Cryptocurrency Investors Use AI Tools Like ChatGPT to Analyze Projects and Assess Risks

Cryptocurrency investors increasingly turn to AI tools like ChatGPT to streamline their research processes and assess the legitimacy of projects before committing capital. ChatGPT can distill complex white papers, explain tokenomics, and highlight key aspects such as team backgrounds and use cases, enabling both novice and experienced investors to make more informed decisions [1].

One of the primary functions of ChatGPT in this context is to break down the technical language of crypto projects into digestible summaries. For instance, it can generate a high-level overview of a project by answering prompts such as “Explain what Bitcoin Hyper (HYPER) does in simple terms” [1]. This allows investors to quickly grasp the core objectives and potential of a project without needing deep technical expertise in blockchain.

White papers, which are often lengthy and dense, can also be summarized by ChatGPT, allowing users to focus on key elements like technology, roadmap, and market positioning. By asking for a summary of a white paper—such as “Summarize the main points of the Stellar white paper”—investors can identify whether the project aligns with their investment criteria [1]. This not only saves time but also ensures that critical details are not overlooked.

Beyond foundational research, ChatGPT aids in evaluating the real-world utility of a coin. For example, a prompt like “What problem does Chainlink solve, and who uses it?” can reveal whether a project addresses a genuine market need and how it is adopted across industries [1]. This insight helps investors determine if a project is merely speculative or has tangible applications.

Assessing the credibility of a project also involves evaluating the team and their track record. ChatGPT can be used to investigate the backgrounds of project founders and their previous work in the industry. A prompt such as “Who founded the Avalanche blockchain and what’s their background?” provides investors with an understanding of the team's experience and potential for execution [1].

Tokenomics—the structure of a coin’s supply, incentives, and distribution—can be another area where ChatGPT assists. A prompt like “Explain the tokenomics of the Hedera (HBAR) coin. What’s the total supply and how is it distributed?” can highlight whether a project's token model supports long-term sustainability or could lead to inflation or rug pulls [1].

Security and regulatory risks are also critical factors. By prompting ChatGPT with questions like “Has Tether USDt (USDT) faced any regulatory issues?” investors can identify potential red flags before committing funds [1]. This is particularly important given the prevalence of scams such as rug pulls, pump-and-dump schemes, and phishing attacks in the crypto space.

Furthermore, comparing a project to its competitors helps investors understand its strengths and weaknesses. A prompt such as “Compare Sui and Sei blockchains in terms of scalability and interoperability” can yield insights into market positioning and technological advantages [1]. This comparative analysis is essential in a crowded market with thousands of tokens competing for attention.

For those new to crypto, ChatGPT can act as a guide by suggesting key research questions. A prompt like “I’m considering investing in a new crypto token. What key things should I research or look out for?” can produce a comprehensive checklist covering fundamentals, technical aspects, market sentiment, and security [1].

However, it is important to recognize ChatGPT’s limitations. It does not provide real-time data unless integrated with external tools, nor does it offer investment advice or financial predictions. Additionally, it may produce outdated or inaccurate information, which means users must verify facts through independent sources [1].

In summary, ChatGPT can be a valuable addition to an investor’s research toolkit, helping to navigate the complexities of the crypto market. However, it should be used to supplement—not replace—critical thinking and thorough due diligence. As the market continues to evolve, AI tools like ChatGPT are making it easier for investors to gather insights, structure their analysis, and ask the right questions before investing.

Source: [1] How to use ChatGPT to research coins before you invest https://coinmarketcap.com/community/articles/68ac5f73c696836ea3fb00b9/