Artificial Intelligence Can Help Crypto Traders in Two Ways

The two buzzwords – cryptocurrency and artificial intelligence (AI) seem to be merging well. As per two distinct researches, AI can assist in forecasting the value of cryptocurrencies and also help identify scams before they occur.

At the Imperial College in London, the work of Benjamin Livshits and Jiahua Xu has developed an algorithm which can forecast when schemes of pump-and-dump are about to happen and also provide a promising method to prevent or subvert them. Jordan Belfort popularized these schemes and “Wolf of Wall Street” is the name which Jordan Belfort is known by. He also pleaded guilty in related crimes and fraud.

In a deceptively simple method, the pump-and-dump schemes work. The malicious actor’s group quietly purchase some cryptocurrency and then create hype across the coin. Therefore, traders become unsuspecting and purchase as well as build the price of the coin spike. After the price rises, the real group sells them and builds a fast profit.

In the case of cryptocurrencies, all of this happens within a matter of seconds, and they are common increasingly: Livshits and Xu speak that on an average there are two scams of pump-and-dump each day and that these achieve about 7 million US dollars’ worth of volume of trading in a month.

Livshits and Xu studied around 236 events of pump-and-dump which happened from 21 July to 18 November. They say that most of them were anticipated by unusual activity of purchasing in the target currency. This could be persistent with insiders acquiring the currency along of the pump, which would be the key to blemish coins target before the schemes of fraudsters start.

Livshits and Xu then deployed this knowledge and authorized their algorithm of machine learning to go live. Between 30 October and 6 November, it recognized six multiple malignant activities, 5 of these activities will found to be schemes of pump-and-dump. “The researchers have still to announce any decision to make their algorithm accessible to deploy by the public, but the education gained from it can be highly important and provide value in stopping them from growing much widely,” as explained by the Technology report of MIT.

Crypto and AI Feelings
Meanwhile, as per the paper by software developer Tejeswar Tadi and published on Academy of Intel AI, an action by Intel, “American tech giant,” machine learning can assist with determining the sentiments regarding any currency given by parsing and scanning via the social media comments. “Favorable feelings regarding a currency can be display to coincide with an up till in the value of the currency around exchanges of the digital coin,” as read by the paper.

In May 2017 Tadi starts his project which is known as “Deep Learning for Cryptocurrency Trading.” It regulates the correlation between sentiments of trader for the market value of the cryptocurrencies and cryptocurrency by applying techniques of the deep learning.

At the beginning of this year, an article was published by Intel AI Academy, and this article introduced Tati as Ambassador of Intel AI. It also states that “The long-term goal of this project is to develop a trading of AI cryptocurrency bot which can not only acknowledged feelings of a trader to create decisions of trading but also benefit from various opportunities like Arbitrage, which is the sale and buy of an asset to gain from the price difference.”

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