MACHINE LEARNING AS A PREDICTIVE
TECHNOLOGY AND ITS IMPACT ON
DIGITAL PRICING AND
CRYPTOCURRENCY MARKETS
Abstract- -
Machine learning mainly deals with the matter of
computer algorithms that are required for decision
making in the digital pathway. The major aim of this
research is to analyze the use of machine learning in the
Digital pricing and markets of crypto currency.
Through using secondary data collection this research
has been conducted and a deductive approach has been
taken in this research in order to critically evaluate the
variables with respect to the established theory.
Machine learning is an advanced process of computing
a large amount of data and the primary purpose of
machine learning is to automate the system with
computers and that does not require human
intervention in order to assist or adjust. In the present
age of digitization organizations, businesses and
individuals use machine learning digital pricing and
crypto currency investment. Machine learning provides
reliable decision-making suggestions based on the data
and information it gathers. With the use of machine
learning in the business process, large companies are
staying ahead of other competitors in the global market.
The present report deeply analyzes the use of machine
learning in digital pricing and cryptocurrency. The
present study involves the different applications of
machine learning and its impact on the cryptocurrency
markets and digital pricing.
Keywords- Cryptocurrecy, Digital pricing, Bitcoin,
Machine learning, Artificial Intelligence
I. INTRODUCTION
BACKGROUND: Machine learning or ML can be
defined as the study that deals with “Computer
algorithms”, used for making decisions or
predictions automatically without being “Explicitly
programmed to do so”. Over the last decade,
“Machine learning” has undergone a lot of
developments and has gained a significant position in
today’s market. Due to the presence of different types
of machine learning, companies are able to keep track
of the rapid increases in the “Digital transformation”
thereby gradually moving towards the “Age of
automation” [1]. Predictive analytics on the other
hand can be defined as the statistical analyses that
include “Statistical modeling”, “Descriptive
analytics” for analyzing a large volume of datasets
[2]. It also involves the use of different machine
learning techniques for identifying the possible
“Future outcomes” based on the “Historical data”.
However, the emergence of crypto currencies in the
market has given a whole new aspect to the industrial
sectors due to their “High volatile” and unpredictable
nature. Another important aspect that has
revolutionized the recent market is the “Digital
pricing” technology that involves the usage of
developed “Information technologies” and
“Digitalized processes” for “Price management”
[3].
AIM AND OBJECTIVE: The aim of this report is
to analyze the use of machine learning as a predictive
technology in order to find out its impact on the
“Digital pricing” and “Crypto currency markets”.
OBJECTIVES
● To analyze the risks of using modern
technologies such as cryptocurrencies and
digital pricing in the business.
● To determine the impact of implementing
machine learning in the cryptocurrency
market and in digital pricing.
● To analyze the different tools and techniques
of machine learning that are being used
lately in the market.
● To analyze the advantages and
disadvantages of incorporating these
machine learning techniques within the
business.
RATIONALE: The “Crypto currency markets” are
of a very unpredictable and volatile nature due to
which there always remains a high risk of scams and
wild swings in the business [4]. The main reason
behind the volatility in cryptocurrencies includes
three “Primary sources”; “Market manipulation”,
“Speculation”, and “Sentiment”. These issues can be
resolved to a larger extent by implementing
“Machine Learning” in Digital pricing and in
cryptocurrency markets. This can be achieved by
developing certain machine learning techniques such
as curation of “More precise content”, “Smart
content creation”, incorporating new website
designing strategies and UX, “Marketing automation
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services”, and so on. Thus, “Machine learning
models” are recently used as prediction technologies
in order to achieve high accuracy guesses in business
plans based on the company’s “Historical data” [1].
The major objective of using these tools is to identify
and analyze all the events that have taken place in the
past in order to provide the best suitable assessment
required for the company’s growth.
Fig 1: Rate of fluctuation of “Bitcoin price” in the
year 2021
(Source: [5])
II. LITERATURE REVIEW
CONCEPT OF MACHINE LEARNING: A
machine learning system learns and improves
automatically from experience without having to be
explicitly programmed by artificial intelligence (AI).
Computer programs that can access data and learn for
themselves are called machine learning programs.
The first step of machine learning is to observe the
data such as direct examples and instructions in order
to analyze and form the pattern that can help in
decision making in the future. The main motive of
machine learning is to automate the system with
computers and that does not require human
intervention in order to assist or adjust.
In the year 2016, “AlphaGo”, an artificial
intelligence came into existence that solved complex
problems in many applications related to driverless
cars, finance, and medical care [1]. With the
innovation of machine learning and artificial
intelligence, the importance of humans in
technological sectors has significantly decreased.
Machine learning can help the financial organization
to make investment decisions based on a large
amount of previous data. Nowadays, investors use
machine learning in picking stock and cryptocurrency
as it can provide relevant suggestions and it also does
not take decisions emotionally as humans do.
Machine learning has different use cases in different
organizations such as stock market trading, online
fraud detection, virtual personal assistance, speech
recognition, image recognition, medical diagnosis,
and so on.
