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As we all know, AI technology is becoming more prominent in many areas, such as navigation,entertainment and software development. With each passing day, more and more people gain access to this technology and employ it in more areas, and of course, the economy couldn’t be the exception.

You can now find an automated AI-based crypto trading platform anywhere in the market, but what does this mean for cryptocurrency users? And how will it affect the future? The following article will discuss AI technology and its effect on crypto trading.

What Is AI Technology?

Artificial Intelligence or AI technology is often defined as the simulation of human intelligence or the cognitive skills associated with it, such as “learning” or “problem-solving”. However, this concept has been rejected by various AI researchers, who now describe AI as any system that can perceive its environment and take action to achieve its goals efficiently.

How has AI Influenced the Crypto Market?

AI technology has been used in many areas of the economy for years to detect market manipulation or fraud. However, this usage changed significantly during the introduction of cryptocurrencies to the market.

Economy Predictions

AI technology allows predictions using algorithms with past data. This allowed AI to make more accurate market predictions and analysis, which in many cases would change the market flow by making many users sell or buy some kinds of cryptocurrencies more frequently, especially private companies with greater access to this technology.

Algorithmic Trading

AI technology would also be used to create more advanced algorithms and what we know as algorithmic trading. Algorithmic trading allows any user to enter the parameters of the trade they want and let the AI do the heavy lifting, meaning the AI would search for any offers with the parameters you inputted or stay on standby waiting until an offer appears.

Benefits and Risks of AI Technology for Crypto Trading

AI technology in crypto trading can allow easier access for people who want to enter this world, since it would no longer be necessary to keep an eye on different offers to buy or sell assets. Many platforms could even offer safe demo modes where you can test and run scenarios, ensuring that all your trades carry out without inconvenience.

Yet, we must mention that using AI technology is not without risk. As we mentioned before, companies primarily implement AI technology to predict the nearest future in the flow of the market. However, if the data is manipulated or there are errors in the algorithm, it can lead to erroneous movements or transactions. Another worst-case scenario is the misuse of AI results, which can lead to market manipulation where said results are used or promoted to cause a desired movement in the market.

Traders can use AI technology to ease the crypto trading process for new or old traders alike. But, as with any other technology, it must be used carefully and not become too dependent. Be sure to study and inform yourself before using a crypto trading platform and keep in mind that while AI can automate trades, it cannot guarantee their success. If traders fail to set the right parameters, AI could automate losses and compound them.