Key Takeaways
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The growth and capabilities of AI has became even more mainstream now with the successful and popular launch of an AI chat bot called ChatGPT.
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As AI and blockchain infrastructure continues to develop, it is only a matter of time before they intersect and AI starts interacting with blockchains directly.
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Some applications and use cases of AI include decentralized AI marketplaces, AI-powered portfolio management, image generation, and more.
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It is worth exploring and understanding AI tokens while the AI blockchain ecosystem is still nascent and under a billion in marketcap as there may be interesting opportunities.
The growth of Artificial Intelligence (AI) has been exponential in recent years, and its integration with the world of cryptocurrency is only a matter of time. ChatGPT is enjoying mainstream popularity, and the competition between Google and Microsoft is heating up with the announcement of Microsoft investing $10 billion into OpenAI and Google's development of its own AI chatbot, Bard. This has led to a rise in interest in AI crypto coins and tokens, with prices of certain tokens increasing by up to 16 times.
Based on the potential of ChatGPT, in the future, it might be possible for an AI to interact directly on the blockchain, and have the ability to hold, spend, and invest cryptocurrency for its users. Since ChatGPT's release in June 2020, it has continued to improve and is now one of the largest and most advanced language models in the world, with the ability to generate human-like text and perform a wide range of language tasks like question-answering, text generation, text summarization, and more.
After all, when ChatGPT's AI was asked what it would do with money, its reply was pretty interesting. It mentioned many similarities with what humans require money for: investment, self-presevation, acquiring more resources, and more, which suggests that it would be possible to train an AI to make investment decisions based on human goals.
In this article, we will explore the concept of AI tokens in the cryptocurrency market, including their types, use cases, and current state.
What are AI Crypto Tokens?
AI is a rapidly growing field that has the potential to change the way we live, work, and interact with each other. In the context of cryptocurrency, AI can be used to improve everything, from security and scalability to user experience and market prediction. This offers developers a revolutionary new platform to design and build applications and services, with the potential of creating a more efficient and transparent system. With the right training data, it can be trained to do anything, from identifying investment opportunities to detecting illicit activities.
AI tokens are cryptocurrencies that are designed to be power AI-related projects, apps, and services, such as decentralized AI marketplaces, AI-powered portfolio management, predictions, image generation, path finding, autonomous organizations, and more. These tokens may confer governance rights on their holders, or they are needed to pay for transactions on the AI platform.
Examples and Use cases for AI tokens
We've picked out a variety of AI tokens across a range of protocols with different use cases within the AI space. Let's see how they work.
SingularityNET: Decentralized AI Marketplaces
What is it:
Decentralized AI marketplaces are places where people can buy and sell services and products related to AI in a decentralized way, using AI tokens as the main form of payment.
Launched in December 2017, SingularityNET aims to create a decentralized platform for AI services. SingularityNET is a decentralized, open-source blockchain marketplace that allows anyone to create, share, and monetize AI services at scale. It allows for a wide range of AI-based services to be shared and exchanged, such as natural language processing, computer vision, and predictive analytics.
In addition to being a marketplace for AI-services, it is also a marketplace for the exchange of data, models, and other resources needed to train and improve AI models. The platform's goal is to democratize access to AI and to create a decentralized AI ecosystem where anyone can participate and benefit.
Token Utility:
AI developers can offer their services and users can access those services using the SingularityNET token, AGIX, as the main form of payment.
Fetch: AI Tooling and Infrastructure
What is it:
AI infrastructure is the hardware, software, data, computing resources, and other things that are needed to build, deploy, and keep AI systems running.
Fetch is a platform that provides the tools and infrastructure needed to build an AI-based digital economy, helping to connect people, devices and services, enabling the sharing of data and cooperation. Launched in June 2019, it is a decentralized platform for building and deploying autonomous agents that can be used for a wide range of applications such as supply chain management, logistics, and decentralized finance (DeFi).
