If you are new to my blog, you may want to read up on my introductions, code and videos on Triangular Arbitrage with Cryptocurrency. You can watch crypto trading bot tutorial videos on YouTube here: https://www.youtube.com/channel/UCVTnyT4fUxYkvawbggo8-AQ

Introduction and Background — Cryptocurrency Arbitrage

Cryptocurrency Arbitrage is the process of profiting from the price difference in two different markets, for example, buying in one geographic region and selling in another. One of my favorite topics to discuss is the strategy of Triangular Arbitrage, which attempts to profit by ‘triangulating’ the arbitraging of coins by purchasing 3 different coins based upon pre-determined calculation process which I have covered elsewhere.

Over the past few weeks there has been tremendous development, discussion and new insights into the Crypto Triangular Arbitrage markets through my public telegram groups, as well as my private crypto trading mastermind group.

This blog post will cover recent developments and areas of focus on triangular arbitrage with cryptocurrency, using a python script developed by Blockchain Engineer - Crypto Trading Bots .

In addition to the output of the crypto tri arb bot, we have continued to run the data collection and visualization which has provided incredible insight into the behavior of a particular triangular arbitrage market over a 3–15 minute time period and has aided in the development of new strategies we are currently pursuing. Please see some of the graphs below which show the incredible dynamic nature of these markets, as well as the effect of price changes on the calculated triangular arbitrage profitability (black crosses).

We are continuing to develop the data collection and analysis capabilities of the bot, which we may make available to a website or through an email.

November 2018 Crypto Triangular Arbitrage Python Update

I am very grateful for the contributions made by community members in particular Nathan (@Penl0 on twitter) in order to bring a major update for the triangular arbitrage bot for trading bitcoin / cryptocurrency available on my github (which is now seeing a steady stream of updates), as well as running the triangular arbitrage bot monitoring software for a number of days which has led to some fantastic visualizations and insights. Recent code additions now allow the user to search through more than 200 coins (tri arb markets) on Binance.com , and begins following and/or trading the most profitable (at that time) market. Because these tri arb opportunities last fractions of a second (or 2–3 seconds at most) it is very difficult to visualize this phenomonena, and these graphs are more for gauging the long-term behavior as well as provide insight into these low-cap tri arb markets.

With these updates and ability to monitor and visualize the tri arb markets in such a way, we are now monitoring 200+ coin / pairs / tri arb markets, and will be initiating trades when a satisfactory profit margin is achieved. These updates have been made available to the public github repository, while myself and others have developed a “Crypto Triangular Arbitrage Professionals” trading group with private code which is able to monitor in much greater quantity and detail.

Future Areas of Focus

Public Github Code: In November 2018 a major update to the publicly available github included the addition of over 200 coins, ability to email results (rather than tweeting) and additional minor fixes. This project has been incredibly successful with 64 forks and 119 stars. We have a few more significant modifications which will be added within the next couple of days.

Private Code: We have begun to experience great results from a private, faster version of the tri arb bot. NOTE: Code is currently not for sale. We decided to develop a private code-base due to the experience and suggestions of many members in the fact that triangular arbitrage bots will be competing for profitable opportunities with one another. Additionally we have decided to keep a private code-base for research purposes to inform future trading strategies.

Conclusion / Future Research

In Conclusion, research and development of the crypto tri arb bot has continued over the past 5–6 months and now we have a working bot which will profitably place trades based on the triangular arbitrage strategy. We will continue to focus on the development of this bot including User Interface. As I mentioned previously, although we are not currently allowing the code to be sold or accessed by outside-parties, we may at some point in the future decide to open up private crypto tri arb bots to select individuals. These details are in the works.

To help you to learn to implement this code as a profitable crypto trader, I have many online resources available. For example:

1. Youtube Channel covering Crypto Trading Bot Tutorial Videos: https://www.youtube.com/channel/UCVTnyT4fUxYkvawbggo8-AQ
2. Medium (Blog) about crypto trading bots: https://www.medium.com/@BlockchainEng
3. Twitter: http://www.twitter.com/BlockchainEng
4. Email: realestateblockchain1@gmail.com
5. Chat Directly Via Telegram: https://t.me/BlockchainEng
6. Bitcoin Trading Bot Software Telegram Group: https://t.co/YlGP1zvvw4
7. LinkedIn: https://www.linkedin.com/in/joaquinroibal/
8. Cryptocurrency Trading Software LinkedIn Group: https://www.linkedin.com/groups/12121918

I apologize for the lack of updates on my medium blog and YouTube channel covering cryptocurrency trading and specifically focused on crypto trading bots in Python.

I have been quite busy with life’s responsibilities and the sideways bitcoin price and lack of either a bear- or a bull-market has zapped many people’s enthusiasm for cryptocurrency, and a general lack of new developments have caused me to focus my attention elsewhere for a couple of months.

During this time however the chat-room that I created on telegram has grown to over 600 members, which keeps me in a constant inflow of new viewpoints, challenges and potential strategies. Due to the members of my telegram group and statistics from my blog and YouTube, I have realized that my most popular content and crypto-trading bot is the triangular arbitrage strategy implemented on cryptocurrency exchanges such as Binance.

I recently spoke with a US Based CPA about taxes and cryptocurrency, and we will be discussing this topic during an upcoming podcast. During this discussion, I mentioned that I had been in the crypto trading markets since 2013 (when I first purchased Bitcoin at around $200 / BTC), and how similar the bull run of August 2017 — January 2018 was to the Bull Run of 2013. We are now exhibiting the exact same market behavior once that bubble popped in 2013, and the sustained bear market has tested the resolve and dedication of many traders. This phenomenon is exactly what caused me to start my blog and youtube videos: A sustained and dedicated commitment to developing and using cryptocurrency and blockchain as an early adopter.

As I mentioned previously, I will be developing and releasing new content shortly. I would like to take this time to say thank you to all of my thousands of audience members from across the world. If there is some type of specific content, question or comment that you would like to see, please leave a comment below.

