Bitcoin was introduced into trading circles in 2008. Initially written off as a hobby, speculative, and risky, it heavily relied on the manual processing of transactions. In 2017, however, cryptocurrency surged in popularity, becoming mainstream worldwide, and the need to automate processes grew.
With a sudden increase in trades and the need to monitor the market 24/7, there was no choice but to automate transactions. Professional programmers, along with advances in AI and machine learning, contributed, and humans were increasingly sidelined. Automation is ideal when it’s seamless, but what happens when it’s not?
Is the automation of crypto trading the end of the need for human traders? Here’s a look at how crypto went from manual to automated trades, and what’s predicted for the future.
The Early Days of Crypto Trading
Nobody had heard the word Bitcoin until 2008, when the enigmatic Satoshi Nakamoto released his Bitcoin whitepaper, Bitcoin: A Peer-to-Peer Electronic Cash System.
Bitcoin and Blockchain Enter the Finance World
In January 2009, the first trades began. It was an extremely manual process with every trade recorded on the blockchain ledger. The beauty of blockchain transactions is that they’re set in stone and cannot be altered.
Initially, Bitcoin trades were negotiated on peer-to-peer forums like BitcoinTalk. These trades were manually transacted and settled on a blockchain. The most famous early trade was performed by Laszlo Hanyecz in May 2010, when he offered 10,000 BTC for two Papa John’s pizzas. At the time, that transaction was around $41. Today, it would be worth $1.1 billion.
Early Automation
The frustration of performing each crypto blockchain transaction manually led to some hobbyist coders playing around with Python and API scripts. The idea was to automate the trades, which led to the creation of community-driven bots.
At first, traders would monitor the crypto market—24/7 if necessary—waiting for the ideal time to transact. Bots immediately cut this task out by being coded to execute at a specific price point.
When and Why Crypto Automation Became Necessary
Cryptocurrency stopped being a fad and entered the mainstream consciousness in 2017. Bitcoin had competition from new cryptocurrencies like Ethereum and a growing number of exchanges such as Binance, Bitfinex, and Coinbase. This resulted in record numbers of transactions, which manual processes could not keep up with efficiently. Automation, including the adoption of AI and machine learning, and the expansion of blockchain’s capabilities, came to the fore.
Why 2017 Was a Crucial Year for Crypto Automation
2017 was a pivotal year for crypto trading. It was no longer considered speculative currency, but a legitimate one. It was the year of the Initial Coin Offering (ICO) boom, and many startups raised billions of dollars by issuing their own cryptocurrencies.
By mid-2017, institutional investors and hedge funds were ramping up their crypto trades, and the need for better automation was raised. This was also the year that regulatory frameworks began to be drafted; this interest in regulation inspired more professional-grade platform development.
Advances in technology made automation easier in 2017 than in previous years. Crypto hobby programmers were being replaced by professionals with advanced coding experience.
AI and Machine Learning Lend a Hand
It was also in 2017 when AI and machine learning were recognized as technology drivers. This technology was able to create sophisticated algorithmic bots to automate most tasks in the crypto transaction process. With the scale of transactions that year, these bots were necessary to drive the massive volume of data sets that manual processing couldn’t cope with.
By this time, there was sufficient pricing history and data patterns for these bots to predict when to perform trades. Risk management and execution accuracy became a crucial aspect of these bots’ activity.
Blockchain—More Than a Crypto Exchange
What began as a platform to trade cryptocurrency has grown into a much broader blockchain ecosystem. Its high level of security allows it to be used to maintain medical records, facilitate e-voting, and support high-level encrypted messaging. Global companies like Nestlé and Walmart adopt blockchain technology for supply chain management. The sheer volume of products that needed tracking was managed more efficiently with blockchain. Blockchain technology even allows top-rated crypto casino sites at CryptoSpinners to provide players with the opportunity to fund their gameplay using their cryptocurrency of choice.