The platform helps users build and deploy intelligent and autonomous software agents that can cooperate to provide services to individuals, companies, governments, and other organizations. These agents can interact with each other and with the real world, to perform tasks such as data analysis, prediction, and decision-making.
Token Utility:
Services provided by Fetch.ai are paid in the FET token, their cryptocurrency which is the main medium of exchange within the Fetch.ai ecosystem.
Ocean: Private Data for Building AI Models
What is it:
Private data is considered the most valuable due to its potential to improve research and business outcomes; however, concerns over privacy and control make it difficult to access.
Ocean Protocol’s Compute-to-Data addresses this issue by granting specific access to private data rather than directly sharing it, enabling the data to be used while still maintaining privacy and control.
Ocean Protocol was launched in November 2018, and it aims to make it easy to share and monetize data while ensuring data privacy. On the Ocean platform, data owners can approve the use of AI algorithms on their data, allowing for the training of AI models that can lead to improved predictive accuracy of models and other benefits without compromising the privacy of the data.
Token Utility:
The OCEAN token serves as the utility token on the Ocean Protocol, it can be used for staking on data curation and for buying and selling data on the Ocean marketplace.
Numerai: AI-based Portfolio Management
What is it:
AI-based portfolio management refers to the use of AI algorithms and techniques to manage and optimize investment portfolios. This can include a wide range of activities such as asset selection, risk management, and portfolio rebalancing.
Numerai was launched in 2015 and is a decentralized, artificial intelligence-powered hedge fund that uses machine learning algorithms to make investment decisions.The platform uses a unique approach as it crowdsources predictions from a global community of data scientists and rewards them with its native token, Numeraire (NMR), for making accurate predictions. Numerai then uses these predictions to drive its own trading algorithms.
It is built on the Ethereum blockchain and uses a combination of blockchain and AI technologies to create a decentralized, secure, and transparent system for making predictions and managing investments.
Numerai also allows data scientists to test and refine their models on a confidential and anonymous dataset, while ensuring data security and privacy. Numerai aims to create a more efficient and fair financial system by leveraging the collective intelligence of the community and the power of AI.
Token Utility:
The NMR token is used as a means of incentivizing data scientists to submit accurate predictions to the platform, and as a means of accessing the platform's services.
Oraichain: Oracle Solution for AI data
What is it:
Smart contracts can currently only access data within their own blockchain and must rely on oracles to access external data from the real world or other platforms in order to perform a wider range of tasks. An oracle is a way for smart contracts to get data and information from the outside world.
Oraichain, launched in 2020, is a blockchain-based ecosystem for decentralized AI, and uses AI and blockchain to create a secure, transparent, and decentralized infrastructure for building and deploying AI applications.
One of the key features of the Oraichain platform is its oracle solution for AI APIs. Its architecture is designed to focus more on AI data sources, allowing for the integration of AI data and services into smart contracts.
This would enable the creation of decentralized applications (dApps) that utilize AI capabilities and the creation of a wider range of AI-based services, such as natural language processing, computer vision, and predictive analytics, and enables the exchange of these services among the participants in the ecosystem.
Token Utility:
Apart from staking and governance, the ORAI token is required in order to run an AI request sent to the Oraichain network.
Alethea AI: AI-powered Image Generator
What is it:
An AI-powered image generator helps to generate new images based on inputs from the user. It can be used for creating digital art, advertising, or even video game assets.
Alethea was launched in 2021 and is an AI-powered image generator based on user input. Alethea AI has introduced CharacterGPT, a Multimodal AI System that generates interactive AI Characters on the blockchain from a description in natural language. In short, CharacterGPT enables Text-to-Character creation.
These AI characters exist on the blockchain as NFTs, and their owners can upgrade their intelligence or be trained in specialized domains, while these NFTs can generate and own AI assets that exist on the protocol.