In June of this year I released my first book about Bitcoin, titled “Bitcoin Basics for Business” and I began distributing this book in e-book format for free. If you are interested to receive a copy please email realestateblockchain1@gmail.com .

As someone who has been involved with cryptocurrency industry for many years, I have seen new projects come and go over the years, and have witnessed the rise of an entirely new funding model, Initial Coin Offerings, or ICO’s. We will discuss ICO’s and how businesses are selling their currency in order to fund development of their cryptocurrency-based business.

The closest analogy to this type of funding model is a ‘crowdsourcing’ through a website like Kickstarter.com where a large number of ‘supporters’ provide small donations (or pre-purchases) in order to fund a company, the main difference being that with ICO’s , the supporters are purchasing the currency issued by a company to use the token or speculate on future price increases.

What is an Initial Coin Offering ?

An Initial Coin Offering, or more commonly known as ICO, is when a cryptocurrency offers a significant portion of their issued coins for sale to the public with the goal of raising money, dispersing ownership and allocation of resources, and begin to operate as a business or economic network.

An ICO is similar to an Airdrop, however, Airdrops occur when the coin or token is given away for free, or by requiring the person to join social media channels. Generally, Airdrops occur very early during a coin’s life-cycle, before the coins have developed significant value, large trade volume, and community support.

If an Airdrop is successful and the project continues to grow, the project founders or owners may offer a pre-sale, which is a private sale to qualified investors in order to gain finances for the project, a high-qualified advisor, or gain institutional investors.

Finally an ICO follows both of these earlier stage developments and offers the currency to a wider audience and seeks listings on cryptocurrency exchanges in order to increase demand and trading volume for the currency.

ICO Funding Amounts

and by June 2018 had already surprised the amount of money raised by ICO’s in 2017, with 3.8 Billion USD being raised in March alone. According to this CNBC article, which is a very good introduction to ICO’s for a sophisticated financial person, states that in 2017, ICO’s raised 4.3 Billion USD. So far in 2018 [August], over 12 Billion USD has been raised., . These values represent a staggering amount of money in a market raised where 80% of ICO’s fail, 10% of coins issued in ICO’s are lost to hacks, with very little regulation or governmental oversight, and limited currency / token owner rights. All of these aforementioned qualities would be assumed in all developed financial markets, such as stock market (even OTC) and bond markets.

Investors and business owners may see this values and become interested in participating in this market in order to secure funding for a current or future business or to begin investing in pre-sales or ICO’s in order to receive a high rate of return on their investment.

How ICO are implemented in the Business World

Since bitcoin and blockchain based businesses are generally going to be software/code based, which have incredibly low cost of entry and cost to create the functionality, website etc, many new project ideas are created and launched each day, and many of these projects lack the funding required in order to develop their future product or service, such as a music service on the blockchain which will automate royalty collection for artists which upload their music library to the service website.

Many of these initial projects on the blockchain ecosystem are ‘tokenizations’ of assets, or service. For example, an area of development where blockchain can make some incredible advances is real estate title: clarifying ownership and transfer for real estate transactions. A business may be created in this industry that will automate some aspect (or the core functionality) of the real estate title business, for example, a global registry of all properties on earth (which would be incredibly useful and valuable).

To simplify this examples, we will use a very simple example that everyone understands: video game arcades. In a video game arcade, you exchange your dollars for ‘tokens’, with a change-issuing machine, and then these token provide a service: you can exchange them to play video games in the arcade.

Now, to bring the idea back to cryptocurrency, say the project is similar to a video game arcade, such as an online video game arcade. Now, the cryptocurrency project may have a product (working code or service) or they don’t. Either way, they offer their issued token / currency (based on their particular business model) which then the business can sell to any number of qualified investors.

If the service is available, the tokens can immediately be used, just as when you visit an arcade, exchange the coins, and then are able to play a variety of video games.

If the service has still not been build or is in alpha or beta state, this situation is similar to telling a group of people: “I will build a video game arcade, if enough of you are able to pre-purchase tokens so that I can buy the video game machines, and rent the space, and hire employees.”

The main reason that people would purchase these advance tokens is primarily because they believe the value of the token is low, relative to future price once the project has been completed or is closer to completion.

What is ‘Tokenization’?

Just as I described visiting a video game arcade earlier and purchasing ‘tokens’ in order to interact with the machines, the process known as ‘tokenization’ involves determining the single unit of your product or service and analyzing potential network effects and blockchain benefits to that specific business.

Tokenization can be applied similarly to any business process where a unit can be developed, such as a single hour of a lawyer’s time or a milkshake at a certain fast-food chain, or if the network is large enough, a coin that could purchase a milkshake anywhere that milkshakes are sold. For example, a business that is ripe for ‘tokenization’ is the coffee-service business.

A coin, we will use the name CoffeeCoin (which is most likely already taken by some type of currency project), represents a single cup of coffee. It would be possible to load a card with multiple CoffeeCoins which could then be spent at a network of independent coffee shops.

The potential benefits of tokenization of this business process is that it could potentially fund new coffee shops, or use their purchasing power to purchase more high-quality coffee, and coffee shop owners could benefit from increased customers and the value of pre-selling a certain number of coffee cups. Or a single coffee company/location, say ‘St. Louis Coffee Coin’ can be used and sold (through a pre-sale or ICO) that will allow the building and development of the company, and allow anyone who purchased the St. Louis Coffee Coin to purchase an equal amount of cups of coffee at their physical location or stores.

The downside of ‘CoffeeCoin’ or any similar type currency is the lack of network effects and the difficulty of building network effects. For example, if someone owns a Coffee Shop in their local town, how likely is it that there will be enough consumers paying with CoffeeCoin to make accepting the coin worth-while? Additionally, if someone purchases a large amount of CoffeeCoin , there will first be required a large network of coffee shops accepting CoffeeCoin in order for there to be a CoffeeCoin accepting coffee shop close to coin owners, who will be spread over a large geographic area (global).

