More than half of institutional traders surveyed by JPMorgan Chase & Co. said artificial intelligence (AI) and machine learning would be the most influential technology to shape trading methods over the next three years. AI was cited in the survey four times more than blockchain and distributed ledger technology.
The findings were published in the financial services giant’s January e-Trading report, an annual assessment of sentiment across different asset classes that had responses from 835 institutional traders in 60 global markets.
AI outpaced every other major technology category in the survey, with 53% citing it the most influential, far ahead of blockchain at 12% and mobile apps at 7%. That contrasts with 2022 when blockchain and AI tied for second with 25% of respondents predicting them to be the key emerging technologies. Mobile trading applications came in first last year at 29%.
Last year’s slump in cryptocurrency prices and a spate of scandals and bankruptcies in the industry, such as the collapse of crypto exchange FTX, has dampened interest in the sector, with JPMorgan finding that 72% of traders “have no plans to trade crypto [or] digital coins” in 2023.
As crypto lost its sheen for these traders, AI technology made inroads, with online tools such as the AI program ChatGPT emerging as one of the fastest-growing consumer internet apps. It can perform language-related tasks from answering user questions to writing essays based on complex prompts and reportedly had 100 million unique users in January, according to analysts.
Crypto benefits?
While institutional traders are taking a shine to ChatGPT, so are cryptocurrency enthusiasts, using it for research, creating trading bots, and coding assistance for developers. Thus, as AI overtakes crypto as the hot emerging technology, many blockchain-based companies look to integrate it into their business models and platforms.
U.S.-based cryptocurrency exchange PayBito said this month it would integrate ChatGPT on its platform to teach new investors about crypto trading. PayBito said AI integration in crypto can enhance market data analysis and trend predictions.
Over the weekend, Justin Sun, founder of the open-source blockchain-based system TRON announced a framework to integrate AI systems like ChatGPT and OpenAI onto a blockchain-based payment system.
“By combining AI technology with the security and efficiency of blockchain, AI developers can maximize their potential… TRON blockchain can provide the best infrastructure support for OpenAI, ChatGPT, and all AI developers by leveraging its robust blockchain payment system,” Sun wrote in a Twitter thread.
“This framework will realize a decentralized payment system that is secure, trustworthy, tamper-proof, anti-censorship, and capable of AI, helping people build a new decentralized, intelligent financial ecosystem,” Sun added.
However, the 32-year-old crypto entrepreneur received mixed reactions on Twitter to his thread, with some implying he was leveraging off the latest tech buzzwords and jargon. The price of the TRON blockchain’s TRX token was unchanged since Sun’s comments, according to data on CoinMarketCap as of press time.
New models
However, other companies – such as Numerai, an AI-run hedge fund; and Ocean Protocol, a blockchain-based marketplace that sells tokenized data – are building new business models based on AI and crypto integration.
SingularityNET, a project aiming to build a blockchain-based marketplace for artificial intelligence services, has seen its native token AGIX jump over 200% to as high as US$0.55 from US$0.17 over the past 7 days, according to data from CoinMarketCap.
Though JPMorgan’s report showed that institutional investors were more excited about the immediate impacts of AI, respondents said that investors, on the whole, are bullish on the crypto space.
According to the report, crypto and digital coins, commodities, and credit are predicted to have the biggest increases in electronic trading volumes over the next year, and 20% of respondents plan to begin trading crypto within five years.
That suggests a weaving of AI technology with blockchain and web3 may see the cryptocurrency industry regain some of the buzz and investor attention that it lost during the turbulent 2022s.
