Cryptocurrency trading bots are on the rise in South Korea over the past few months as a rising number of companies is offering such automatic trading.
Similarly to the trading bots for other assets, the cryptocurrency trading bot programs sell and buy cryptocurrencies by watching the market price movements using a quant method and various algorithms. They are particularly convenient for less experienced traders or for those who do not have much time to watch and analyze the markets.
According to a report of Business Korea news outlet, quoting crypto industry sources, there has been a significant rise in the use of automated trading programs like Coinsum and Watchbot.
Coinsum is developed by blockchain company Coinstream that currently operates on crypto exchanges Binance and Bithumb. Soon the software will be available for the largest South Korean exchange by volume – Upbit. According to its statistics, it had an average daily return of 1% on Binance Coinsum. On Bithumb the bot performed even better, earning its users profits of 2-3% per day on average.
Watchbot, developed by Jane/KIN company, is a bit more advanced than Coinsum. It not only trades automatically, but allows users to create their own trading strategies. According to company data, in the first week of May, there were 4068 Watchbots with average weekly transactions of KRW 87 billion (around USD 77.96 million).
Another Korean company, Findexchain, recently introduced its own trading robot, which uses artificial intelligence and machine learning to trade the crypto markets. It is used in conjunction with Findexchain’s crypto wallet Ionia, and can run on Bithumb, Coinone, Poloniex and Bittrex.
There are other popular trading bots such as Profit Trailer, Gunbot and Coinbot24.
According to the media report, however, the rise of the trading bots is causing some security concerns. “Both cryptocurrency exchanges and automatic trading bot service providers are double-encrypted with API Key and Secret Key,”a person from a crypto trading bot company told Business Korea. “We are improving security so that users’ trading rights are protected as much as possible. We are now paying special attention to security and will always continue to focus on raising security.”
Those are not the only problems of trading bots. Historically such programs have been responsible for market crashes and price manipulations, however unintentionally.
For example, the famous 1987 Black Friday Wall Street crash, where equities dropped over 30% in one day, was caused by program trading — the first generation of bots, which sold stocks automatically when they fell below a certain price. Despite being far more advanced than their forebears, the current trading bots are often accused of causing similar calamities on the crypto market, artificially inflating and manipulating prices.
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