7 ways ChatGPT can help you make informed crypto decisions
Blockchain technology is considered to be one of the most groundbreaking innovations to emerge in recent years. It has seen a significant amount of adoption recently, and is a major reason why the cryptocurrency sector has grown so much in so little time. Cryptocurrency is a hard concept to grasp and so many struggle to understand how the technology works. However, recently there have been major breakthroughs in Artificial Intelligence (AI) and Machine Learning (ML), which has led to the introduction of ChatGPT.
This new technology works hand in hand with cryptocurrency and offers a powerful tool for traders. This guide will explain what ChatGPT is and how it can help crypto traders to make more informed decisions regarding their financial choices.
What is ChatGPT?
ChatGPT is an artificial intelligence chatbot developed by a company called OpenAI. The bot launched in late 2022, and has since received multiple updates that have impressed the world. With the launch of the GPT-4 update, ChatGPT was able to pass high school and law school tests. According to the results, it scored among the top 10% of participants. In time, it’s likely to continue to develop and become even more advanced. It already allows users to type in any text, such as questions or prompts; in return, it provides real-time responses.
Some are concerned that ChatGPT is “scary good” and that it could cause “internet-level disruptions.” Meanwhile, others view it as a highly useful tool. Of course, potential misuse is a clear concern, which is why big names in tech demand regulations for AI. Misuse aside, ChatGPT could serve as a very powerful tool when it comes to digital asset investing.
However, this could only be scratching the surface of what machine learning and artificial intelligence can do for traders. That's why we've compiled a list of 7 ways ChatGPT can help you make informed crypto decisions
A list of 7 ways ChatGPT can help you make informed crypto decisions
1. Trading education
ChatGPT was trained on an enormous database, meaning it has access to significant amounts of data. Therefore, it’s familiar with the majority of topics and concepts within the crypto market. This can include market trends and details about digital assets, such as market cap, and more.
This enables ChatGPT to answer questions about nearly any topic. It can help newcomers to crypto to learn about the industry and how it differs from the banking system, for example. It's a well-educated teacher about nearly any concept words can explain. Users can ask detailed questions to learn more about any topic and educate themselves.
2. Market analysis
ChatGPT can analyze market conditions and provide analysis for traders to benefit from, leveraging its access to real-time data when users subscribe to the paid version of ChatGPT. The free version of ChatGPT doesn't currently have access to real-time data — provided by Microsoft's Bing search engine — but should do in the future. This allows the chatbot to analyze current market conditions, making it a valuable tool for traders.
In addition to this, ChatGPT can also analyze past market conditions and identify patterns that may recur. While its knowledge is not limited to data up to 2021 anymore, it continues to provide useful insights for traders seeking to improve their understanding of cryptocurrency.
3. Trading strategies
Something else ChatGPT can do is create trading strategies for aspiring crypto traders. By analyzing market conditions and receiving data about the trader’s goals, ChatGPT can create entire strategies. These would be personalized trading strategies, based on your financial objectives, risk tolerance, and more. ChatGPT can analyze your input, compare it with strategies it knows of, find the best fit for you, and recommend it.
4. Price prediction
Another potential use case for ChatGPT when it comes to crypto trading, is for it to provide price predictions. While this is technically true, traders need to be aware of the risks associated with this request. Price predictions are extremely unreliable even when made by human crypto traders with a deep understanding of the market. If you ask artificial intelligence for a price prediction, it will be able to offer one, however, this should be taken as recommendation, as opposed to financial advice.
With that being said, for forecasts, traders can utilize something called the JAMES prompt. It was created to make predictions for the future of any topic. Of course, the results may not necessarily be accurate. However, this is true for any forecast in and out of crypto.
The reason we don't recommend this is because ChatGPT might be delusional. As a result, it's not recommended to take the tool — or anyone’s — prediction without conducting your own research. The crypto industry is too volatile and too unstable to do so. In other words, if you do ask Chat GPT for a prediction, use the results for educational purposes only.