Tokenization and the Blockchain

Another benefit of the tokenization of a business is the ability to utilize the blockchain technology in new and unforeseen ways, such as tracing the history of Diamonds in order to ensure they are conflict-free.

To extend the ‘CoffeeCoin’ example further, rather than the value of one CoffeeCoin being one cup of coffee, a CoffeeCoin could represent a pound of coffee , and in such case when a consumer purchases a coin, their purchase would be connected with a specific pound of coffee, grown, picked and roasted with that information and meta-data able to be immutably recorded to the blockchain. This example usage, where the currency is a digital account and record for a real world asset, demonstrates that the ability of CoffeeCoin to be issued is directly related to the yearly production of coffee.

Legality and future regulations.

One of the main benefits, or limitations depending on who you ask, of ICO’s is their current lack of regulation, with absolutely no oversight among any government agency in the US with the exception of the Securities Exchange Commission if the token meets certain qualifications.

SEC_News on Twitter

What you need to know about #ICOs before investing: https://t.co/vjbqUiMaIR #initialcoinofferings

Personally I believe that the cryptocurrency markets must have a sensible level of regulation, including consumer protections, in order for them to truly grow beyond hobby status, and one of the main areas which requires a sensible regulatory environment is ICO’s, with current accepted best practices adapted directly from the Stock Market given the similarities to cryptocurrency ICO and Initial Public Offerings (IPO’s), which is one of the most speculative and high risk areas of the stock market.

How are they similar / different to traditional business model / structure ?

Given everything I have said about ICO’s and their similarity to currently established business practices, there exist key differences in these markets compared to well established markets. As I mentioned previously, traditional businesses have very well established traditions, norms and regulations that are currently non-existent for cryptocurrency. Also when you purchase stock in a company, you are a legal owner of that company with significant rights and responsibilities, and legal recourse in case of loss. When you purchase a currency, you are speculating on a highly volatile, risky and an asset class which is still in its infancy, with virtually no legal framework, rights or legal recourse in case of loss.

Additionally, when you purchase equity (stock) in a company, you are are purchasing ownership of the company and a percentage of future profits of that company. When you purchase currency, by participating in an Airdrop, ICO, or trading on an exchange, you are speculating that the price of the coin will increase in the future due to a greater demand, either because of the value of the token itself has increase or the usefulness of the token increased. One exception to this purely speculative investment strategy of investing in cryptocurrency is coins which are based upon a ‘Proof-of-Stake’ consensus algorithm which relies on honest nodes ‘staking’ their coins to verify a block of transactions, which earns a percentage of transaction fees and therefore providing a ‘dividend’ to coin-holders who also actively and honestly stake their coins in order to improve the security and validity of the network.

Also, depending on the token or currency, you may be further speculating on an underlying asset, such as in digital-land based tokens, where each coin represents ownership and property rights for a digital piece of property, which can then be bought, sold or improved upon similar to a “real” piece of property in order to increase its usefulness and value.

To Be Continued in Part 2:

how ICO’s operate, How To Participate in an ICO

best practices, ICO Do’s and Don’t’s

Successful ICO projects in past

Most Common Causes of Failure in ICO’s

Additional Reading and Online Resources

• CoinDesk ICO Tracker - CoinDesk
• Over 800 cryptocurrencies are now dead as bitcoin is 70 percent off its record high

As those who also watch my videos on my YouTube channel, I have been switching focus to more business-oriented topics with more introductory lessons and discussion in order to engage a wider audience to cryptocurrency and blockchain technology.

I will continue posting in depth technical articles as well, but also branching into other areas of interest to me in the cryptocurrency/blockchain space. Comments are encouraged so that I can continue to create articles that people are interested in.

email: realestateblockchain1@gmail.com

Join Crypto Trading Discussion:

LinkedIn: https://www.linkedin.com/groups/12121918
Telegram: https://t.co/YlGP1zvvw4
Twitter: http://www.twitter.com/BlockchainEng

I apologize for my lack of posting on Medium.com blog and that is because I have been working on a book titled “Bitcoin Basics for Business”, and to say thanks to all of my readers on my blog I am giving away FREE Advanced Copies.

To receive your free copy of the book, send an email to realestateblockchain1@gmail.com !

I wrote “Bitcoin Basics for Business” as a way to distill the knowledge that I have gained from trading into an easy, interesting and engaging format. My audience for this book is business people and everyday person with a bit of experience trading stocks and basic financial literacy. I cover in the book how to acquire your first cryptocurrency, keeping crypto safe, and advanced trading strategies.

Taught by Blockchain Engineer - Crypto Trading Bots, he brings years of trading experience to this course to learn how you can passively make money by trading cryptocurrencies. My motivations for this course are to teach students what I have learned from trading cryptocurrencies with a bot, help you set up your own cryptocurrency bot, as well as profitably trade with a minimal investment of time, knowledge and invested capital.

At the end of this course, students will be able to:

• Trade cryptocurrencies profitably, evaluate coins/tokens and their economic/technical potential.
• Avoid Common (and Expensive) Beginner investment mistakes.
• Make Money in Cryptocurrency in numerous ways, such as trading algorithmicly, ICO’s and Airdrops.

Goals of Online Crypto Trading Course

It is my hope that students who are interested to learn about cryptocurrency trading industry, buy/sell/trade cryptos to make a profit, and learn about scams and pitfalls will learn how to make money in this space and gain economic freedom from profitably applying their knowledge to the cryptocurrency industry gained from this course.

The skills you gain from this course will allow you to research cryptocurrencies by staying on top of news and developments, determine profitable trade opportunities, and other standard skills of a crypto trader such as trading on an exchange and participating in ICO’s.

Target Audience

The target audience for this post and subsequent videos is someone who is learning about bitcoin, may or may not have traded yet, and are looking to invest/profit from the cryptocurrency industry with higher profits than buy and hold strategy.

You are expected to have some familiarity with bitcoin, such as creating a wallet and sending and receiving some Satoshis. You also must have some fairly developed technological skills including being able to use a computer, install software, etc.

