Artificial intelligence is all around us. Whether we’re interacting with website chatbots, using online programs to check our writing, or asking virtual assistants questions, AI is a technology we interact with daily.
Artificial intelligence is powerful enough in its own right. But what happens when you pair it with another ultra-modern technology? As finance professionals and artificial intelligence experts are already discovering, great things happen when AI and Bitcoin work together. Check out some ways this duo is transforming the world of finance and beyond.
Lightning-Fast Fraud Protection
Bitcoin and other forms of cryptocurrency appeal to many people because they’re decentralized. However, that decentralization makes some people understandably wary, particularly the lack of legal recourse in the event of fraud. Blockchain technology allows for transparency and significantly reduces fraud risk, but it’s far from perfect.
Now, cryptocurrency exchanges have begun to use AI as a watchdog. AI systems can continually monitor exchanges for signs of potential fraud. For instance, a sudden and uncharacteristically large withdrawal might be flagged. When the AI flags it, a person can then investigate further.
AI doesn’t single-handedly solve the problem of fraud, as exchanges still need capable human investigators. However, an AI system can sort through a volume of data more than any human could. Without them, human investigators will struggle to identify most potentially fraudulent transactions, much less investigate them.
This type of technology doesn’t only protect those actively trading cryptocurrency. It also helps prevent scams that give cryptocurrencies like Bitcoin a bad name. For example, AI can scan social media for signs of crypto scams (like people selling Bitcoin for artificially low prices). By flagging possible scams, these algorithms can protect countless social media users from financial losses and make it harder for scammers to find new victims.
The best thing about fraud-detection AI programs is that they grow more capable with time. That’s thanks to a phenomenon called machine learning. Like the human mind, as an AI system processes more data, it learns to identify patterns more quickly and accurately.
A Powerful New Approach to Trading
Cryptocurrency markets are notoriously difficult to predict. If you’ve followed the history of Bitcoin, you know that it’s seen unexpected highs and lows. From the outside looking in, it seems like there’s no reason behind this volatility.
However, the power of machine learning might be able to demystify the Bitcoin market for traders. As an AI system evaluates historical market data, it may be able to detect patterns that humans were previously unable to see. Over time, that might lead to bots or systems that can predict the fluctuations of the Bitcoin market with reasonable accuracy.
Moreover, integrating machine learning (ML) into investment strategies could offer traders valuable insights and could increase their ability to make informed decisions. Traders can stay ahead of the curve, enhancing their chances of success in the dynamic world of crypto trading.
Customer Support for Crypto Holders
People new to the Bitcoin market often find it to be somewhat inaccessible. It can be a challenge to get your questions answered since, in some situations, there’s nobody to ask.
That’s where AI chatbots can make a difference. Many ordinary websites have chatbots set up to answer common user questions. AI powers the chatbots, so there’s no need to have an actual person typing.
If more Bitcoin-adjacent businesses start to adopt AI chatbots, the crypto-cautious among us might find their fears assuaged. After all, if you’re investing in a brand-new currency, it helps to have 24/7 access to a program that can answer most—if not all—of your questions.
Crypto-Specific Credit Scores
If you’ve ever gotten a Bitcoin loan, you know that online lenders don’t check your credit score. The algorithms used to generate credit scores in the traditional finance sphere don’t do well in predicting the creditworthiness of people and businesses who mainly deal in crypto.
This may simplify the lending process, but it also means that lenders often take more risk than they realize. Plus, borrowers with a long history of responsible Bitcoin transactions might miss out on even lower interest rates and other perks.
Now, artificial intelligence is poised to change the game once again. Some lenders have begun to use an AI algorithm that can access blockchain transaction records, social media information, and other pieces of data. They use the technology to instantly determine how much risk a would-be borrower poses to a company offering cryptocurrency loans.
What does the future hold for Bitcoin and AI?
The technological landscape is constantly changing. Some of the applications above are already in use worldwide, and others are still being developed. Whether you’re a cryptocurrency enthusiast, an artificial intelligence expert, or someone who likes to stay informed about finance and technology, it will be exciting to see where these technologies go next.
Link: https://www.analyticsinsight.net/how-ai-and-bitcoin-are-changing-the-world/?utm_source=pocket_saves
Source: https://www.analyticsinsight.net