5. Risk management
Having access to data about digital assets, ChatGPT can also offer risk management guidance. It can assist you in managing your risk exposure by providing real-time risk analysis and alerts — again, when using the paid version of the tool. AI is extremely skilled at spotting patterns. You can use this to your advantage and make better-informed decisions. But once again, it's vital you also conduct your own research, especially when it comes to risk management.
6. Portfolio management
Portfolio management is another area where ChatGPT can be useful. It can help traders manage their crypto portfolios by offering real-time portfolio tracking and analysis. It can also monitor the performance of your assets and offer recommendations involving its rebalancing. This would be very helpful for those who are new to self-custody.
7. Crypto news analysis
Lastly, ChatGPT could monitor crypto news for you. By continuously monitoring the Internet using the paid service, it keeps itself updated about the latest crypto news and developments. As such, it could alert you, suggest a modification to trading strategies for example. News is a significant part of fundamental analysis of the cryptocurrency sector.
Initially, ChatGPT only had access to information up until late 2021. However, with its latest update, it can now directly browse the web. This update has granted the AI chatbot access to Bing, enabling it to report new information. Nonetheless, it's important to note that this feature will be fully rolled out in the future.
How does ChatGPT work?
ChatGPT uses a deep neural network trained using large sets of data. The neural network consists of a series of interconnected nodes, known as artificial neurons. With them, the network can process information and make decisions based on that information. These neurons also come in multiple layers, which allow the bot to process and analyze input text. After that, it can generate a text-based output in response. The network’s deep structure allows it to learn, generate text, and notice patterns.
Whilst it was in training, the bot was given countless examples of input-output pairs. This allowed it to learn the relationship between inputs and outputs in a conversation. The material used was taken from various websites, books, and social platforms. The developers then filtered and curated the data to ensure its quality.
The final product is a bot that generates probabilities related to different possible responses when an input prompt is given. It will then select the one with the highest probability of offering the correct answer to the question. It will base its decision on data, training and the neural network.
ChatGPT pros and cons
ChatGPT has impressed everyone, from tech experts to investors and even politicians. After all, it has many benefits, use cases and applications. However, it has a few downsides, as we are about to see. Here are ChatGPT’s pros and cons.
ChatGPT pros:
- ChatGPT is very easy to use
- It offers human-like responses extremely quickly
- It is free to use
- It can create or debug code, write song lyrics, story prompts, and more
- It can explain difficult concepts to students
- It can answer FAQs, offer customer support services, and more, reducing the costs for businesses
ChatGPT cons:
- ChatGPT still lacks common sense and has limited understanding
- The bot may seem human-like, but it doesn’t understand the text it is processing
- It can generate misleading or incorrect information
Combining AI and crypto
ChatGPT is a new but powerful tool that has already provided a number of great use cases. In the crypto industry, it can be used to keep track of crypto news and crypto market trends. It can keep track of Bitcoin (BTC) price, market cap and other details. The same is true for virtually any other digital assets. While crypto traders are able to use it for price predictions and making trading strategies, remember that it is not reliable.
FAQs
Does ChatGPT have a crypto coin?
No, ChatGPT is not associated with any cryptocurrency or blockchain. However, OpenAI has considered its uses within the crypto/blockchain space.
Can you use ChatGPT for trading?
As of May 2023, ChatGPT can only serve as a tool for creating trading strategies and algorithms. It cannot serve as a trading bot right now. Whether or not this will be possible in the future remains to be seen.
Is ChatGPT a blockchain?
No, ChatGPT is a network of artificial nodes designed to resemble a human brain. However, it does not run on blockchain technology and has no direct connection to it.
Who owns ChatGPT?
ChatGPT is owned by OpenAI, the same company that developed the bot. OpenAI was co-founded by Elon Musk, among others, but Musk has since stepped down from the board.
Can ChatGPT predict crypto prices?
Technically, ChatGPT can provide crypto price predictions. However, the price predictions might be unreliable. The crypto industry is too volatile and requires deep insight into trends and market behavior.
Can ChatGPT help with crypto trading?
ChatGPT can help with crypto trading by creating trading strategies traders can follow. As of May 2023, this is the best way to use it in regard to crypto. It cannot trade directly as a trading bot, and it shouldn’t be trusted with price predictions as of yet.
