AI token's market soars high, leaving record-breaking Bitcoin behind
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Coins linked to AI-focused crypto projects have jumped alongside tech stocks like Nvidia, opening a new tab driven by insatiable investor appetite for applications like machine learning
With Artificial Intelligence (AI) taking over almost every other field, the AI token rally has left cryptocurrency in the dust.
Coins linked to AI-focused crypto projects have jumped alongside tech stocks like Nvidia (NVDA.O), opening a new tab driven by insatiable investor appetite for applications like machine learning.
The rise of many AI crypto tokens has outpaced even that of bitcoin over the past year as the world's biggest cryptocurrency has surged to record levels. According to CoinGecko data, their combined market value has ballooned to $26.4 billion, up from just $2.7 billion last April.
Tokens linked to these projects have increased between 145% and 297% in the past 30 days.
If the more optimistic industry predictions pass, there could be more room to run. Some market watchers say crypto and blockchain technology could help solve some of the AI industry's teething problems, such as privacy and a need for computing power.
"As both AI systems and blockchain networks continue to grow, we will see more and more use cases fusing together the two industries," said Markus Levin, co-founder of blockchain data storage firm XYO Network.
The CoinDesk Indices Computing Index, which includes AI-linked tokens, has leaped over 165% over the past 12 months, outpacing even Bitcoin's 151% rise to record levels.
Kaiko Research data showed that trading volumes in AI tokens have also risen sharply this year, hitting an all-time high of $3.8 billion in late February.
"There is a significant chance that ... AI applications will be crypto's raison d'etre," fund managers VanEck's Matthew Sigel and Patrick Bush said in a note.
Some of the top blockchain projects currently include the Render Network, a blockchain platform for peer-to-peer sharing of AI-generated graphics; Fetch.AI, a platform for building AI apps; and SingularityNET, an AI services marketplace.
"Investors are starting to realize that if you want real value, you need products that are uncorrelated to the crypto market," said Ahmad Shadid, founder of AI-focused blockchain startup io.net.
Winners and losers
AI-linked blockchain products include various services, such as payments, trading models, machine-generated non-fungible tokens, and blockchain-based marketplaces for AI applications where users pay developers in cryptocurrency.
Investment manager VanEck has predicted that revenue from AI crypto projects could reach $10.2 billion by 2030 in the base case and over $51 billion in the bullish scenario.
VanEck pointed to using crypto tokens as rewards, developing physical computation infrastructure, data verification, and transparency to prove digital ownership as primary areas where blockchain technology lends real-world value to AI development.
Offering crypto tokens as incentives allows quick scalability, said iOS Shadid.
His company plans to launch a token later this year.
"The reason we can scale fast is the token we have coming out," he added. "The token incentivizes owners of physical infrastructure to bring their computers onto our network."
Yet, just as with the AI boom, picking winners and losers could be perilous.
"We're still in the very early stages of AI networks integrating with blockchain-based networks, and the utility of many tokens is still very uncertain," Levin cautioned.
Source: Reuters
