The cryptocurrency market is extremely volatile, and the prices of tokens fluctuate drastically within seconds. Investors participate in crypto trading, but they often fail to react instantly and efficiently to the crypto price changes and hence, fail to achieve optimal trades. Investors need to dedicate much more time to crypto markets to achieve the best trades and profit from crypto trading. Crypto trading requires round-the-clock monitoring of crypto exchanges which becomes quite challenging for investors. This has led to the rise of decentralized crypto trading bots, automated tools that conduct and execute trades and transactions on behalf of Investors. This article will focus on the benefits of using decentralized crypto trading bots and how they change the digital game.
What are decentralized crypto trading bots?
Decentralized crypto trading bots include automatic programs designed to perform crypto trading on behalf of human traders. Typically, traders and investors must pay close attention to market stats while practicing trading and choose which crypto to buy or sell and at what time. Trading bots are used to automate the interpretation and analysis of market stats by gathering market data, interpreting it, calculating the potential risks, and executing the final buy and selling of crypto assets.
Decentralized crypto trading bots are just like hiring experts to perform the trading activity for investors while they sit back and see their profits grow. There has been a significant rise in the number of decentralized crypto trading bots in the market due to many advantages over centralized bots since there are no financial intermediaries or counterparties involved in the transactions. The trades operate automatically and autonomously without interference, making them cheaper and faster.
Advantages of decentralized crypto trading bots
The popularity of decentralized crypto trading bots for beginners is due to their several advantages over centralized bots, such as security, anonymity, censorship resistance, transparency, reduced fees, and high speed.
- Security – Decentralized crypto trading bots cannot be accessed unless a hacker gains access to a user‘s private key. The blockchain system secures funds and transactions on decentralized platforms, and the distributed networks verify the trades and transactions, which makes it even more secure.
- Anonymity – Since the users do not have to register to make a trade with the crypto bot, it is possible to maintain complete anonymity. All transactions are pseudonymous, where the users are identified by their wallet addresses.
- Censorship Resistance – Decentralized crypto trading bots do not need users to fill in lengthy KYC forms, offering complete anonymity and privacy. Since decentralized platforms do not exercise censorship, it is possible to provide more digital assets and cryptocurrencies than a centralized exchange.
- Transparency – All trades made via crypto bots are delivered on publicly distributed blockchain ledgers. These automated bots use tools that allow users to look up transaction data and check when and where a crypto transaction took place from a wallet address. This degree of transparency reduces fraudulent transactions.
- Reduced fees – Crypto trading bots are generally less expensive than centralized versions since there is no intervention by financial institutions or even the government. However, one should note that the high demand on the blockchain network may increase transaction costs.
- High-speed – Compared to any traditional transaction method, crypto transactions are the fastest, processing in a few seconds. Bank transfers, credit card or debit card payments, and even e-wallets take at least 24 hours to process. Once the blockchain network confirms the block with the transaction, it is fully settled, and the funds are ready to use instantly.
Case studies
Crypto trading bots have seen great success due to their usefulness for modern investors, especially beginners learning about the highly volatile crypto market. Even for experienced traders with various assets to monitor, it is impossible to check the market 24×7 and make informed and profitable decisions. This is where crypto trading bots come in. Trading bots monitor and track historical price data to calculate the best strategies. One such notable bot includes 3Commas.
3Commas helps traders win in all market conditions, including bear, bull, and sideways markets. It offers smart trading terminals and tracks cryptocurrency investments by keeping them all in one place. 3Commas features include – Rebalance, Dashboard, Paper Trading, Smart Cover, Options Bots, and Signals.
Another crypto trading bot that has made it to the top is Cryptohopper, the most powerful AI-crypto bot. Cryptohopper helps traders improve by using features like copy trades, ProTools, portfolio management, trailing features, templates, signals, Dollar Cost Averaging, short selling, triggers, and many more. Successful traders who have used Cryptohopper’s AI platform to automate, visualize, and deploy their trading strategies, have seen exponential increases in their returns.
Future Outlook
Crypto trading bots are the latest successful and prominent decentralized protocols that do not depend on order books like traditional exchanges but use mathematical formulae to calculate asset prices. The growing popularity of decentralized crypto trading bots signifies a great future impact on the crypto industry as they aim to maximize capital efficiency through automated trading. In the next few years, the decentralized finance and the crypto industry will grow exponentially and eliminate all intermediaries like banks and governments and replace them with decentralization, be it crypto bots, exchanges, or any other product or platform.
Conclusion
Crypto trading bots use algorithms to execute trades when certain suitable market conditions are met. Institutional investors and traders create trading bots activated when the financial market hits a particular condition. The latest machine learning and artificial intelligence technology have made these trading bots even more efficient and faster. Furthermore, these bots take all emotions out of trading strategies while making profitable decisions. They do not need to thrive or sleep in the 24×7 crypto markets, which is why they are often used to take advantage of arbitrage and high volatility opportunities. Moreover, accessibility is egalitarian, which means traders of all experience and income levels can use crypto trading bots based on their requirements.
