AI tokens are surging, leaving Bitcoin behind. But are they any good?
Bitcoin, the first cryptocurrency ever released, is widely known for providing plenty of benefits in the financial sector. The digital currency has changed the world by ensuring easy and fast transactions worldwide while eliminating the need for official bodies and governments to monitor these transactions.
However, since 2009 until now, the market has changed drastically, along with users’ needs. Other cryptocurrencies with unique features were released to offer a broader range of applications. Ethereum, Polygon and Cosmos are the most popular at the moment for their characteristics. Compared to Bitcoin, Ethereum includes a larger ecosystem and is therefore influenced by more than media coverage and supply and demand.
But besides the numerous cryptocurrencies and blockchains, the domain is approaching other technologies, such as Artificial Intelligence (AI). Let’s see how these two sectors blend and create a new era of technology.
Why is Bitcoin slowly becoming irrelevant?
As the first cryptocurrency ever, Bitcoin has rapidly gained popularity due to market demand and uniqueness. However, as time passed and more developed solutions appeared, Bitcoin became less profitable and more of a hassle to handle. Besides the fact that its valuation fluctuates and has been built in deflation, Bitcoin reached a point when it’s challenging to mine, which means the blockchain is releasing coins less often. And let’s not forget that Bitcoin is still not regulated, and it’s less likely that a worldwide acceptance will occur sometime soon. If a crypto sector is falling, another arises, the AI token.
What Are AI tokens?
AI coins and tokens are basically digital assets used for AI-based projects. Tokens specially made for this purpose can be integrated into asset management projects or fraud detection systems. AI tokens can also serve as opportunities for governance rights or rewards to users, but they also have the standard features of cryptocurrencies, paying for transactions.
Some examples of these AI token projects include some of the following:
- The SingularityNET platform, of which the coin is AGIX, leverages an AI-based decentralized marketplace where users can trade AI products and services securely;
- The Fetch.ai platform has FET as an official asset, and it provides essential infrastructure features for developers to build AI solutions on Web3;
Other use cases of AI in the crypto industry include AI bots used for crypto trading, which can considerably help people who don’t have the time to learn about cryptocurrencies and investing or trading. These bots often offer indicators on trading, from portfolio management to strategy backtesting.
What can AI tokens bring into the crypto medium?
Although AI tokens are still relatively small compared to the market and have yet to develop in the future, for the moment, they leverage some great benefits for both investors and regular users:
- AI can provide price prediction models to make investments easier by following patterns;
- AI can help minimize and eliminate scams in the crypto market through certain algorithms;
- AI can enhance decentralization and lessen human errors;
- AI can guide investors in taking the right decision to avoid risks;
- AI can analyze public sentiment on a specific domain on social sites and provide accurate data;
- AI can be integrated by governments into compliance policies to control money laundering;
Why are AI tokens so popular?
The popularity of AI crypto rose suddenly, similar to when NFTs became a boom in the market. But as technological developments have evolved, the need for AI emerged as a response to how fast the world has changed. Moreover, since the surge of chatbots and other similar software solutions, investors have become more interested in expanding this universe to the crypto industry. This boosted prices and market crashes, considerably enhancing some investors’ portfolios.
Another reason more investors are interested in cryptocurrencies is their usability and transparency. On the blockchain, everything can be seen, but investors can hide their true identities and protect their data and information. Plus, AI tokens can potentially shape the Web3 ecosystem, which is great for future investments.
Challenges of AI in crypto
The best feature of artificial intelligence is that it provides an easier route to complex and time-consuming tasks concerning collecting and analyzing data. As its ability to simulate human reasoning increases AI’s popularity, we cannot help but wonder if the AI decision-making process is transparent. Complex machine learning AI tools are often prone to trust and ethical issues.
Users may find it challenging to trust an AI whose decision-making system is biased and not providing trustworthy data analysis. And as AI algorithms need to be explainable to provide accountability, this challenge is more difficult to tackle. However, blockchain can fill in the gaps of trust through its immutable digit record that allows insight into the framework behind AI and the source of the data it delivers.
But that’s not the only issue that blockchain can solve with artificial intelligence. Blockchain technology leverages decentralized data storage through which users can track how companies use their data. At the same time, combining AI and blockchain can pave the way toward reducing the need for human intervention in any company task, leaving systems to do the tedious work.
Finally, AI requires a lot of computing power to function correctly, which is less sustainable and complex for data servers to cope with. But with its distributed ledger technology, blockchains can allow many machines to power up computing requirements and boost companies’ tasks.
On the other hand, artificial intelligence can also improve blockchain by working on the intelligence of blockchain-based business networks and giving them a competitive advantage. AI models can also be included in smart contracts to execute re-orders, payments and other similar transactions. Detection of fraudulent activities on the blockchain is also possible with AI algorithms. Overall, AI and blockchain go hand in hand.
Final thoughts
Artificial intelligence is not a bizarre technology anymore as it expands to many industries, such as blockchain. And since cryptocurrencies are surging in popularity and investors are interested in different markets and opportunities, AI comes to fill in the gaps of blockchain and enhance its features.