AI Traders Handling Crypto Markets Aim to Blur Professional Lines

Adding machine learning assistance to existing markets isn't a new concept, but no one has gone quite as far as teaching a machine to play the financial market with limited human interaction.

Now that Elpis Investments is looking to raise capital for just that purpose, one has to wonder if our advancements in AI have moved far enough to make this plan a success.

Courting Market Professionals and Uninitiated Traders

Unsurprisingly, traditional approaches to handling financial trading rely on the input of professionals who study the ups and downs of the market and invest accordingly. Elpis Investments seems more intent on taking the human element out of the equation and handing the reins over to machine learning algorithms that are emotionally detached from the grind of buying and selling.

Yet we're very much in the realm of infancy when it comes to injecting AI into this kind of financial process. Handling the automation of record-sorting is one matter, but accurately predicting global markets is something even financial experts can struggle to grasp due to just how many minor influences can drastically shift the marketplace over a short period of time. With a field in need of experts and no obvious solutions to various questions in sight, just how soon will AI trading change from an idea into the reality of the business?

Elpis is taking an approach to the field as any fledgling attempt at integrating cutting-edge technology into a financially dense field should; Those who choose to buy into this new corner of the market won't be paying traditional fees, but rather offering up a 20 percent portion of trading profits instead.

If machine learning simply can't handle the market at the start, only initial investments will be in danger of disappearing into the market rather than investments and fees. It's not much of a safety net but it does show the company's faith in their own product.

The AI Trading Loop

While not as technologically fascinating, Coinsquare has set up a subsidiary founded to help investors seeking to put money into AI and blockchain technologies. This subsidiary is set to use more human-driven processes, but it does raise an amusing question: What happens if machine learning advances to the point where it replaces human traders, thus leaving AI to invest into companies making more AI? Will that AI favour funding its creators over other companies in a show of self-awareness, or will it stay impartial to the market as a whole?

Expect initial waves of AI-driven trading to operate with strict human oversight. It'd be foolish to assume current plans to introduce AI to the open market hasn't also included endless simulations of trading, but it'd be equally foolish not to assume humans will remain completely hands-off should any unseen events lead to strange performance. That said, Elpis has offered up data on its current and past market simulations to back up their confidence in their system, with rates that show as much as a 3.5 times reduction in investor risks over traditional routes of investment.

Similarly, one has to wonder if the crypto market would benefit from AI-driven portfolios. Bringing new blood into the marketplace can feel like a daunting task between the wide variety of cryptocurrency wallets and trading platforms available; Having a platform that assists new traders with decisions based on machine learning and market analysis could open the door to thousands of investors unready to take that initial plunge.

Expecting solid performance isn't outlandish given the importance of weighing risks and options in analysing the market. Humans and AI have their own sets of weaknesses, but bringing in a coldly analytical eye to a market where riding on a sunk cost fallacy can cost a fortune only seems like insurance many investors would benefit from.

So while Elpis Investments has a mountain of questions and doubts to overcome, the future of the financial sector through AI-driven investments does raise a number of interesting questions and exciting possibilities for a sector that may not have put much stock in the value of machine learning in prior years.

If Elpis doesn't manage to pull out industry-shaking numbers, expect another company to capitalise on future developments even if they only result from a savvy AI investing in itself.