Bitcoin’s meteoric rise in value has been nothing less than spectacular, but it has also been volatile, which has had less-seasoned investor nervous, to say the least.
Like any stock or market, rising prices are celebrated, but a bull run is two-sided.
On the one hand, a massive rise in value makes some people incredibly rich. On the other hand, it could lead to massive correction where a large amount of people start to sell their stock.
When that happens, the price of the commodity being traded plummets in value. For Bitcoin, that could mean a chain death spiral.
Luckily we live in the digital age of mobile apps and Blockchain technology. Some very smart developers have created an application which uses computational learning power to scan Bitcoin markets, news and social media platforms to signal any potential market crashes in the future.
According to RT, the app Bitcoin Bubble Burst provides real-time price change alerts to users by using algorithms based on Bitcoin price change data. Combined with news and social media chatter, they hope to serve meaningful advice to users.
Potential to fail
While this app and many like it will no doubt be useful tools, there could be some potential pitfalls. A swathe of bad news reports and negative sentiment on social media could trigger sell-off messages on apps - leading to the very situation they are trying to predict.
Nevertheless, the developers plan to introduce some customizable triggers for users - so they don’t get flooded with push-notifications. They also seem to back the algorithms their software is using, according to their website:
“Utilizing sentiment analytics we can get a numeric picture of the current event. Our model learns which patterns are 'odd' and when to contact you via notification.”
While this handy piece of software will be nifty to use, it should not be the driving force behind a person’s decisions on Bitcoin trading.
Artificial intelligence has come a long way and the algorithms that feed our social media platforms and search engines are amazingly complex. However, they do not incorporate human emotion.
A person can take a lot of information out of the news and it goes a lot further than an app’s ability to serve you numeric data. There are sentiments and emotions involved, especially when it comes to investments, and it’s hard to believe that people will make important decisions because an app told them to do so.
At the very least, being served real-time data from a broad domain of exchanges is extremely valuable, and this app and many like it will be useful to monitor worldwide trade of Bitcoin and cryptocurrencies in the future.
When mainstream financial institutions like the Chicago Board Options Exchange enables trading of Bitcoin Futures on Dec. 10, more and more people will need accurate trading data on cryptocurrencies.
At the very the least, the constantly changing value of Bitcoin needs to be closely monitored, with $100 changes a day commonplace.