Major U.S. financial services company Capital One has filed a new patent application for a cryptocurrency analysis and trading system that will attempt to predict crypto market trends and generate trading decisions using artificial intelligence (AI).
Capital One’s Cryptocurrency AI System
The United States Patent and Trademark Office (USPTO) published a patent application on Aug. 13 for a cryptocurrency system filed by financial services company Capital One Services. It is a continuation of Capital One’s system patented in June. Capital One Services is affiliated with Capital One Bank, a subsidiary of Capital One Financial Corp. The corporation had $304.2 billion in deposits and $421.3 billion in total assets as of June 30. A Fortune 500 company, Capital One trades on the New York Stock Exchange (NYSE) under the symbol COF.
Capital One explained that cryptocurrencies trade 24/7 so traders need to monitor information from many sources all day. Numerous factors could affect trade decisions, including regulatory and exchange news, stock market news, rumors, and opinions on social media such as on Twitter, Reddit, Youtube, and Telegram. There are also events that could affect the market, such as initial coin offerings (ICOs), forks, airdrops, hacks, rebranding, and company future plans. Capital One asserted that “it would be impossible for human traders to track all of the above-mentioned cryptocurrency-related data and respond to that data in real time.” It would also be impossible to verify the credibility of the information in real time, the company added, noting:
Accordingly, there is a need for a centralized platform that analyzes speculation, news, and other cryptocurrency-related information as well as provides a recommendation and/or implements the provided recommendation.
The patent application describes a system with “a credibility analysis engine configured to determine the credibility of the cryptocurrency-related information,” with weighting assigned. It also describes an AI engine “configured to predict a cryptocurrency market trend based on … all received information and corresponding weighting.” In addition, it can be configured to generate and execute personalized trades automatically based on predicted crypto market trends.
An illustration of Capital One’s crypto system for analyzing cryptocurrency-related information. Source: USPTO
The eight modules shown in the illustration — cryptocurrencies market, social media, event, cryptocurrencies company, user, regulation, fiat currency, and traditional data modules — may receive different types of crypto-related information, the filing notes.
Cryptocurrency-related information includes “speculation, rumors, opinions, and other information posted on social media,” the patent application details. For example, the information may be “an influencer’s opinions, recommendations, predictions, etc.” The system may evaluate the information and give corresponding weightings based on the popularity of the social medial post as well as the poster using data such as “views, likes, dislikes, comments, shares, retweets, and reposts.”
After analyzing, the system will “generate market predictions based on initial hypotheses and weights,” and can execute personalized trading decisions. The full patent which details the entire system can be found here.
What do you think Capital One will do with this crypto prediction and trading system? Let us know in the comments section below.