Above: Blockchain is spreading quick.
Cryptocurrency is a fundamentally fresh type of investment, one that has investors and economists both excited and jumpy about the future. Sometimes referred to spil digital currency, cryptocurrencies like Bitcoin utilize blockchain technology (or other decentralized means of exchange and recordkeeping) to loom transactions te tamper-proof ledgers.
However the concept has bot around for years, rente te cryptocurrencies has spiked with the dramatic rise te Bitcoin prices (and, a brief while straks, its 50 procent crash). Now software engineers and financial advisors are wondering: Is it possible to use machine learning and AI to prototype the potential growth of cryptocurrency and better predict its future fluctuations?
There are some key opportunities and limitations driving the future here.
Opportunities for AI prediction
Let’s begin by looking at the opportunities for development and growth.
AI prediction and management te other areas
There are many overarching investment strategies to consider, and so far, human engineers have bot able to semi-master trading algorithms that can fulfill those goals. Robo-advisory firms like Wealthfront and Betterment are already managing billions of dollars of assets ter stocks, bonds, and index funds. If wij can manage elementary assets and currencies already, it stands to reason a cryptocurrency trading algorithm isn’t too far beyond our capabilities.
Observation of patterns from other novel commodities
Cryptocurrencies aren’t the only fresh, volatile investment asset available. Tho’ on the surface, cryptocurrencies are designed to function like any other global currency, their volatility suggests a pattern somewhat closer to those of commodities. Studying thesis patterns and learning from them could be a shortcut to quicker success.
Stabilization and future intrigue
Cryptocurrencies are presently volatile, thanks to a combination of uncertainty and consumer excitement. However, it’s unlikely that this volatility will last forever. Assuming cryptocurrencies remain active, it’s likely that they’ll eventually stabilize and become more predictable, making them lighter for trading algorithms to treat.
The fact that so many consumers are interested ter cryptocurrencies (especially Bitcoin) is driving more engineers to probe this area and suggest products that make trading lighter or more profitable. At least one verhoging, VantagePoint, already incorporates cryptocurrency predictions into its offerings, correlating Bitcoin prices to 30 other markets to project price fluctuations.
There are also some limitations wij should bear te mind.
Lack of gegevens
Bitcoin is only a few years old, and most of its contemporaries have only bot born te the past several months. Unlike the stock market, which has almost 100 years of gegevens to probe, wij’re ter the dark with cryptocurrencies, this is a fundamentally fresh type of investment, so there isn’t enough raw gegevens to make suitable long-term predictions.
Presently, even our best trading algorithms are still the product of a human mind and are therefore subject to all the biases and limitations of the average human. If wij don’t understand how the market works, how can wij possibly vormgeving a trading algorithm or predictive AI technology that can outperform us?
Processing and tech boundaries
The more sophisticated a machine learning algorithm is, the more hardware and processing power wij need to run it. Spil an example, one of DeepMind’s latest projects, AlphaGo, needed 1,202 CPUs and 176 GPUs, more than 25 times spil many spil the single-computer version of the algorithm. For a high-profile company with ample funding, this is an effortless obstacle to surmount. But for an fledgling entrepreneur or a prospective machine learning engineer, this can be prohibitive.
Also, consider that to develop a truly successful cryptocurrency trading algorithm, a company would need to win the public trust. The company would be responsible for not only proving that the algorithm works better than the average human being, but that cryptocurrency is a worthwhile long-term investment. So far, despite the consumer excitement overheen the currency, durable questions about the long-term efficacy and acceptance of the currency prevent it from being a mainstream source of exchange, especially te the international toneel.
Is it possible for AI to proefje the growth and recession trends of cryptocurrencies better than a human? Spil of now, the response is no, but it’s certainly possible, given enough time and enough effort waterput into the project. Until then, the volatility and unpredictability of cryptocurrency will likely remain a staple feature of the investment type.
Larry Alton is a contributing writer at VentureBeat covering artificial intelligence.