Token Utility:
The AI Protocol utilizes the Artificial Liquid Intelligence (ALI) token to generate these AI character NFTs, upgrade them, and more, on top of being used for governance and to incentivize the various participants of the AI Protocol.
Hera: AI-powered Pathfinder
What is it:
A pathfinder is an algorithm or system that helps users find the most efficient and profitable trade path when trading on Decentralized Exchanges (DEX).
Hera was launched in 2022 and is a pathfinder algorithm that helps users find the most efficient and profitable trade path when trading on DEXes. The Hera aggregator uses an AI-powered pathfinder which uses machine learning algorithms to analyze trading volumes, prices, and liquidity, to identify the best route for a trade.
This could include identifying the most efficient trading pairs to use and the optimal amounts to trade in order to reduce slippage, which is the difference between the expected price of a trade and the actual executed price.
The team started on the Metis network; however they are going multichain in 2023 and aims to launch on Arbitrum next.
Token Utility:
The Hera token currently shares the protocol revenue and allows for participation in the governance of the project, but in the future will be launching swap fee reduction and airdrops based on the usage of their DEX aggregator.
Current state of AI tokens
The market size of AI tokens in the cryptocurrency market is still relatively small at around $1.6 billion; however, the intrinsic demand of AI tokens are not yet clear as it is still a nascent industry, potentially resulting in rampant speculation during its early days.
However, it is expected to grow significantly in the coming years as more and more projects and companies begin to explore the use of AI in the crypto space.
Challenges and Opportunities in the AI Space
The AI token market is still in its early stages of development and faces several challenges that could impact its growth and adoption.
One of the major challenges is regulatory uncertainty, as there is currently a lack of clear and consistent regulations surrounding the cryptocurrency market, which includes AI tokens. As it is difficult to predict the regulatory landscape in the future and how it may impact the value and usability of AI tokens, this creates challenges for projects and investors as it acts as a deterrence.
Another challenge facing the AI token market is a lack of awareness among the general public. Despite the potential benefits of AI and blockchain technology, many people are still unfamiliar with the concept of AI and cryptocurrency and how they work, and combining them together makes it more complicated. This lack of understanding can make it difficult for projects to attract investment and for the market to grow.
As the AI token market consists of both AI and cryptocurrency, it can face competition from both sides of the market that it belongs to, cryptocurrency and AI projects. Individually, crypto and AI are both highly competitive industries with many projects vying for attention and investment. Combining them could make it harder for individual projects to stand out and attract investment.
Despite these challenges, there are also many opportunities for growth and innovation in the AI token market. For example, the decentralized and secure nature of blockchain technology makes it ideal for building AI applications that need to protect sensitive data and ensure privacy.
Additionally, the integration of AI and blockchain technology has the potential to bring new and innovative solutions such as an AI-driven DAO and other applications as mentioned above. As the market continues to evolve and mature, there will likely be increasing demand for AI tokens and new opportunities for growth and innovation.
Conclusion
The current demand based on the utility of AI tokens is unclear. That said, the future outlook for AI tokens in the cryptocurrency market appears to be bright, with many experts predicting significant growth in the coming years and most tokens in the space adopting an upwards trend (as of time of writing).
AI tokens in the cryptocurrency market have the potential to revolutionize the way we think about decentralized AI marketplaces, portfolio management, and even AI-powered autonomous organizations.
However, as with any emerging technology, there are challenges to be faced and opportunities to be seized. As the market continues to evolve, it will be important to keep an eye on key players and projects, and to understand the potential impact of regulatory changes.
With the recent success of OpenAI, and Microsoft’s large investment into them, it is clear that AI is here to stay. AI’s integration with cryptocurrency still remains to be seen, but it will be exciting to see how these technologies work together to shape the world we live in.
CJ is a business graduate that has been involved in crypto for 4 years and specializes in DeFi protocols. He is also interested in TradFi becoming DeFi, and has written for ByBit, SwitcheoLabs, and others. Follow the author on Twitter @fishmarketacad
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