By: Samarth Hadawale RIG Inc Intern Researcher

The most important word in this Digital Economic Lifestyle is ‘Cryptocurrency’ (Crypto) and that is the reason big investors, companies, and owners are now relying on Big Data Analytics and it’s usage in Identifying the patterns in these Cryptocurrencies. Let’s dive into the most important and famous Crypto: Bitcoin!

The Term ‘Bitcoin’ was introduced back in 2009 under the pseudonym Satoshi Nakamoto but everyone refers to it as Bitcoin. It was invented back in March 2010 and introduced in bitcoinmarket.com. This was the time that Blockchain Technology was also introduced to the larger market in order to further strengthen this new era of Digital Currency.

As soon as these crypto currencies started gaining momentum, more investors started to look to invest in these digital currencies; they were looking to invest significant amounts of money, but their main concern was the security of their investments.

That is the time where Big Data Analytics & Blockchain technology made a significant difference. As this crypto market is always moving up and down, more transactions are occurring, leading to the generation of more data. Blockchain & Big Data techniques make it simple to maintain the security of large investments.
With this ever-growing crypto market, Big Data Technologies are being used to gain insights related to it; which later helps individuals to make predictions for themselves.

 

 

Now, let’s focus on exactly How Big Data Analytics is helping(benefitting) Cryptocurrency

 

Task performing efficiency of investors increased

  1. Most investors put their money in these crypto markets in order to make quick money. Hence in most cases investors initially fail to make the correct decisions when it comes to the crypto market. Their major focus remains on analyzing the values of different digital crypto coins and checking their values while buying and trading them in order to make huge profits. If you look into the crypto market, you will realize that this market undergoes many frequent fluctuations. For example, back in April-May 2020 when the pandemic had just arrived, Bitcoin was priced around $3000 and now in April-May 2021 it is priced around $57000. This example illuminates how inconsistent and fluctuating this market is.
  2. Yes, every market was affected when Covid-19 arrived but if we exclude the initial 1-2 months of the Covid-19 Pandemic there wasn’t much that affected the Crypto-Market. While most businesses fell short of profits, this market was growing more than ever. However, it is challenging to keep track of all these fluctuations. With the help of Big Data Analytics and ML Algorithms, any investor can more effectively uncover the trends before big jumps and dips happen in these crypto markets.
  3. Analysis of these trends helps all investors to determine what will be the next move of the market. Based on historical data, it can help to predict the future. Using different machine learning models, investors can now use these fluctuations as a variable and use them into the models to predict the future value of any cryptocurrency. As investors are familiar these methods, there is higher chance for them to gain maximum benefits using all these Big Data Techniques.

 

Secured Block Chain technology and its usage for the Investors

  1. The most important aspect of investing your own money into a Cryptocurrency is having security for your investments. This involves the thought of Blockchain Security. As these cryptocurrencies are now being used to purchase various services & products, it is very important to have robust security; or else it will be really difficult for all the buyers, consumers and customers to make investments in these types of cryptocurrencies such as Bitcoin, Dogecoin, Litecoin etc.
  2. Blockchain security comes with an additional layer of protection which is called “Big Data Security”. The perception of the security domain is significantly more complex when having big data in the process. Making it difficult for someone to break into the system with such a well-advanced security comprised of multilayer restrictions. By having blockchain security under your radar makes it flexible for consumers to invest in digital currencies.
  3. Providing security to blockchain using big data opens new opportunities for startup companies. As blockchain gains traction by providing proper security, it can easily help consumers to gain maximum profits on the investments they have in cryptocurrencies. Extra security gives investors an additional advantage in the investment process.

 

Detecting patterns with the help of Big Data & Machine Learning algorithms

  1. Unfortunately, the biggest advantages of big data and cryptocurrency lie in the criminal sector and because of that most of the banks and companies which provide credit/debit/insurance cards are hesitant to do businesses with cryptocurrencies because of the security concerns. Each credit card provider/company wants to know about all the basic details of cryptocurrency: where it is coming from, where it is being transferred, who is sender, who’s the receiver, whether a proper transaction is being taken place between them or not etc. By using Big Data techniques, you can track all these minor/major details and then start looking for some patterns. This will help to identify whether the activity taking place is fraudulent or not.
  2. While looking for patterns, people can also use and analyze some basic ML algorithms in order to find if any crypto’s rate is either going to increase or decrease. Having the knowledge of analyzing these patterns can help you solve many questions such as: Should we invest in this particular crypto? How much profit it will give us? What will be the loss if nothing works out? etc.
  3. When talking about cryptocurrency, everybody’s major concern is security. Larger transactions taking place are some of the indications wherein you can check for illegal operations. However, it is not always necessary that the heavy usage of transactions will always lead to illegal operations, but investors need to be more aware.

 

Conclusion:

As cryptocurrency tends to accelerate these different businesses, many hackers will try using illegal means to interfere via malware attacks or other malicious activities. This is largely the reason why the big data industry and the big data techniques used to find patterns are highly beneficial for blockchain and the crypto market. Although the adoption of cryptocurrency is still new to many countries across the world, it is slowly gaining acceptance worldwide.  However, investors need to ensure they’re not being fooled by any fraudster and to do this you need to start using big data techniques to analyze and detect any unwanted activity before it takes place.

 

 

References:

https://www.icaew.com/technical/technology/blockchain/blockchain-articles/what-is-blockchain/history

https://www.investopedia.com/terms/b/blockchain.asp

Pattern Recognition: The basis of Human and Machine Learning

https://medium.com/limitedio/beginners-guide-to-investing-in-cryptocurrencies-e2636d9c2fd