Additionally I will not be going in depth to discuss the technology behind cryptocurrencies and blockchain technology, as there is a lot of information available on both of those subjects.

Audience Needs & Expectations

This course is specifically designed for someone who has just heard about bitcoin and cryptocurrency, or just started investing, to learn how to properly invest/trade cryptocurrencies including using algorithmic trading strategies.

You are expected to desire to participate and contribute to the cryptocurrency industry.

You will learn about crypto from a trader’s perspective, while learning about the fundamentals behind profitable trading opportunities and how to avoid common mistakes.

After completing the course, you will have learned about the cryptocurrency industry, you’ll have learned a number of ways to trade/invest in bitcoin/crypto, and you will now be able to participate in the cryptocurrency economy through exchanges, ICO’s and Airdrops while avoiding scams & wasted time & money.

You are expected to have heard a little bit about bitcoin, through news sources, have a bit of familiarity with the idea behind it, experience with wallets/transfers and basic financial literacy and investing fundamentals. I will discuss many of these topics during the first chapter in order for everyone to be on the same page.

Beginner’s Guide to Crypto Trading Course Outline & Videos

Chapter 1: Introduction to Cryptocurrency Trading

Chapter 2: Crypto Trading Software

Chapter 3: Backtesting Strategies — Learn from Previous Trades

Chapter 4: Profitable Trading

Chapter 5: Advanced Strategies/Future Research

I have lately been discussing the powerful features and functionality of the Gekko Crypto Trading Bot Platform, and at this point I have pretty much moved all of my crypto-botting activities to gekko-based because of its ease of use and helpful, well developed tools.

Perhaps one of the most important (and ultimately profitable) features of Gekko is the ability to collect historic data, and run simulations of our algorithms to determine if they would have been effective on the previous few days of data.

After installing Gekko and testing a Neural Network strategy among various small, micro-cap coins, I have begun to understand the importance of backtesting.

By performing this analysis (known as ‘back-testing’), we are testing our algorithms on real-world (historic) data, and analyze these results to ultimately modify our initial inputs to our algorithm/trading strategies which will improve the profitability of our bots.

Backtesting Introduction

Backtesting is the process of applying a current strategy to recent, historical data in order to determine how the algorithm would respond in reference to profit and loss.

Backtesting is great because it is similar to ‘paper-trading’, however, you can iterate much faster over much longer time periods than a traditional paper-trading functionality can provide.

In the following video I describe my process I use to determine coin to trade (based on price change and volume), how to collect data and backtest, and ultimately using the values obtained during backtesting in order to create a more profitable (hopefully) trading strategy by modifying inputs to specific strategy:

How To Backtest Using Gekko

The general process to follow in order to perform a back test (with a few tips and discussion) is described below:

1. Enter Gekko User Interface (UI) — Webpage so that you can access the features of the Gekko Bot.
2. Go to the ‘Local Data’ tab, then ‘Import Data’ near the bottom of that page.
3. Select an exchange, currency pair and time period to collect data for back-testing. Generally I use 2–3 days of data and 1 minute candles when back-testing in order to most closely mimic my trade settings.
4. once data is finished downloading to your computer, go to back test, select your preferred coin/time range, select strategy to back-test, then perform back test. The first test I usually perform involves leaving all ‘default’ values in the strategy in order to serve as a good starting point for further changes in initial inputs.
5. Upon receipt of back-testing results, take notice of the profitability, is it higher or lower than the ‘market’? I will then repeat step 4 a number of times, trying to find the right combination of input values for previous data which will provide the most profitability. I then utilize these numbers when implementing a real crypto trading bot directly on the exchange.

Essentially, we will be using the data collected during back testing (input values and their corresponding profit percentage) as a way to increase profitability moving forward. How many tests we perform, and how ‘optimized’ these initial parameters can become is the next topic.

Forming New Crypto Trading Strategies

Not surprisingly, there exist many tools to help in finding the optimal strategy and input values for gekko backtesting tool, such as this tool by xFFFFF which will compare any number of strategies and coins, out will output profitability % to screen and a CSV file.

An additional strategy for optimization based upon back-testing results is known as the ‘Gekko Genetic Algorithm’ which will analyze and modify input parameters (based on results from backtest) in a way that is similar to Genetics, hence the name.

Further Development of Backtesting/Conclusion

I would like to test out some of these tools in order to automate the back-testing process, as well as allowing me to iterate enough times to find the best input values for the specific strategy I am utilizing.

Additionally I will be testing many of the tools available in order to test new strategies and optimize their input parameters, and after spending some time back-testing, it has become clear that much of the work in ensuring a profitable trading strategy involves back testing, running the script over a wide-variety of coins and time periods, and ultimately tracking and coordinating this data into providing the most successful trading algorithms.

as you are all aware I have been building my own crypto trading bot in Python for use on the Binance Exchange for a couple of months, with all coding available through my YouTube Channel.

While this project initially seemed quite simple and straightforward, the complexity of the endeavor soon took over the project. I was able to code 4 very usable bots, however, further development of user experience, AI, and trading functionality requires significant software development. Despite these challenges, many of these python scripts are still under development within private discord group, including a GUI for use with the bot.

Recently, a community member ‘tocilla’ has been convincing me of the utility and features of Gekko, an open source trading bot written in NodeJS. I have resisted implementing this trading but due to the (seemingly) complex set up, and the language it’s written in, JavaScript, I am familiar but not very proficient with.

I followed the installation instructions for Gekko (which were quite simple), and implemented pre-designed bot strategies (Such as a Neural Network-based strategy) by downloading, unzipping and placing files within proper folders. After this set up (approximately 15 minutes for installation, 3–4 more hours further research, and 15 minutes to install Neural Network strategy) I was recording data and trading algorithmicly through Binance.

I was amazed at the simplicity of installation, resources available for gekko, and powerful abilities of the gekko crypto trading bot platform.

Installation of Gekko — User Interface of Gekko Trading Bot

The creator of Gekko has created an instructional video which shows installation of Gekko, as well as the User Interface in the following video:

After watching the above videos, you should feel confident in starting a gekko bot on your own computer, collecting data, implementing back testing, and Trading successfully on a cryptocurrency exchange.

