Blockchain Is Transforming The Investment Business
With the recent publicity surrounding blockchain and crypto-currencies it can be hard to imagine that it’s been nearly a decade since Bitcoin went live. Just a couple of years ago, Bitcoin’s price was sitting below $500. Many investors didn’t even know what blockchain and crypto-currencies really were. But fast forward to today and blockchain has effectively changed the landscape of finance and investing.
Blockchain has now been embraced by traditional financial institutions. Institutional investors have already entered the crypto market. Established trading platforms have also started to support top crypto tokens which allowed ordinary investors to easily diversify into cryptocurrencies.
Despite the recent correction that saw many coins’ prices drop significantly from their all-time highs, interest in blockchain and crypto remains. This year so far, there have already been more than 180 initial coin offerings (ICOs) held generating more than $6 billion in funding.
There are plenty of opportunities in which to invest. The challenge for investors, however, is to make sense of the market. Investing in the crypto market is still a high-risk undertaking.
Crypto-currencies are highly volatile and prices are driven mainly by speculation. The savvier and more experienced traders have achieved some success performing technical analysis but new and ordinary investors struggle making the right moves.
Fortunately, developments in technologies such as artificial intelligence (AI) and machine learning (ML) have given rise to efforts and projects that aim to provide better insights regarding crypto market.
Senno and Santiment, for instance, are using sentiment analysis to reveal which coins the market is excited about. Other platforms like TokenAI seek to make Wall Street-caliber trading tools more accessible to ordinary users and help them navigate the market better.
Access to Sentiments
Sentiment analysis crunches vast amounts of textual data collected from sources such as articles, posts, and transcripts to evaluate the market’s emotions about a particular topic. Such analyses are particularly useful for markets involving highly speculative assets like crypto since opinions and emotions drive these markets. Blockchain-based platform Senno aims to make sentiments accessible to a wider audience by letting developers create applications that could access sentiment results generated by the platform.
Among the platform’s first applications is CryptoScanner which scans information from crypto-related content and identifies which coins the market are interested in. Santiment also offers insights from sentiments through its own content and data feed library.
To give credence to this approach, media and information firm Thomson Reuters recently launched a media feed that delivers insights to crypto investors based on market sentiments.
Tools for Analysis
Another way AI and blockchain is changing the way people invest is by making powerful tools accessible to ordinary investors. Quantitative and technical analyses require full effort to perform.
Aside from having access to vast amounts of market data and computing resources, it also requires the participation of experts. Previously, only large firms and companies are able to perform these kinds of intensive analyses.
With blockchain and AI, however, new platforms are making easy-to-use interfaces that lower the barriers to the use of these tools. TokenAI, for example, offers a platform that allows ordinary investors to manage their crypto portfolio through AI. TokenAI’s algorithms scan months of market data and identify strategies and moves that fit investors goals. Investors need not worry about learning the highly-technical aspects of analysis and rely on the platform’s AI to balance their portfolios.
Room for Improvement
These AI and ML efforts are not without critics. Experienced traders and experts have always challenged that there are market connections and intuitive decisions that only humans can make. To be fair, these criticisms are quite valid. This is why even in Wall Street, quants or quantitative analysts have yet to fully take over. However, AI and ML technologies are constantly evolving. They are already proving to be quite useful in a variety of applications today. There definitely is value in computers being able to go through large volumes of data a lot more quickly than a single human mind can.
It may take weeks for a single person to comb through thousands of articles to just see which assets are trending in the community. AI can do this in seconds. At the very least, these insights can be used alongside other types of analyses to drive investment decisions.
AI and ML’s use in conjunction with blockchain are also creating sustainable means for these technologies improve. These platform’s respective token economies establish means not only for these services to be effectively monetised but also to reward contributors who help continue developing these platforms and share valuable data that can be used for analyses.
Not just in Crypto
While it’s only natural for these AI and blockchain platforms to focus on the crypto space for now, it’s only a matter of time before they are applied to other markets. Numerous projects are already attempting to enable trade of traditional assets like stocks, derivatives, real estate, and precious metals on blockchain offering advantages such as fair market pricing and fractional ownership.
When these finally gain traction, we can only expect AI-driven blockchain platforms to also figure into the space and provide trading insights and sentiments to all forms of investing.
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