Since its launch in November 2022, ChatGPT has generated rumors and speculation about the various ways artificial intelligence (AI) can be used to revolutionize cryptocurrency trading. This led to a massive AI crypto boom in early 2023 and a search for potential integrations with ChatGPT for crypto traders.
Here is an overview of the latest tools and technologies. These fall into the following three categories: cryptocurrency trading bots, decentralized finance (DeFi) bots, and AI bot markets.
Cryptocurrency trading bot
Unsurprisingly, the same tools and technologies such as auto trading bots, which are popular with stock investors, are now suitable for trading cryptocurrencies. There are now ChatGPT-powered cryptocurrency trading bots, ChatGPT-powered crypto investment portfolios, and even ChatGPT-powered crypto market prediction contests. It's not uncommon to find YouTube influencers and content creators on social media highlighting all the ways ChatGPT is helping the recovery of the "crazy" and "crazy" wallet.
Even if you have no programming experience, creating your own cryptocurrency trading bot with ChatGPT is now surprisingly easy. ChatGPT is capable of generating computer code based on a simple natural language query.
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 the Bitcoin DCA strategy" . ChatGPT also tells you what settings to adjust (like "purchase frequency" and "purchase amount") and where to get bitcoin price data.
DeFi bots
AI also has the potential to revolutionize the world of decentralized finance. After all, the smart contracts used in decentralized finance are just small pieces of self-executing code. If ChatGPT can generate computer code for a cryptocurrency trading bot, can't ChatGPT also write smart contracts?
I tested a simple request ("Give me a computer code for an NFT smart contract that pays a royalty on every NFT sale") and ChatGPT provided the code immediately. Also, ChatGPT knew I would be building these NFTs on the Ethereum (CRYPTO:ETH) blockchain, so they wrote the code in Solidity, Ethereum's preferred programming language.
This is really just the tip of the iceberg of what is possible with DeFi. For example, Omni is a new crypto bot for the Solana (CRYPTO:SOL) blockchain that will allow you to participate in passive income strategies such as cryptocurrency. This bot is trained on data from Solana, who is a DeFi expert.
These types of DeFi bots go beyond just talking about DeFi – they will soon be able to transfer funds between different crypto wallets and connect to different DeFi protocols.
AI robot markets
However, not all ChatGPT bots are meant to be used for trading. You can also use ChatGPT to manage risk.
For example, cryptocurrency exchange Coinbase Global (NASDAQ:COIN) now uses ChatGPT to analyze token risk. Before adding a new digital asset to its trading platform, Coinbase now verifies it using ChatGPT.
If Coinbase can use ChatGPT for this purpose, why not individual investors? One day you may enter the following query on ChatGPT: "I'm 40 and currently saving for retirement. Is this cryptocurrency too risky to add to my portfolio?" - And you can get a quick risk score.
Places where these bots can be found would be in open source code repositories such as GitHub, directly on the websites of major cryptocurrency exchanges, or in new AI bot marketplaces where it is easy to find dedicated bots to "hire". financial duties. . Tired of rebalancing or optimizing your portfolio? Just hire an AI robot to take care of it.
SingularityNET (CRYPTO: AGIX), for example, offers a growing selection of rental AI bots on its marketplace. Currently, many of these bots focus on tasks like image and speech recognition (which AI is doing very well at the moment), but there are also bots that claim to be very good at analyzing the market and data.
What to consider
Note that almost everything related to ChatGPT is still in "beta" mode. We really don't know how generative AI models like ChatGPT will perform in the long run, and ChatGPT readily admits that he hasn't been trained on data beyond 2021.
In addition, researchers have already shown that ChatGPT often "hallucinates". In short, ChatGPT often gives a completely wrong or imaginary answer to a question without you realizing it. As an investor, the last thing you probably want is an automated chatbot trading cryptocurrencies for you.
But what's really cool is that each new iteration of ChatGPT (we're now at version 4) seems to get exponentially more powerful. Cryptocurrency trading bots are just the beginning. The AI cryptocurrency trading revolution has just begun.
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Dominic Basolto holds positions in Bitcoin and Ethereum. The Motley Fool has posts and recommends Bitcoin, Coinbase Global, Ethereum and Solana. The Motley Fool has a disclosure policy.