Trading cryptocurrency is a pretty new activity, something that didn’t exist ten years ago and is only just becoming mainstream.
Because of the anonymous nature of cryptocurrency it’s tough to say exactly how many people are involved, but it’s a lot — with an estimated 28.5 million Bitcoin wallets (and growing) in existence all over the world.
It isn’t surprising why crypto trading is taking off in such grand fashion. It’s a great, fun way to make big money quickly and without a huge amount of startup capital needed.
Many of us have heard the inspiring stories of ‘Bitcoin millionaires’ who made eye-watering sums of cash just from smart trading of cryptocurrency.
Stories like this one — about a man who invested $3,000 in Bitcoin in 2010 and now travels the world with the millions he made — are enough to inspire anyone.
Maybe the best thing about the world of crypto trading is that it’s open to everyone. Traditional trading can often feel elitist and exclusive, confined to a world of established ivy-league grads with chunky start up funds.
Crypto, on the other hand, is built on principles of equality, anonymity, and inclusivity. Anyone with an internet connection and a bit of spare cash can get involved.
But that doesn’t make it easy. There’s a lot of difficulty involved in making real money from cryptocurrency. Let’s find out why.
The challenges of trading cryptocurrency
There are a few challenges involved in trading crypto. Some of them are unique to digital currencies, and some are shared with old-school fiat trading.
Here are the big ones:
- Cryptocurrency is a 24/7 market. Unlike Wall Street it never stops, meaning big changes can happen at 3pm or 3am.
- Human error and our natural tendency to rely on emotion and impulse instead of reason can be a problem. It means that even the most level-headed traders can sometimes make crazy, irrational decisions in the heat of the moment — and these can be horribly costly.
- Cryptocurrencies are volatile by nature. Just take a look at the price graph of any major cryptocurrency over the past year to see how quickly significant changes can happen.
These aren’t the only obstacles facing crypto traders, but they are serious ones. The result of these combined issues is that people just aren’t physically capable of responding to every dip, spike, and change in crypto markets.
You’d have to monitor every market you’re invested in, non-stop, forever, and then respond with lightning accuracy and speed in order to keep up.
That’s not going to happen. It’s far too easy to make mistakes and miss out on big opportunities.
So what’s the solution?
Using algorithms to revolutionize crypto trading
Algorithms and machine learning are already widely used in traditional finance, and there are plenty of good reasons for that.
They help take the pressure of human traders by monitoring markets on a 24/7 basis, responding quickly to changes to maximize gains and avoid losses. They can be programmed to do all kinds of things, like automatically buying or selling assets if the price hits a certain point.
Algorithms aren’t all-powerful — we still need people — but they do mean traders don’t have to be glued to a screen in order to trade effectively. They also eliminate human error, trading with all the cold, mechanical certainty of AI.
So, a perfect solution, right? Well, there’s one major problem that you may have already guessed — algorithms don’t come cheap.
Unless you’re a skilled programmer, or prepared to pay big money to hire one, personal trading algorithms just aren’t an option. That means they’ve been confined to the rich and well-connected, an all-too-familiar story in the world of finance.
Until now, that is.
How new companies are making algorithms accessible
Companies like Capitalise want to build a new way of trading cryptocurrency, by making trading algorithms accessible for everyone.
Capitalise is a SaaS platform where users can craft their own algorithms easily and affordably. They simply enter the instructions in plain English, helped along with suggestions. There’s no need to understand code or AI, just the basics of trading.
In the future, users who put together successful algorithms can even share their work with other members of the network and get rewarded for their generosity. The platform is user friendly, intuitive, and even suggests ways for users to modify and optimize their algorithms in the interface.
This is a way to make things fairer, more accessible, and more inclusive in the crypto trading space, encouraging more new traders to get involved and building a community of like-minded people with similar goals. Their plan is to introduce a social network, where traders of all experience and ability levels can share their knowledge and help each other.
Other planned features include using historical data to simulate trades and gain an idea of what could happen.
This kind of project is part of a movement that marks a return to crypto’s founding principles, and a much-needed lifeline for those who want to trade cryptocurrencies without being a Wall Street powerhouse.