Required Reading: Neural Networks

Neural Networks are attempts to replicate Neural Learning with code. A fantastic introduction to this topic is available from Natalia Pattarone where she describes the code and theory behind a neural network based off of white-blood cells and bacteria. Natalia’s article references further reading describing how to build a Neural Network and the technical detail behind this new technology.

An additional required reading is a post by Nan Li describing how scientific thought has become too reliant upon AI/Machine Learning. While this may seem to be a strange recommendation on the required reading list, I have placed it on here due to the fact that we can not treat the Neural Network algorithm as a simple black box in a blind search for profit, and my own personal beliefs that we should treat this new ‘tool’ like a tool for discovery without compromising real-world applicability (as is covered in Nan’s post) and we must approach this method in as scientifically as possible.

Additional research in this area includes applying ‘Genetic Algorithms’ to Financial Markets, including the cryptocurrency and bitcoin markets. Discussion concerning the downside and areas of concern regarding Genetic Algorithms is available through stackexchange, and considering these concerns, we will be implementing GA in the future using Gekko.

With this research, I was curious to apply this technology to the cryptocurrency / bitcoin trading bot from Gekko.

Results from implementation of Neural Network Crypto Trading Strategy

A Neural Network-based crypto trading strategy file for Gekko was found within the xFFFF github repository of Gekko Trading Strategies, which implements the DeepQLearning algorithm produced by Blake Milner and Jeff Soldate. After implementing a 1-minute candle and increased trading frequency by reducing the absolute values of trading thresholds (to 0.5 and -0.5), I implemented the bot on BNB/BTC because I had some BNB in my account from previous botting attempts, and BNB was in a severe bear market.

Note: In the Gekko suite, green dots are where you purchased, and red dots are where you sell. Ideally the green dots will be below the red dots in order to profit as a trading bot.

After running the bots for just under 8 hours (using 1-minute candles), the bot had made a number of buys and sells based on its own signals, and automatically placed an order for these trades within the Gekko Crypto Trading Bot.

The above graph is after running the Neural Network for 21.5 hours on the same setting. As you can see, BNB is in a bear market, but the Neural network seems to buy/sell at quite good times, in particular is the Buying of bottom and selling of top near the middle of the graph. To me the Neural Network is working very effectively and I will continue research on this topic, while also attempting to push the bot to trade (buy/sell) more often.

BlockchainEng - Crypto Trading Bots on Twitter

After 32 hours we can see that the bot has made a few trades, and fantastic timing on high/lows, plus it's in the difficulty of a bear market and is still profiting: Market currently -2% but bot is up 3%, that's 5% in one day!

Neural Network Crypto Trading Strategy on VEN/BNB

Profit report — 8 Hours

Start balance: 0.07979

Current balance: 0.08024

Market: -0.00001 BTC (-0.58588 %)

Profit: 0.00045 BTC (0.56378 %)

Alpha: 0.58633 BTC

This strategy is still running and future updates will be adding to the Medium Blog here.

Closing Thoughts on Gekko Crypto Trading Bot Software

After spending a few days researching Gekko, and a full day testing and implementing the software which has been developed for this open source crypto trading bot project: I am very impressed by the level of development and support available for the Gekko project, the amount of functionality built in, and ability to test/iterate/change strategies among a larger community of programmers is a very large selling point to me.

In conclusion, The Gekko Crypto Trading Bot Open Source software project is a fantastic resource for anyone interested in trading cryptocurrencies due to its immensely powerful software, ease of installation all at a cost of ‘free’.

I am currently running a bot on this platform and will continue researching and implementing new trading strategies, because the Gekko software has taken care of all of that part already.

As a trader, I simply connect to the user-friendly web-page based AI, determine what data to collect, and apply back testing using a variety of community-created trading strategies, which I can then test and modify for use in live trading.

The motivation to code a bot, rather than use commercially available projects, stemmed from the desire to maintain control over my own private keys, but also be able to implement whatever functionality I desire in my own crypto trading bot — and testing various inputs such as Sentiment Analysis based on twitter posts.

Due to the increased development of these bots, my own limits in programming skill and knowledge have been challenged on a daily basis. Fortunately, a tremendous community has grown from this original project idea, including traders, developers and business-persons, which provides a unique perspective on the functionality (and how to) behind these bots.

The purpose of this blog post is to outline and detail the current development status and goals of the python crypto/Bitcoin Trading Bot project which has developed over the past couple of months. I will be recording an audio-call of many of the most important developers/contributors to this project which I will make publicly available.

Historic Development

All code is available through http://www.github.com/Roibal

The current status of various portions of the project are available here:

1. Basic Python-Binance Bot — The first crypto trading bot I began developing, this bot has limited functionality and serves as a base for more complex crypto botting projects.
2. Advanced Crypto Trading Bot — After learning about ccxt, a library to extend botting functionality to all exchanges and currencies, the Basic Binance Bot was converted to use with CCXT and further developments were added.
3. Triangular Arbitrage Cryptocurrency Bot — A bot was developed extensively to perform Triangular Arbitrage on the Binance Exchange. Current functionality includes paper trading (with and without fees) and collecting/visualizing data. We are currently very close to having an operational buy/sell tri arb bot, however, it turns out that the triangular arbitrage strategy is not as profitable (on binance with ETH/USDT/BTC/BNB) as originally anticipated.
4. Sentiment Analysis Bot — A quick side project which I developed, the Sentiment Analysis Bot will utilize a python library to analyze the sentiment of tweets based around the discussion of ‘bitcoin’, and will track positive/negative/neutral sentiment over time in order to make profitable trades. Currently the bot collects, analyzes data and has buy/sell signaling.
5. TradingView Signals Analysis Bot — Contributor Michael Goode has developed a python script which will scrape the buy/sell signal recommendations from tradingview.com for numerous coins. I modified this code to run continuously and for a larger number of coins. This will serve as a base for either a signal-output platform and/or buy/sell signals for an automated trading bot.

