Pick an industry – any industry – and you can virtually guarantee that AI will have been hailed as its next big thing. The cryptocurrency sector is no different, with many of 2017's ICOs shoehorning the concept into their whitepapers somewhere in a bid to appear "cutting edge" and in touch with the zeitgeist. But beyond all the hype, what impact will artificial intelligence have on the crypto industry, and could its rise ultimately render human traders obsolete? AI is to tech what "blockchain" is to the cryptocurrency industry: a concept whose genuine applications are significantly outnumbered by the projects interested solely in latching onto the buzzword and surfing it for all it's worth. Given that startups described as being involved with AI attract 15-50% more funding than other tech firms, it's understandable why companies are so keen to cash in on the hype.
As hedge funds rush to enter the cryptocurrency space, the landscape for retail cryptocurrency investors is fundamentally changing before our very eyes. Guy breaks down the implications of this fundamental shift and we discuss how the community can prepare for the rise of AI in crypto trading. To understand the extent in which AI is taking over hedge funds, we need only to look at the statistics. AI is set to replace 90,000 asset management jobs and 45 thousand sales and trading jobs by 2025. Famous hedge funds that are already employing AI in their trading are Renaissance Technologies, Two Sigma, and Bridgewater Associates.
The cryptocurrency market has been one of the most exciting to watch over the last year, considering its blistering returns and daily swings which can inspire panic in even the most seasoned traders. Apart from knocking established financial markets down a peg, their rapid growth saw cryptocurrency instruments outpace gains in more traditional asset classes, garnering a cult-like following and adoration from users. Although some non-believers are eager to label to bitcoin and its contemporaries as frauds, or inside a terminal bubble, the incredible momentum of the industry accompanied by the large numbers of individuals flocking to open e-wallets and exchange accounts is impressive.
A visual representation of digital cryptocurrency Bitcoin is displayed on February 16, 2018 in Paris, France. Well, there have been plenty of developments in artificial intelligence (AI) and machine learning (ML), but opinions about them have been quite varied. One can marvel at how AI was able to perform traditionally "human" activities such as winning at poker or writing music. And, Google's predictive search, which can sometimes make outlandish suggestions and be eerily spot on at times, might make one sceptical too. However, AI can also be scary, as imperfections in the technology could also lead to harm.
Just because Grindelwald and Dumbledore had a deadly brawl during their quest to revolutionize magic doesn't mean two great powers cannot be used in concert to change the world. This could be the worst way to start an important conversation about financial technology, but stick with me, it gets more interesting. We are speaking about the world-altering technology of Artificial Intelligence as the first superpower coupled with the financial system disruptive technology of cryptocurrency -- a decentralized payment system that circumvents government manipulation of currency and is forcing us to redefine the concept of money. The question is: Can these two technologies be used together to change the way ordinary people like you and me invest our money -- without expiring in a shower of blue sparks? But first, let's take a step back and look into them as individual concepts, with respect to their relationships to investment and trading.