CONCEPT OF DIGITAL PRICING AND
CRYPTOCURRENCY: Digital pricing is a concept
of new information technologies and digitalized
processes in price management. Digital pricing is
used in businesses for automated pricing based on the
data and with the help of machine learning. The
model of digital pricing led to the business for better
monetization of the usage. Digital pricing plays an
important role in the business for the determination of
the revenue source, and value to customers [2].
Cryptocurrency is a virtual or digital currency or
encrypted data that is denoted as currency. The entire
process of cryptocurrency is organized and monitored
by an algorithm called the blockchain. The validity of
a transaction is done by a peer-to-peer network and it
is also believed to be a secure mode of transaction.
The primary cryptocurrency is called Bitcoin, and the
other currencies are called alternative coins or
"Altcoin" [3]. The maker of cryptocurrency is still in
its early stages, that is why there is no regulation on
this system and anyone can make his or her own
cryptocurrency. The cryptocurrency market is highly
volatile than the stock market and therefore most of
the expert investors do not provide suggestions to
invest in the cryptocurrency.
THEORETICAL OVERVIEW: The main purpose
of “Computational Theory” is to make the
computational process fast and accurate by using
algorithms. "Computational Theory" is based on
certain principles such as ultimate limit, sample
complexity, time complexity, learning, and
interpretability [4]. Ultimate limit conveys how far a
machine learning model can learn, sample
complexity suggests what number of staples it needs
to learn, time complexity indicates the time taken in
the computation process, learning indicates what kind
of algorithm is working, and interpretability suggests
the explanation of the prediction. Machine learning
adopts all the principles of “Computational Theory”
and that is why it is one of the most used
technologies for making computations in the
organization. In the present age of digital technology,
large companies and financial organizations use the
computational power of machine learning in order to
increase sales, make customer relations strong, make
investment decisions, and so on.
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IMPACT OF MACHINE LEARNING ON
DIGITAL PRICING AND
CRYPTOCURRENCY: Machine learning can
process a large amount of data in a short period of
time and suggest decision-making. Machine learning
can also be used in digital pricing and cryptocurrency
investment-making strategies based on the previous
data. In this digital age, there are more than 1500
crypto currencies over 5.8 billion people individual
and institutional investors. Machine learning is
largely used in the retail sector for digital pricing. In
the increasing competition within retail businesses,
machine learning can help the retailers in increased
price awareness and increased cost and help to
remain a stronger competitor in the global market.
Information technology and the computing power of
machine learning help retailers set digital pricing.
With machine learning, the business can easily make
pricing decisions at any stage in the life cycle of the
product [5].
In the present generation of investment, a whole lot
of people invest in cryptocurrency for a huge profit in
a short period of time. The present generation of
investors takes AI suggestions that run on machine
learning. Due to the volatile market, it has become
difficult for making predictions and making a profit.
With the use of machine learning investors can access
real-time investment suggestions. Generally, machine
learning is an automatic process based on the
previous data and it can display real-time suggestions
that can help the investors for making cryptocurrency
investing [6]. Machine learning runs on the algorithm
and improves its strategy by itself and on the basis of
the algorithm the computers can provide
cryptocurrency suggestions. People trust machine
learning as it gives reliable suggestions and it can
provide information in a short span of time.
Furthermore, machine learning provides data based
on the information not on emotion as humans do [7].
Individuals can make mistakes in the prediction as
they can change their minds based on fear and greed.
On the other hand, machine learning processes data
based on the relevant data.
However, with machine learning, some predictions
may go wrong as the cryptocurrency market is based
on different factors. A piece of single bad news can
shake the entire cryptocurrency market and machine
learning or AI cannot predict that. Another drawback
of machine learning is that it cannot predict the news,
machines can only work based on the data [8]. A
cryptocurrency investor needs to know five machine
learning methods that are used in cryptocurrency
trading, these are: “Graph neural networks”,
“Representation learning”, “Generative models”,
“Neural architecture search”, and “Semi-supervised
learning”. These machine learning models can help
cryptocurrency investors to gain massive profits.
III. RESEARCH METHODOLOGY
A secondary analysis has been performed in order to
complete this piece of research work. The relevant
information based on the research topic has been
gathered from the popular databases such as Google
Scholar, Pubmed, Scopus, and so on. Suitable
keywords have been used in order to find the most
suitable journals and along with that a five years
range has been set for assessing all the latest journals.
A deductive research approach has been used in order
to analyze the critical relationship between the
deduced variables with the help of the developed
theories based on the research objectives of this
particular study. In this aspect, the factors affecting
the cryptocurrency market and digital pricing have
been analyzed. Along with that, the impact of
different types of machine learning techniques on the
recent marketing strategy has also been analyzed by
using thematic analysis. In this aspect different
themes have been developed and evaluated based on
the research objectives.
