AI may attempt to sabotage your cryptocurrency.

As the world of cryptocurrency trading evolves, so does the technology supporting it. In recent years, we’ve seen a surge in AI tools like ChatGPT being integrated into various facets of the crypto landscape. This development, while exciting, is not without its drawbacks.

A recent survey by Bitget found that 80% of crypto traders admitted to having negative experiences with ChatGPT. Examples included false investment advice, misinformation, and falsification of facts.

Misleading investment recommendations

Artificial intelligence is not an all-knowing entity but rather a man-made tool. AI and, more specifically, ChatGPT, operate within parameters set by human developers. While its capabilities are impressive, they have limitations. Our understanding of these tools is still maturing, and it’s essential to recognize their potential risks, especially when it comes to financial decisions.

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Many fintech companies are exploring the potential benefits of incorporating AI into their operations. However, experiments with using AI for customer inquiries, design, copywriting, and coding have shown that human talent still outperforms AI most of the time.

Bitget tried using ChatGPT to handle routine customer inquiries. Initially, they were impressed by its proficiency in analyzing and compiling information. However, as they delved into more complex queries, the cracks began to show. Despite being trained on extensive data, ChatGPT sometimes offers misleading, biased, or incomplete information, as a recent internal test reminded them.

When their staff inquired about market sentiment regarding a lesser-known altcoin, ChatGPT mistakenly associated the coin’s name with a popular internet meme. The resulting response, although amusing, may have been taken seriously by those new to the market who rely heavily on third-party programs.

Another request came from a user who received a list of prospective coins from ChatGPT to consider. The user asked why Terra’s LUNA was trading 95% lower than last year. When they tried to clarify why LUNA was on the recommended list, ChatGPT started offering another coin, quickly changing its mind.

Language models like GPT-4 and GPT-3, which are used in ChatGPT, have access to an outdated information base. This is unacceptable in the trading market, where speed and relevancy matter. For example, FTX, the crypto exchange that went bankrupt in November 2022, is still safe and sound if ChatGPT is to be believed.

Although the exchange collapsed almost a year ago, ChatGPT’s knowledge only runs until September 2021, which means it assumes FTX is still a going concern.

The importance of human expertise in crypto trading

The crypto landscape is complex and ever-changing. It requires keen human insight and intuition to navigate its many twists and turns. AI tools, while robust and resourceful, lack the human touch necessary to interpret market nuances and trends accurately. It’s important to exercise caution, diligence, and critical thinking. Both companies and individuals must not overlook the importance of human intuition and expertise in the pursuit of technological advancement.

As a result, Bitget has chosen to limit its use of AI tools like ChatGPT. Instead, they place a higher emphasis on a blend of human expertise and technological innovation to serve their clients better.

This is not to say that AI tools don’t have a place in the crypto sphere. Indeed, for basic queries or simplifying complex topics, they can prove invaluable. However, they should not be seen as a replacement for professional financial advice or independent research. It’s essential to remember that these tools, while powerful, are not infallible.

In the crypto world, every piece of information carries weight. Each detail can impact investment decisions, and in this high-stakes environment, a misstep can have significant consequences. Thus, while AI tools can provide quick answers, it’s crucial to cross-verify this information from other reliable sources.

Furthermore, it is important to consider data privacy. While AI tools like ChatGPT do not inherently pose a privacy risk, they can be misused in the wrong hands. It is crucial to make sure that the data provided is secure and that the AI tools used adhere to strict privacy guidelines.

Ethical considerations and data security

Despite this, AI tools like ChatGPT are not the enemy. They are powerful tools that, when used responsibly and in conjunction with human expertise, can significantly enhance the crypto trading experience. They can explain complex jargon, provide quick responses, and even offer rudimentary market analyses. However, their limitations should be acknowledged, and a responsible approach to their use is essential.

In our experience with ChatGPT, we have learned that AI tools are only as effective as their latest update, training, and the data they have been fed. They may not always be up-to-date with the latest developments or understand the subtleties of a dynamic and often volatile crypto market. Furthermore, they cannot provide empathy, which is often needed in the tense world of crypto trading.

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The integration of AI in crypto trading also raises ethical questions, especially when it comes to decision-making. If a user makes a financial decision based on misleading information provided by an AI tool, who is responsible? This is a question that the industry is still grappling with.

There is also the issue of data security. In an era of data breaches and cyber threats, any technology that collects, stores, and processes user data must be scrutinized. While AI tools like ChatGPT do not inherently pose a privacy risk, they are not immune to misuse or hacking. It is essential to ensure that these tools have robust security measures to protect user data.

It is also important to note that while AI tools can provide data-driven insights, they cannot replicate the instinct that experienced traders often rely on. This kind of instinct is honed over years of trading, observing market trends, and understanding the psychology of other traders. This is something that AI, for all its sophistication, cannot learn or emulate.

While AI tools like ChatGPT offer exciting possibilities for the crypto industry, they should not be seen as a magic solution. They are tools to aid, not replace people, intuition, and financial expertise. As we continue to explore the potential of AI in the crypto world, we must be mindful of these limitations and potential risks.