (DeFi) bots, and AI bot markets.
Cryptocurrency trading robots
With automated trading bots already popular with stock market investors, it is perhaps not surprising that the same tools and techniques are now being adapted for crypto trading. There are now crypto trading bots powered by ChatGPT, crypto investment portfolios designed by ChatGPT, and even ChatGPT crypto market prediction contests. On social media, it's not uncommon to find influencers and YouTube creators touting all the ways ChatGPT is helping drive "crazy" and "crazy" portfolio returns.
Image source: Getty Images.
It is now surprisingly easy to build your own cryptocurrency trading bot using ChatGPT, even if you have no prior coding experience. ChatGPT is capable of generating computer code based on a simple natural language message.
For example, if you want a Bitcoin (CRYPTO: BTC) trading strategy focused on long-term returns, you can ask ChatGPT something like, "Give me the computer code for a dollar cost averaging (DCA) Bitcoin strategy", and voila! You will have the computer code available in seconds. ChatGPT will even tell you what parameters you'll need to adjust (for example, "buy frequency" and "buy amount"), as well as where it gets its Bitcoin price data from.
DeFi bots
AI also has the potential to disrupt the world of decentralized finance. After all, smart contracts used in decentralized finance are just small pieces of self-executing code. If ChatGPT is capable of generating the computer code for a cryptocurrency trading bot, shouldn't ChatGPT also be capable of writing smart contracts?
I experimented with a simple prompt ("Give me the computer code for an NFT smart contract that pays royalties with every NFT sale"), and again, ChatGPT delivered the code immediately. Also, ChatGPT knew that he was probably going to mint these NFTs in the Ethereal (CRYPTO: ETH) blockchain, so he wrote the code in Solidity, which is the programming language of choice for Ethereum.
This is really just the tip of the iceberg of what is possible with DeFi. For example, Omni is a new crypto robot for the Solarium (CRYPTO: SUN) blockchain that will soon allow you to participate in passive income strategies like crypto bet. This bot has been trained with data from Solana and is an expert in DeFi.
These types of DeFi bots go way beyond just chatting about DeFi: they will soon be able to move funds between different crypto wallets and connect to different DeFi protocols.
AI bot markets
However, not all bots powered by ChatGPT have to be used for trading. You can also use ChatGPT for risk management.
For example, cryptocurrency exchange world coinbase (NASDAQ: CURRENCY) now you are using ChatGPT for token risk analysis. Before adding a new digital asset to its trading platform, Coinbase is now evaluating it with the help of ChatGPT.
If Coinbase can use ChatGPT in this sense, why can't individual investors? One day soon, I may be able to enter the following message into ChatGPT: "I'm 40 years old and currently saving for retirement. Is this crypto token too risky to add to my portfolio?" -- and get a quick risk assessment.
The place to find these bots will be in open source code repositories like GitHub, directly on the sites of major cryptocurrency exchanges, or in the new AI bot marketplaces where it will be easy to "hire" bots to perform certain financial tasks. . Are you too tired to rebalance or optimize your portfolio? Just hire an AI bot to take care of that for you.
SingularityNET (CRYPTO: AGIX)For example, it offers a growing range of AI bots for rent on its marketplace. Right now, many of these bots focus on tasks like speech and image recognition (which AI is very good at now), but there are also some bots that claim to be very good at market and data analysis.
What to keep in mind
Just keep in mind that almost everything related to ChatGPT is still in "beta" testing mode. We don't really know how generative AI models like ChatGPT will perform in the long term, and ChatGPT readily admits that it hasn't been trained on any data after 2021.
In addition, researchers have already shown that ChatGPT often "hallucinates". In short, ChatGPT often inadvertently gives a completely wrong or fanciful answer to a question. The last thing you probably want as an investor is a chatbot that is freaking out while trading crypto for you.
But what's really exciting is that every new iteration of ChatGPT (we're on version 4 now) seems to get exponentially more powerful. Cryptocurrency trading bots are just the beginning. The AI โโcryptocurrency trading revolution is just beginning.
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dominic basulto He has positions in Bitcoin and Ethereum. The Motley Fool has positions and recommends Bitcoin, Coinbase Global, Ethereum, and Solana. The Motley Fool has a disclosure policy.
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