Capital One Patents AI Fact-Checker to Make Crypto Trading Safer
Capital One believes its patented artificial intelligence system can better assess whether crypto-related news and data are more reliable than humans for tradings, according to its patent filing.
A subsidiary of U.S banking group Capital One said its newly patented artificial intelligence (AI) system would save human crypto traders from potential pitfalls.
Capital One Services, which deals in credit cards and auto loans, says its system uses AI technology for "analyzing [the] credibility of cryptocurrency-related information."
Humans face barely surmountable obstacles and pressures when they trade crypto, the filing states.
The market runs 24/7 and it requires investors to know the intricacies and nuances of very distinct protocols as well as watch out for events such as airdrops, forks or hacks that come streaming in from multiple sources including Twitter, Medium posts and crypto news sites, the content of which cannot always be readily verified.
"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," the patent reads. "Further, it would also be difficult to verify the credibility of the cryptocurrency-related information in real time. In particular, it is difficult to verify the credibility of speculation, rumors, opinions and other information posted on social media and elsewhere."
Awarded by the U.S. Patent and Trademark Office last week (patent no. 10,679,229), Capital One's AI verification system can be split into three crucial components.
First, the system has a specific AI program that looks out for one kind of information such as tweets. After finding a potentially noteworthy event, it feeds it back to a "credibility analysis engine," which cross-references and determines whether the event is credible based on historical examples and, if so, how the market has responded in previous instances.
It then collects all the information, processes it and uses it to make quick trading decisions.
Capital One said the AI engine could become nuanced and sophisticated at interpreting information. The system might be able to detect fake volumes and evaluate the speed by which news, such as an exchange hack, goes viral across various social media platforms and news sites.
"The machine-learning algorithm," the patent reads, "can also determine the reach ... and how quickly the news spreads out, what investors said and felt ... on social media as the news was spreading out, how long it took for the initial fear, if any, to fade out, for the "buy-the-bottom" mood to arise, as well as for the market to bounce back up."
But Capital One says its patent will need further nuance before it can be launched as a new service (and generally, the filing of a patent does not necessarily indicate intention to launch a product). It's unclear as it stands whether the system could execute trades autonomously or whether they would have to be okay'd by a human first.
Like the rest of the U.S. banking sector, the broader Capital One group blocked account holders from purchasing crypto using their credit cards in early 2018. The bank has defended its decision, saying it wants to shield clients from the high levels of fraud, loss and inherent volatility in crypto.
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This same sentiment is reflected in the patent filing: "As with many nascent markets, many cryptocurrency investors rushed into the market without adequate knowledge and experience in either trading or cryptocurrencies. In fact, many of the cryptocurrency investors were trapped by short-term market movement and lost money quickly."
TBut then again, Capital One knows the traps and pitfalls of crypto firsthand. Last year, an ex-Amazon employee hacked into the bank's internal systems, exposed the personal and financial data of over 100 million customers and used the company servers to covertly mine for cryptocurrencies.