Top 5 Myths: Bypassing GPT in Digital Coin Studies

Trading crypto is and always has been a risky game, so it makes sense to pursue avenues that may make it a little easier. In 2023, the use of ChatGPT in crypto trading became evident, as this chatbot is a hub of information. However, there are some reasons why using ChatGPT to trade cryptocurrency may be a bad idea.

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1. Lack of Real-Time Data

The cryptocurrency market is always changing. A coin can be worth $10 on Monday and then $5 on Tuesday. Because of this, real-time data is crucial in crypto trading, be it prices, trends, or predictions. Using outdated information can result in poor investments and a loss of funds, so it’s important to be on top of things.

Because ChatGPT has only been trained with data up to September 2021, it cannot provide up-to-date information on the crypto market. Without real-time data, it becomes almost impossible to make a wise crypto trading decision, so it’s best not to rely on ChatGPT entirely here.

2. AI Hallucinations and Potential Biases

The huge success of ChatGPT, as well as the release of similar AI chatbots , has brought the concern of hallucination into the limelight.

AI hallucination occurs when an AI system gives a confident response, but the response itself is false and goes against its training data. In other words, it does not provide the expected response. This can happen in a number of scenarios and is possible in ChatGPT.

For instance, you may give ChatGPT unrealistic prompts that it cannot fulfill. At this point, the chatbot may give you an untrue answer simply to satisfy your query as best it can. The chatbot doesn’t know it’s lying but thinks the information it’s giving you is appropriate, despite that not being the case.

If ChatGPT hallucinates when you’re trying to reach a crypto trading or investment decision, and ChatGPT hallucinates, you could make a poor decision and lose money.

If you’re worried about AI hallucination, there are some things you can do it avoid it .

Additionally, ChatGPT can fall victim to biases, which can affect the accuracy of its response. Sample bias, political bias, courtesy bias, and ignorance bias have all been identified as a possibility when using ChatGPT, which could be bad news for crypto traders.

ChatGPT can hold a bias in certain scenarios due to its training data. According to BBC Science Focus , ChatGPT was fed with an incredible 570GB of data from various sources, including books, journals, news articles, and Wikipedia. Most of this information was written by humans who hold biases, conscious or not. Even if less than 1% of ChatGPT’s training data is biased, that still poses a problem.

3. Fails to Give Personalized Financial Advice

You can certainly ask ChatGPT any number of questions about the crypto market, as well as use it for financial tips. But while this is possible, it may not be the best route to pursue.

ChatGPT knows more than any one human could ever know. But ChatGPT wasn’t specifically designed to provide financial advice. ChatGPT is a jack-of-all-trades chatbot, meaning it can answer questions on almost any topic. But this also means the tool is not fully equipped for hyper-specific or niche prompts.

Because ChatGPT knows nothing about your financial circumstances, delivering personalized financial advice is tough. How much you have to spend, your preferred platforms, your spending habits, how much you can afford to lose, and the profit you’re looking to make must all be considered, and this may end up being too much for ChatGPT.

This may result in the chatbot telling you it cannot satisfy your request or in AI hallucination, leading to an inaccurate response.

4. Relies Heavily on Historical Data

We’ve already discussed ChatGPT’s lack of real-time data, but it’s also important to note that this chatbot heavily relies on historical data to satisfy prompts.

ChatGPT doesn’t use common sense when answering a question, as it isn’t advanced enough to make decisions based on its own opinion. What ChatGPT can do is interpret what you’re saying and provide you with an interpretable response using its training data.

ChatGPT can be friendly and even make jokes , but this is all based on the data it has been trained with. You could certainly call it a smart program, as it is highly advanced by today’s standards, but it is not an all-knowing entity.

It’s very important to remember this, as it’s easy to assume you’re getting crypto advice and statistics from a genius-level AI system when that isn’t the case. You should never use ChatGPT as a substitute for professional financial advice or up-to-date sources because of this heavy reliance on historical data.

5. Lacks Insights Into Macroeconomic Factors

The crypto market is tied to the traditional market in ways you’d never expect. If something big goes wrong in the traditional financial industry, chances are the ripples will be felt by the crypto industry. After all, people use traditional money to buy crypto, so it’s natural for the two markets to interlink.

But this evident relationship means that macroeconomic factors should be considered when making a crypto investment or trading decision. For instance, you should consider your residential country’s inflation and interest rates before delving into crypto, as an oncoming market hiccup, or even a crash, may cause a coin’s demand to plummet.

Say you bought a single crypto coin for $100 on Monday. The next day, your government announces a rise in interest rates. This means that anyone borrowing money is worse off, and may lead to people selling off their crypto to have more fiat currency. If thousands of people offload their holding of the crypto you invested in on Monday, its demand will plummet.

Once supply exceeds demand, prices drop. Now, the coin you bought is only worth $70. The next day, it may be worth less, and this is all because of a traditional market issue.

Because ChatGPT doesn’t have access to real-time data, it cannot consider these kinds of macroeconomics when giving investment and trading advice. Nine out of ten times, this may not matter, but there’s always a chance of receiving advice from ChatGPT when the tool itself hasn’t considered all the necessary factors in its response.

ChatGPT Is Revolutionary but Far From Perfect

There’s no denying that ChatGPT can help you in a myriad of ways, be it in research, writing, idea generation, or creativity. But if you want to use this chatbot in your crypto trading venture, it’s paramount that you consider the risks and downsides listed above.

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