Crypto and AI: how the two industries will emerge in 2024

After a turbulent 2022 and a far more promising 2023, let’s discover what the coming year has in store for artificial intelligence and cryptocurrency.

Artificial intelligence (AI) and cryptocurrency represent two of the most disruptive technologies of our time. One lets individuals do by themselves what they need financial institutions for; the other lets machines do what they need humans for. As AI continues influencing industries worldwide, it also makes inroads into crypto, birthing a new category of coins that integrate AI technologies.

AI-related crypto aims to bring the abilities of artificial intelligence to digital currencies and blockchain networks. But what exactly are AI cryptocurrencies, and how do they work?

AI crypto coins use artificial intelligence for operations, promising improved risk management, emotion-free decision-making, and non-stop trading. Yet, they are usually susceptible to security vulnerabilities, technical glitches, and price fluctuations — just like the rest of crypto.

AI coins are tokens that leverage artificial intelligence technology for their operations — from establishing a platform for AI researchers to using AI to trade crypto and make market predictions.

This article provides an overview of AI crypto coins, how they function, top five AI crypto projects, and the benefits and risks associated with these assets.

What is artificial intelligence?

AI refers to computer systems and machines that can perform tasks that normally require human intelligence. This includes visual perception, speech recognition, decision-making, language translation, and more. AI aims to create intelligent machines that can function, react, and learn in ways similar to the human mind.

However, AI still has limitations in accurately modeling extremely complex systems like financial markets. There remains a risk of biases, errors, and unforeseen gaps within AI crypto systems. As the technology continues advancing, further innovation and oversight will likely be necessary to realize the full potential of AI in the crypto sphere.

What is AI crypto?

AI crypto refers to cryptocurrencies and tokens that utilize artificial intelligence technologies for their operation. The integration happens in various ways based on the project’s goals.

Some AI crypto coins focus on powering AI computing platforms and machine learning models, while others emphasize enabling decentralized AI marketplaces. However, the most common application is leveraging AI/machine learning for automated crypto trading strategies where AI is used to predict cryptocurrency fluctuations.

For instance, an AI crypto fund may create a token that allows holders to share profits from the performance of its automated quantitative trading algorithms. The tokenomics would distribute a percentage of the fund’s returns to token holders via smart contracts.

In another example, an AI crypto project building a decentralized supercomputing network for machine learning models may reward participants contributing computing resources with native tokens. Users would pay the same tokens to access the network’s processing power for running their models.

The token integrates within the ecosystem to enable value exchange between network participants. These examples highlight that the mechanisms for deriving and accruing value vary across AI crypto coins based on the offering. But artificial intelligence capabilities provide the common thread.

Best AI cryptos making waves

The crypto industry has witnessed multiple high-profile AI crypto launches. Many focused on finance and trading. Below is a list of some of the best artificial intelligence crypto projects in terms of valuations.

Fetch.AI (FET). This Ethereum-based token powers an open machine-learning network for building AI solutions. Fetch.AI provides the infrastructure for creating intelligent autonomous software agents and running them securely and scalably. Despite declines from its peak, FET retains a market cap of over $760.5 million per CoinGecko.

SingularityNET (AGIX). With a market cap of around $415.9 million, AGIX is the native token of SingularityNET, a decentralized AI services marketplace. Participants can buy and sell various AI algorithms and services using AGIX.

Numeraire (NMR). NMR is the utility token powering the Numerai platform focused on AI for quantitative hedge fund modeling and data science competitions. NMR has a market cap of nearly $104.6 million.

Matrix AI Network (MAN). MAN is the native token for Matrix AI Network, an open-source blockchain project focused on AI capabilities. The network enables miners to run AI applications in a decentralized manner. MAN has a relatively modest market cap compared to others on this list, netting $9.7 million.

DeepBrain Chain (DBC). DBC is the native token behind DeepBrain Chain, a distributed computing network for lower-cost AI processing and machine learning. Despite immense hype earlier on, DBC has a market cap of $6.8 million.

These projects showcase how AI crypto coins aim to merge artificial intelligence and blockchain technology for innovative models. However, the integration is still in the early stages and comes with substantial risk.

The promise and perils of AI cryptocurrencies

AI crypto coins offer immense potential but also uncertainties typical of emerging technologies.

Potential Benefits

• Increased efficiency via faster-automated analysis and transactions.
• Improved risk analytics for better decisions.
• 24/7 high-frequency trading and portfolio management.
• Emotionless non-stop monitoring powered by algorithms.
• Democratization of advanced AI for finance.

Associated risks

• Coding errors leading to incorrect outputs or system failures.
• Cybersecurity vulnerabilities that increase the risk of theft or manipulation.
• Lack of regulation around AI automation in finance and crypto.
• Job losses in traditional finance sectors.
• Extreme price volatility synergistic across AI and crypto.

Conclusion

Although both artificial intelligence and AI crypto coins are relatively in their infancy, there is insight into the benefits they provide, enabling automation, predictive analytics, and efficiency improvements.

Rather than relying solely on human analysis, AI crypto projects incorporate algorithms that can analyze data, identify patterns, make AI crypto forecasts, execute trades, and adapt as market conditions change. This allows for applications such as automated high-frequency trading, portfolio balancing, and risk management without constant human oversight.

However, it’s important to remember that AI crypto coins ulitmately represent speculative assets with rewarding upside and commensurate downside dangers. As the tech matures, AI may emerge as a defining force in fintech and crypto. However, regulatory uncertainty and technology risks imply investing in AI blockchain projects demands thorough due diligence.

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