IV. ANALYSIS AND INTERPRETATION
Theme 1: The impact of machine learning techniques
in reducing the risks of the Cryptocurrency market
and digital pricing
The major risk that is faced by the organizations or
their investors, in this case, is its high rate of
volatility, that is, they are very unpredictable in
nature [14]. These types of unpredictable changes
within the “Market sentiment” can result in sharp
fluctuations in the price rates. Moreover, these can
also get affected by a “Hard fork” or certain
discontinuation while trading. Apart from that these
types of technologies are always prone to hacking
and technical errors and no possible ways exist to
prevent these problems [15]. However, with the use
of machine learning predictability models, the
aforementioned problems can be mitigated to a larger
extent. In this aspect, different researchers showed
that by the implementation of different machine
learning techniques the predictability of the “Bit-
coin” market can be determined [16]. Moreover, this
machine learning is also used in this domain in order
to determine the existing relationship between the
“Features” and the potential targets in the market.
Theme 2: The different advantages and disadvantages
of deploying various Machine learning techniques in
the market
Machine learning has enabled easy management of
the business by its ease of adaptability with the ever-
3
changing conditions of the market trends. It helps in
the improvement of the business operations by
developing a better understanding of the entire
business and the customer demand. The efficiency
rate of these machine learning techniques can be
further enhanced by combining it with “Artificial
intelligence” thereby achieving different “Analytical
processes” finally resulting in the growth of the
business. The major advantages of using machine
learning involve the identification of the latest
“Trends and patterns” in the marketing sectors that
are not apparent to humans [17]. In these cases, no
“Human intervention” is required thus there is a less
chance of human errors hence continuous
improvement can be achieved.
Furthermore, these “Machine learning algorithms”
can be used for analyzing the data that are
multidimensional or “Multi-varied” in nature.
However, there lies certain limitations of using these
modified techniques in the cryptocurrency market
and while handling prices digitally. These include
massive “Data acquisition” that is, a huge quantity of
good quality datasets are required in these cases [18].
The entire process is time-consuming as a machine
learning algorithm requires plenty of time to process
the data and develop it in the right manner to achieve
higher accuracies. Problems are often faced while
interpreting the algorithmic results generated by the
system. Moreover, different instances of hacking and
technical issues related to crypto currencies and
digitalization have also been observed.
Fig 2: Pictorial illustration of the handling pricing by
different Machine learning techniques
(Source: [19])
V. DISCUSSION AND FINDINGS
Prediction of digital financial market and market
efficiency by using machine learning: It has been
observed from the studies of different researchers that
machine learning provides potential techniques in
order to explore the rate of predictability of the
cryptocurrency market. Thus, it helps in developing
profitable “Trading strategies” even under “Adverse
market conditions” by analyzing the historical
datasets of that particular market. In regard to this,
another study has been analyzed where the
predictable range of the three major
“Cryptocurrencies” that is, “Ethereum”, “Bitcoin”,
and “Litecoin” has been determined [20]. Their
predictability has been determined by using “Trading
strategies” based on different machine learning
techniques such as, “Random forests”, “Linear
models”, and “Support vector machines”. Thus,
machine learning algorithms in this case can be used
in order to predict the customer’s reaction to the
pricing strategy more accurately thereby estimating
the demand of that particular product in the market.
Moreover, the sales of the digital financial market
can be improved by using chatbots and “Virtual
assistants”.
Market prediction of “Bitcoin” by using “Machine
Learning”: Different researchers have established
regression models for analyzing the market
predictability of bitcoins by using different machine
learning techniques. In this aspect, the “High
dimensional technical features'' has been used for the
identification of the historical perspective of bitcoin
in the market that includes “Bitcoins return” analysis
[21]. Other than that, “Block-hain” features have also
been used for analysing the historical datasets such as
the total number of bitcoin transactions taken place.
Different techniques such as “tree-based models”,
“Random forest”, “Ensemble models”, and many
more have been used by different researchers in order
to evaluate the different aspects that can result in the
increase or decrease of the pricing rates in the market
[22]. Apart from these, modified trading strategies
have also been developed by various researchers for
analyzing the “economic complications” that occur
while predicting the “Bitcoin market”. Thus, it has
been found that machine learning techniques can be
used for predicting the market rate of bitcoins for a
limited span of time. Hence, this valuable
information can be used by the investors, or the
management committees to understand the
recent trends of the market thereby achieving greater
success [23]. This particular study provides a basic
idea regarding the different machine learning
techniques as well as their importance in the
cryptocurrency market and in digital pricing [24].
Thus, in order to achieve greater success in the
4
market the following recommendations regarding the
usage of machine learning are provided. The lead
scoring tools can be used for identifying and
predicting the lead patterns that can be used to make
accurate estimations about the products [25].
VI. CONCLUSION
A vivid idea about the different types of machine
learning techniques that can be used in the
cryptocurrency market and in digital pricing has been
obtained. The different risk factors such as changes in
the pricing rates, technical issues, and hacking have
been addressed in this piece of research. The
relationship of machine learning with artificial
intelligence has also been stated in this study. In this
respect, it has been observed that the incorporation of
artificial intelligence within machine learning
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