Current Development — Priorities & Tasks

1. Basic Python-Binance Bot — Currently this bot is not a priority due to the limited functionality and dependence on python-binance library, limiting its functionality to the Binance exchange. Current usage of this bot is as a study tool for introductory lessons to crypto trading bots.
2. Advanced Crypto Trading Bot — Current development on this project has stalled due to increased interest in Triangular Arbitrage and obtaining proper/valid signals. More than likely this bot will be incorporated with signals from trading view in order to complete our desired automated trading functionality.
3. Triangular Arbitrage Cryptocurrency Bot — After further research and development, it was discovered that tri arb opportunities on binance are VERY slim margins (0.001%), and disappear incredibly quick (1/4 of 1 second). Further research has identified possible triangular arbitrage markets on binance and will need to be investigated/analyzed further.
4. Sentiment Analysis Bot — The Sentiment Analysis Bot has just been modified to produce Buy/Sell signals when market is overly positive or negative, and the output from collected data was developed to be directly posted to twitter. After Khal developed a A Stop-Loss/Profit-Taking script, I believe the Sentiment Analysis bot is very close to trading, just a matter of position sizing, timing, etc. Most likely the Sentiment Analysis Bot will be incorporated as a signal within another bot.
5. TradingView Signals Analysis Bot — A major focus of development is the Trading View Signal Scraper by Michael Goode, due to the quantitative nature and high-quality of the signals produced by trading view, and the ability to apply Khal’s code directly with the signals to produce a crypto trading bot that should fare quite well. I have modified Michael’s original code to collect data continuously, on a larger set of coins, and record this information on a spread-sheet/CSV file.

Future Development — Priorities & Tasks

Future research in this arena is primarily focused on two areas: Analyzing signal quality (from Sentiment Analysis Bot and TradingView Bot) and implementing trading functionality so that we will have a crypto trading bot code that can begin to be evaluated by teams and individuals within our current technological ecosystem.

Tasks:

• Build SIMPLE trading bot from TradingView Signals and Profit-Taking/Stop-Loss code (eventually incorporate Sentiment Analysis Signals)
• Add Trading Functionality (Buy/Sell) to Sentiment Analysis Bot
• Combine Advanced Crypto Trading Bot with signals from TradingView signals Bot
• Continue researching profit opportunities and application of Triangular Arbitrage Bot

On a more large-scale, wide-lens view, I would ultimately like to condense the trading signals output into a human (and computer/bot) readable format which can be used for manually (or bot) trading, and make these signals available every 6 hours, for a total of 4 times per day. This data would be output in a ‘newsletter’ format and will include analysis and suggestions from the most successful crypto traders.

Conclusion

The main purpose of this post was to describe the process and current developments of this project, in order to create a software which can successfully trade crypto based on data and algorithms developed by experienced traders & developers.

In conclusion, significant research and development has gone into the crypto-Bitcoin Trading Bots with the result in many functional scripts and codes which now must be united into one cohesive whole that can be tested, analyzed and ultimately implemented to trade cryptocurrency profitably.

With that in mind, I will be discussing a few topics around Bitcoin that will elucidate many of the complexities, current and future uses of cryptocurrency.

First I will discuss Bitcoin as Money, including discussing the very concept of money itself, and discuss how bitcoin is similar and different to previous forms of Money.

Second I will discuss the creation, history and significant events surround Bitcoin, in order to gain better insight into its place in current culture and technological innovation.

Third I will discuss current uses of bitcoin, its use as a store of value and currency, altcoins and other tokens, ICO’s, trading and begin to discuss its underlying technology, ‘Blockchain’.

Fourth I will delve into the technology of Blockchain, a distributed ledger of ownership and transaction of digital assets.

The fifth area I will be discussing in this post is various thought experiments involving bitcoin and cryptocurrency, as pure thought experiments to demonstrate the differences between bitcoin and other forms of currency.

These topics will conclude the first chapter of the ‘Philosophy of Bitcoin’ and will demonstrate the differences between bitcoin and other, traditional currencies in a way which will allow for a better understanding for the following chapters.

What is Bitcoin?

Although many people have heard of the idea of ‘bitcoin’, their understanding may go barely deeper than the name and sky-high price increases.

In this chapter I will discuss bitcoin & cryptocurrency technology to give a basic understanding to its constituent parts, and conclude with various examples, similarities and differences with traditional money.

For this section, it is assumed you have very little understanding of bitcoin, cryptocurrency, or blockchain and I will describe each in some detail. If you have more advanced knowledge of these concepts, you may want to skip directly to the ‘thought experiments’ section of this chapter and then continue to chapter 2.

What is Money?

In order to understand Bitcoin, we must first understanding the concept of Money, currency, and historical examples to better understand bitcoin’s role in the evolution of the way humans exchange value.

Creation and History of Bitcoin/Cryptocurrency

Bitcoin was first described in an academic “White Paper” released October 31, 2008 by “Satoshi Nakamoto”, a pseudonym for either a person or group of researchers. The first bitcoins were mined January 2009, giving birth to an entirely new industry, set of products, and technological capabilities: cryptocurrency.

The “Crypto” in “Cryptocurrency” is from cryptography, because the coins themselves are backed by ‘math’ rather than a government entity, such as in fiat currency.

What is unique about bitcoins, and gives them their value, is the fact that all ownership and transfer of bitcoin is logged through a ‘blockchain’, a decentralized ledger where all members (miners) of a network (node) must agree before a new set of transactions (block) will be added to the accepted ledger of transactions (chain).

In order to fake transactions, ‘double spend’, or steal bitcoin from someone else’s wallet, you would have to convince all other members/nodes (or at least a majority) of bitcoin that your transactions are valid, and any attempt to ‘change’ the history of the bitcoin network will cause a cascade of bad blockchain data which is easily discarded by current network.

