AI and Crypto Collide: A New ChatGPT-Powered Bot Will Soon Help Traders

AI and Crypto Collide

In this section, Stephen Ehrlich, Director of Research for Digital Assets, talks about how the worlds of AI and crypto are colliding.

The Misappropriation of Chatbot GPT Technology

• Many efforts in crypto have been made to misappropriate chatbot GPT technology.

• This is often done to sell tokens to investors at high prices.

Falcon X's Collaboration with OpenAI

• Falcon X is a San Francisco-based Prime broker that caters to institutional investors.

• They offer access to trading desks and exchanges around the world, credit services, loan provisioning margin, etc.

• Falcon X is building a trading side together with OpenAI on top of chat GPT.

• This is the first reported case of any crypto-focused company cooperating with OpenAI.

The Goal of Falcon X's Trading Bot

• The goal of Falcon X's new product (trading bot) is to make it simple so that anybody can become an algorithmic trader in 10 to 15 minutes.

• Ragu Yarlagata, CEO of Falcon X, has experience in machine learning and artificial intelligence.

• He wants to simplify sophisticated trading strategies so that anyone can use them.

Becoming an Algorithmic Trader

• Whether or not it's too good to be true for somebody to be an algo trader depends on how you define algo trader because there are different levels and degrees of sophistication.

• An algo trader could be something as simple as running a basic strategy for Bitcoin for a month or exploiting the difference in price between a spot price and future price with like a month expiry where you take advantage of the difference or some sort of arbitrage strategy.

Types of Questions to Ask Chatbots

In this section, the speaker discusses the types of questions that can be asked to chatbots.

Asking Chatbots in Crypto Space

• You can ask chatbots anything from writing a poem for you, finishing your English paper, or asking any question in the crypto space.

Pre-Trade Function

• Falcon X breaks down a trade into three different functions. The pre-trade function is where you gather all the different intelligence out there by reporting news and figuring out what you want to do.

• Having access to information is helpful since it's still a very news-driven market, especially for assets beyond Bitcoin and Ethereum.

Sophisticated Questions

• You could ask more sophisticated questions like comparing white papers which is an introductory document that is somewhat technical on how certain protocols and platforms work.

• You could give it a hypothetical scenario and say like imagine we're in the world bitcoins worth this interest rates are this like what are some of the options available to me?

Concerns with AI Implementation

In this section, the speaker discusses concerns with AI implementation.

Hallucinations

• Investors should be cautious about using products like this due to hallucinations within generative AI where chatbot essentially creates facts and purports them to be true. This can be problematic in many circumstances as it falsely claims things that aren't true.

The Limitations of AI in Crypto Trading

In this section, the speaker discusses the limitations of using AI tools such as Satoshi and Chat GPT for crypto trading.

Limitations of relying on AI tools

• Using an AI tool like Satoshi can be risky since it may provide incorrect information.

• Private financial information about companies is not available to these tools, making it difficult to predict market trends accurately.

• While these tools can help avoid speculative bubbles, they cannot prevent traders from falling into other pitfalls if they do not use them appropriately or understand how to interpret their signals.

The Future of Crypto and AI

In this section, the speaker discusses the potential for crypto and AI to merge together effectively.

Potential for merging crypto and AI

• While blockchains are secure and immutable, they lack data capacity and speed necessary for generative AI at scale.

• For crypto and AI to merge effectively, significant steps forward in scalability and throughput on the side of blockchains are necessary.

The Implications of Breakthrough Moment in Crypto and Blockchain

In this section, the speaker discusses the implications of a recent breakthrough moment in crypto and blockchain technology. He talks about how this could impact various professions such as journalism, law, marketing, etc. He also discusses the scalability issues faced by blockchains like Bitcoin and Ethereum.

Scalability Issues with Blockchains

• Bitcoin and Ethereum can only handle a handful of transactions per second.

• Other blockchains like Solana, Algorand, Cardano, Polkadot, Cosmos can handle transaction throughput akin to what you might expect from Visa or Mastercard.

• New types of technology are emerging that are complementary to layer two blockchains on top of Ethereum. These new approaches include Roll-Ups which roll up data into more efficient packets and ZK snarks which compress data to make it more scalable.

Challenges Faced by Crypto and AI

• It is hard to find a way for these two technologies (crypto and AI) to work together when they're both still finding themselves.

• One solution could be doing some major computations off-chain and then anchoring them on-chain from time to time.

• There have been mixed responses within crypto regarding AI. Some people are looking at ways to figure out its implications for the industry while others are taking advantage of it to sell tokens.

Pushback Against OpenAI Development Pause

• Some people in crypto have pushed back against efforts to put a pause on the development of OpenAI and Chat GPT.

• The CEO of Coinbase, Brian Armstrong, argued against this and said that technology is going to develop as it develops and this pause is not necessarily going to be sufficient for regulators to know how to handle this technology moving forward.

Stephen Ehrlich discusses the implications of a recent breakthrough moment in crypto and blockchain technology. He talks about scalability issues faced by blockchains like Bitcoin and Ethereum and new types of complementary technologies emerging. He also discusses the challenges faced by crypto and AI in working together. Finally, he mentions pushback against efforts to put a pause on the development of OpenAI and Chat GPT.