It is well-known that crypto markets are fuelled by narratives. AI (artificial intelligence) is the latest trend.
Crypto Twitter’s top traders believe that AI-based tokens will be the sector to lead the next bullmarket. CryptoSlate data has shown that such tokens have seen an average increase of 80% in the last week.
Tokens like Artificial Liquid Intelligence, Fetch AI (FET) and Singularity Net (AGIX) have been among the most successful. CoinDesk had previously reported.
The tokens of AI startups such as Image Generation AI and IMGNAI have tripled in just two weeks. Users can create artwork via text disruptions using social platforms like Discord.
Some tokens that were popular in 2018 and 2021, such as Big Data Protocol (BDP) and Measurable Data (MDT), are jumping on the hype. In these tweets, users seem to be reminding us how they use AI technology in their crypto applications.
BDP has risen 2,100% in just a week, CoinGecko data has shown, while MDT is up 150%. Both protocols use their tokens as a way to commoditize and anonymize data.
Despite fundamental catalysts, crypto majors such as Ether and Bitcoin have shrunk to a mere 30% increase each over the past month. However, the market capitalization of major tokens is over $300 billion. This means they require substantial amounts of investment as well as public interest in order for prices to rise multifold within weeks.
Why are AI tokens so popular?
AI can be defined as the imitation of human intelligence by machines that think and act in the same way as humans. Popular uses of AI technology include chatbots (self-driving vehicles), image-generation programs, and online marketplace optimization. But, futuristic applications envision autonomous cities, cyborg humans and interstellar transport.
Most of the recent increase in AI tokens resulted from the public launch of ChatGPT (chatbot) and DallE (image generation software), in the middle of 2022. Both are classic software that do not use cryptocurrency or blockchain. They were launched jointly by OpenAI, which recently raised $29 billion from Microsoft.
Because of this institutional interest, crypto traders have a compelling argument to invest in AI-focused tokens.
Ravindra Kumar – founder of Frontier cryptocurrency wallet – stated that there is a growth opportunity in the AI/Web3 space. “The combination of early interest, potential and hype” “While AI intervention is still a controversial topic in the crypto space, there are compelling and innovative use cases.
Aditya Khanduri, Biconomy’s marketing head, has a gentler approach. She believes that the current AI trend, while still very speculative and exciting, will result in a surge for tokens such as OCEAN ALI AGIX. Some tokens with more buzz have had more success and people are following them, so it’s less important about the actual technology behind it.
“This is due to the fact that current AI tokens, web3 projects, and others may not have a clear understanding of what these decentralized AI tools look like. Khanduri spoke to CoinDesk about the many challenges that remain and how they can be solved.
Khanduri claims token-based scaling of AI software is a challenging problem.
“Suppose an AI tool gains 250 million users. How will its infrastructure look then? What are the people who will use it? How will the data be trained? Where does this token fit in? He asked, “Can you have a token to reward people who use their data to train your models?”
Some market watchers remain skeptical about the AI token hype.
“When the market begins to improve, all kinds of new trends emerge out of the woodwork. And they are not all that solid as they might seem,” Valentina Drova, a financial advisor to CoinDesk said.
Drofa pointed out that “there is a chance that this whole new trend is going to be empty hype”, as there are many investors who would like to take advantage of short-term price pumps. Drofa was in reference to recent multifold gains achieved by some tokens.
“The industry in general will suffer long-term damage and another hit to its image.” She said that these cycles are becoming more tiresome and frustrating to witness over and over.
Author
Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