Essentially, Satoshi Nakamoto created a new way of exchanging, storing and transferring value digitally. Paypal and online banking formats are very similar in that they are ‘digital cash’, however, these are merely digital representations of U.S. Dollars which is a fiat currency.

No person is allowed to forge U.S. Dollars, just as no one can create bitcoin out of thin air due to the security of the network. However, anyone can issue their own currency, with its own subset of rules and amounts, by simply modifying the bitcoin code, or launching a new cryptocurrency on the Ethereum Network (where there are currently 1300+ coins/tokens).

All of these tokens and currencies have begun to have a tremendous real-world value, with a market cap of around $300 Billion. As a nod to Satoshi, the smallest currency of a bitcoin (1/10⁸) is called a ‘Satoshi’.

Current Uses of Bitcoin — Current Technology

Store of Value / Currency

Due to the recent price increases of Bitcoin to nearly $20,000 in December 2017, many people have learned about bitcoin and the concepts behind it, however, they continue to debate whether BTC is a store of value or a currency due to its volatility.

At the same time, many developers are working to make it easy as Apple Pay/Mobile payment system to pay with bitcoin at a local coffee shop.

This transaction criteria (easy, capable, cheap and fast enough to be able to use the technology as a currency) seems to be a major mental threshold that, once this technology becomes more widespread, I believe prices will increase due to the further widespread adoption of bitcoin.

At the all-time high bitcoin price of $20,000, the cost/fees to send were very expensive due to the large volume of transactions needing to be confirmed, limited by the 7 transactions per second maximum of the bitcoin network. These high-fees and long transaction times (30 minutes or more) greatly reduced the ability of Bitcoin to be used as a currency, however, since this time the fees have reduced drastically (almost zero) due to the low traffic on the network and a secondary addition to Bitcoin known as the Lightning Network.

Many people continue to speculate on the price of bitcoin increasing drastically over the coming years and see this time as an ‘accumulation period’ before the next bull-run driving prices above $100,000 — and, in my personal opinion, much farther.

Ownership of a Network/Resources (Altcoins)

Many new blockchain based projects are issuing new coins, and funding these projects through what is known as an Initial Coin Offering (discussed in next section).

Many new projects are looking to add functionality to bitcoin or through the application of the blockchain technology to a domain specific problem, such as maintaining title/ownership of a real estate asset.

Many new coins/utility tokens are ERC-20 compliant, meaning they work directly with the Ethereum Virtual Network and will work with Ethereum Wallets, greatly reducing the amount of code that will be need to reproduced for new currencies/tokens.

Each coin or utility project attempts to solve an old problem with the new solution of blockchain. The coins that these groups issue can involve ownership/usage of the underlying technology (such as Gas to power the Ethereum Network), or represent an underlying asset (such as title to a house). I will now discuss the creation of new tokens, and the concept of an ‘ICO’.

Creation/Issuance of New Coins/ Tokens & ICO’s

When a new currency is issued by a group and cryptocurrency code, often the owners of the token will attempt to sell their new currency in various ways in order to make money for the development (or to pay for previous development) of their new token.

The pattern for the monetization of a new currency involves either a presale, an ICO, or both. In a pre-sale, coins are offered for a ‘discount’ price (valued relative to previous sales or upcoming listing on an exchange) to a small group of ‘early investors’ who purchase the coins with the intention of selling at a later date for a higher price.

An Initial Coin Offering, or ICO, is similar to a stock-market Initial Public Offering their shares for sale to a wider market such as an exchange or to a larger group than the initial early investors.

Additionally, founders and the company itself may hold a large number of the particular cryptocurrency in wallets they control, leading to a potentially large market cap for that particular currency and a very large reserve for future development of the project.

Founders can also gain a large number of initial currency through ‘pre-mining’: when a currency first launches and very few resources are dedicated to ‘mining’ the currency, the early adopters can use simple computers to mine large quantities of the currency before raising awareness/access around the currency for the competitive nature of mining operations to raise the difficulty of mining, sharing the bounty among a wider group of people, and increasing network security.

For these reasons, creating an ICO can be very lucrative for a small team, to launch their own currency, raise funds on a global market, and attempt to improve a business process with the Blockchain. However, due to the large amount of hype, capital, and ease of issuing a cryptocurrency, many are nothing more than highly technical ponzi schemes and must be avoided at all costs. The only way to protect yourself as a wise investor is to Do Your Own Research (DYOR) and stay abreast of new developments within the crypto ICO market.

Trading/ Speculating and Forex with Bitcoin

Buying & HODL’ing is a common strategy employed by Bitcoin advocates, in the belief that bitcoin prices will continue to drastically increase in the future, as a deflationary currency. Another trading strategy involves diversification and investing in other cryptocurrencies (altcoins) such as Ethereum, NEO and others, in order to increase profits.

Other websites/exchanges such as Bitmex allow you to leverage (up to 100x) your long/short bet. Seeing an opportunity within both of these markets, many bitcoin enthusiasts have begun trading cryptocurrency in a similar manner to Forex (Foreign Exchange, Currency) traders. Many strategies are employed in this type of trading and were borrowed from traditional stocks, bond and currency markets.

Personally I have experience crypto trading and written many python scripts for trading in crypto, and this topic contains much of my own personal history and interests. I will cover this topic in depth in subsequent chapters.

Storing Data

Another feature of certain Blockchains, including the Bitcoin Blockchain, is the fact that it is ‘censorship proof’ and no one can stop data from entering blockchain and once it’s there it’s impossible to remove (immutable), which has its own positives and negatives in itself. The positives are that blockchains provide an accurate and unchangable record of the past (transactions, temperature, population, etc), however, the fact that data can not be removed (in bitcoin blockchain), there can be no censorship during times when data should be removed due to either size constraints or legal/ethical concerns.

What is a Blockchain?

As I mentioned previously, a blockchain is a distributed ledger of transactions. I will dive a little deeper in this fascinating technology which is set to revolutionize significant industries such as Finance, Medical and Economics.

Bitcoin/Cryptocurrency Thought Experiments

Bitcoin in a world w/ no energy and internet (post apocalyptic)

Desert Island

How Much Does a Bitcoin Weigh?