Crypto Automation—Benefits and Challenges
The role of automation is to benefit crypto traders, and in many cases, it does. However, there are limitations and risks involved with relying exclusively on automation. Then there are the issues around regulations.
Advantages for Modern Traders
Crypto automation was originally limited to large volume traders like hedge funds. Today’s crypto-trading bots mean mom-and-pop traders now have access to the same technology. Now everyone has access to 24/7 trades, transactions across multiple exchanges, data-driven accuracy, and emotion-free trading. All anyone needs to do is set their parameters, set and forget.
The Limitations and Risks
The overdependency on algorithm-driven bots is something that needs to be addressed. No bot is risk-free; a slight technical vulnerability or poor line of code could result in thousands of dollars in trading errors. While automation, when correct, can increase gains, it can also magnify errors if it’s incorrect or misused.
Two instances where algorithms caused disasters were the Ethereum crash in 2017 and the Binance Flash Crash of 2019. In 2017, a multimillion-dollar sale of Ethereum on the GDAX exchange triggered thousands of bot-automated sell orders, and the value of Ethereum temporarily dropped to $0.10. In 2019, a poorly programmed Binance bot executed trades at extremely low prices, causing a “flash crash.” Binance needed to tap into its Secure Asset Fund for Users (SAFU) to cover the affected customers.
The Challenges Around Regulations
The biggest challenge facing the cryptocurrency ecosystem is the lack of regulations. However, by 2025, several countries will have created clear guidelines around crypto trading linked to “know your customer” (KYC) and “anti-money laundering” (AML) rules. These countries include Canada, Australia, Brazil, Malaysia, and South Korea. Further challenges arise when the regulations differ per nation, complicating the ability for smooth cross-border cryptocurrency trades.
As automation of trades increases, stricter regulations will need to be created and adopted. Attention will be given to anti-manipulation rules, fair-access requirements, and complete transparency.
Crypto Automation and Human Involvement
Automated trading has assisted the crypto ecosystem in processing record numbers of transactions. Yet, as with most forms of automation, there is also the risk of job loss. Indeed, the hobbyist programmers who initiated the first trades in 2008 and 2009 may have been replaced, but there’s a chance for them to be reemployed.
Unpredictability is a term often associated with cryptocurrency, and this could be one area where AI may fall short. Machine learning uses patterns and history to forecast the future, but it’s not yet capable of being speculative. That’s where a collaborative approach is needed.
The future of crypto trading isn’t human vs. machine but a more hybrid humans-with-machines partnership. Since crypto trading remains speculative and algorithms fail, human intuition and background knowledge need to step in. People will become strategists, steering the automation in the right direction. Processes will be automated, but primary decision-making will still be left to human input—at least for now.
The Results of Crypto Automation
From its beginnings as a speculative hobby, cryptocurrency has reached levels that require full automation. Automation has assisted in processing massive volumes of trades, which have seen some cryptos boom, bust, and boom again.
The human role in cryptocurrency trading has changed. From the creators and initial traders, experts will now need to partner with machines to ensure the future of crypto remains bright. Regulations are globally coming into being, and this will further cement the place of cryptocurrencies in worldwide financial transactions.
Managed correctly, the automation of cryptocurrency will broaden its scope and bring it further into mainstream acceptance. Satoshi Nakamoto’s dream of a universally accepted currency continues to move closer to reality.
FAQ
Is automated crypto trading risky compared to manual trading?
Automation eliminates emotional errors (like panic selling), which is a huge advantage. However, it’s not a “set and forget” magic button. If an algorithm is poorly configured or the market hits a “flash crash” (like Ethereum in 2017), bots can execute bad trades rapidly. The key is to use automation as a tool for your strategy, not a total replacement for your oversight.
Will AI eventually replace human traders entirely?
Probably not. While AI is great at spotting patterns and crunching data, it lacks human intuition and the ability to react to “black swan” events or unpredictable news. The most successful approach is a hybrid one: the human acts as the strategist, and the bot handles the 24/7 execution and heavy lifting.