What is the price of BTC in 1,000 years?

Bitcoin vs. Gold

What is ‘Bitcoin’, a new cryptocurrency that has grabbed global headlines with an increase in price from $1000 in January 2017 to nearly $20,000 by January 2018? I will delve deep into this brand new industry, and describe the trends which will shape our future. By experiencing many facets of this industry, I will be able to demonstrate the challenges & winning strategies for successfully understanding the new money revolution.

Initial Experience with Bitcoin/Cryptocurrency

I first heard about bitcoin through some online forums in 2011 or 2012. My initial response to it was that this new technology would be very successful for the ease of which it performs a necessary activity: transferring value.

During my initial fascination with Bitcoin in 2013, I purchased ‘a few’ from the run up from $100 to $900 and sold before it crashed. My original response to this drastic and sudden decrease in price was to lose interest, until October 2016 when I saw a bitcoin vending machine in Boulder, CO coffee shop advertising BTC at a price of $800.

From then on I continued to watch the meteoric rise to nearly $20,000 (Jan 2018) and a slow but steady decline to $5800 (June 2018)— where I correctly ‘called the bottom’ on this tweet, as bitcoin is now above $6k:

Further Exploration in Cryptocurrency — Developing Crypto Trading Bots

Due to my previous education in pursuing a Master of Science in Engineering, I decided to apply the data analysis and computer programming skills I had learned previously, and In April of 2018, I began writing a Crypto Trading Bot with Python and posted tutorial videos on YouTube of building a bot from scratch, utilizing libraries such as Python-Binance and CCXT, with all code available. The goal for this project is to develop a software (bot) which will trade cryptocurrencies on exchanges using varying strategies in order to gain profit.

This project continued to grow and now I now maintain a very active telegram chat about crypto/bitcoin trading bots, a discord for a group we have named ‘International Crypto Research Group’ (ICRG) which will be used as a centralized location for development of crypto projects and includes discussion, how-to/tutorials, and code in numerous languages, however, python primarily. I also maintain an active Twitter presence with the handle of Blockchain Engineer - Crypto Trading Bots (twitter: http://www.twitter.com/BlockchainEng ) , and I have written numerous Medium posts around the topic of bitcoin/cryptocurrency.

Because of my interest and experience around Bitcoin/cryptocurrencies, I have decided that the best way for me to communicate everything I have learned around the topic of Bitcoin, Crypto, Money, Philosophy and the intersections of these topics, I will be creating a new e-book, published through medium.com, that will delve into relevant topics around Bitcoin / Cryptocurrency in the following chapters:

Chapter 1: Intro — What is Money?

Click Here To Read Chapter 1 — What is Bitcoin? on Medium.com .

In the introductory chapter I will discuss the widely encompassing term of ‘money’, including various thought experiments to gain a better understanding of the true meaning of this term, in order to gain a better understanding of the major implications of a cryptocurrency such as Bitcoin.

Chapter 2: All About Cryptocurrencies & Bitcoin 101

A further delve into the technology of Cryptocurrency is in order including the technology behind blockchain, an introduction to other cryptocurrency, and a good history of Bitcoin evolution and development.

Chapter 3: Who’s Making the Money? Interview with The Traders

Cryptocurrency Trading is similar to any foreign exchange/currency trading and speculating, with the exception of a much less well developed market including regulatory authority and lack of institutional investment. In this chapter I will speak to various cryptocurrency traders about their craft.

Chapter 4: Who’s Making the Bitcoin? Interview with Bitcoin Miners

Bitcoin mining has grabbed global headlines because of the amount of energy being expended to ‘Mine’ Bitcoin, and now utilizes more energy than Iceland. I will provide an overview of Bitcoin Miners and then we will delve into the current state of the art with Bitcoin Miners.

Chapter 5: Interviewing Cryptocurrency Investors

The meteoric rise of Bitcoin always brings attention, both good and bad, from more traditional forms of capital investment/creation, such as institutional investors, Goldman Sachs, etc.

Chapter 6: The Developers

The software, front-end, and User Experience must be greatly improved in order to increase adoption by the average consumer. Smart Contracts, deployed through the Ethereum global computer Network can provide tremendous functionality to companies, and even entirely automate the corporate structure through Decentralized Autonomous Organizations (DAO’s) , but from the DAO hack, and subsequent forking to two currencies of Ethereum and Ethereum Classic, we learned the significant risks that this new technology poses. Developers are constantly seeking new methods, new fixes, easier/faster/cheaper ways of transferring value through blockchain/cryptocurrency networks.

Chapter 7: All About Initial Coin Offering (ICOs)

An Initial Coin Offering is similar to an Initial Public Offering (IPO) in the traditional stock-market, and is essentially a company, group or even nation will offer a new cryptocurrency which is being launched at a ‘pre-sale’ or discount price to early investors. The SEC has recently begun creating new regulations around this space, and determinations of whether cryptocurrencies/tokens are securities.

Chapter 8: CryptoTwitter and Influencers & Thought Leaders

One of the best places for news and opinion around Crypto currency is Crypto Twitter, which contains many high-profile influencers on the crypto world such as http://www.twitter.com/ToneVays .

Chapter 9: Sentiment Analysis, Data Analysis, Crypto Trading Bots

Much of my own research and personal interest in this space has been utilizing python scripts to automate data collection, analysis and to inform a trading strategy for a crypto/bitcoin trading bot. As discussed previously, this includes Instructional Live Coding Youtube Videos and Explainers around Cryptocurrency topics such as Triangular Arbitrage, Sentiment Analysis of CryptoTwitter Tweets and a simple Swing Trading Bot. In this chapter I will delve into these topics to describe the original process of thought that went into their creation and discuss future development.

Conclusion — Description of E-Book Format

Each chapter will contain a Medium.com post, a YouTube Discussion video, and/or a podcast audio recording. Please feel free to leave comments and I encourage discussion around the topics I have raised in these medium posts.