The world has been captivated by the explosive growth in AI. The crypto markets are no different.
2023 has gone a lot better than expected for most crypto traders. After a depressing finish to 2022, with the collapse of FTX and the subsequent hit to the market, we had limited expectations for 2023. However, traders have been pleasantly surprised by the market’s resilience.
Bitcoin started the year at $16.5k but had pumped to over $23k within 21 days. The OG of crypto has remained relatively stable since only breaching the $24k mark once on the second of February. Ethereum has had similar success and also peaked on the second of the month at just over $1.7k USD.
However, some of the market’s most successful coins have made BTC and ETH look like pygmies in comparison. SingularityNET (AGIX) is up 669.15% in 30 days, Anchor Neural World (ANW) is up 810.66%, and GNY (GNY) is up 946.61%. What do they all have in common? They’re AI tokens.
It’s Not Just Crypto
Unless you lived under a rock, you’d have noticed that 2022 became “The Year Of AI.” The trend kicked off in June when social media became flooded with uncanny valley images generated by OpenAI’s Dall-E Mini. (The tool was later rebranded as CRAIYON.)
In September, a more powerful version called DALL-E 2 became available to the public. Other AI image generators had begun to catch on by then, attracting users eager to save money on graphic design or simply have great-looking social media avatars. Starry AI, Midjourney, BigSleep, and Pixray were just some that became popular.
But the big explosion in interest in AI came in November 2022 with the launch of ChatGPT. The language generation model uses “deep learning” techniques to generate text based on a prompt. This could include writing a screenplay or novel, organizing copy, or writing a shopping list based on a list of meals you’d like to eat in the week ahead. According to Google Trends, interest in ChatGPT has only increased since its launch.
AI use cases are nearly limitless. For decades, doctors and healthcare professionals have waxed lyrical about the potential for AI to improve patient diagnosis and treatment by analyzing medical data to detect patterns. In finance, AI could be used to predict and execute profitable trades faster than normal investors. (Although maybe the less said about that the better?)
Before the mad rush of AI technology in 2022, we had already seen AI infiltrate many of our lives. Most notably in the form of natural language processors in smart speakers like Alexa and Siri.
Why Are AI Tokens Pumping?
The sudden increase in AI last year caused a corresponding increase in the interest in AI tokens. The technology conversation has been completely swamped by it: how it will take over search engines like Google, how machine learning will help us save the planet from climate change, and how it will make everyone’s jobs obsolete.
As the tech industry’s slightly outcast younger sibling, it was always inevitable that AI would contribute to the crypto conversation too. Prominent traders also point to AI as the source of the next bull market. Data from Cryptoslate shows that the AI token market is up by over 86% over the past seven days.
Blockchain and AI are being mixed in new and innovative ways in some AI tokens. With SingularityAI (AGIX), AI, blockchain, decentralization, and privacy are purportedly combined in a novel form. The project’s Artificial General Intelligence (AGI) claims to be independent of any central entity (like OpenAI or Microsoft.) Music to the ears of most crypto enthusiasts.
However, with big and sudden market pumps comes the risk of greater volatility. At the time of writing AGIX is down approximately 18% in the past 24 hours.
Big Data Protocol (BDP), a token that was popular in 2021 before hovering at around 2 cents, pumped nearly 4000% over January.
However, critics have questioned the compatibility of AI with blockchain. One trader on Twitter said: “Speculators will leave when hype dies off so prices will dump, if you made money, take profit.”
A Cautionary Tale
The recent surge in the market for AI tokens should give people pause for thought. Not every token will last or is based on a sustainable business model or demonstrable technology.
Before the AI boom, there was AI Doctor (AIDOC), a platform that offered AI-based real-time health monitoring, disease diagnosis, and personalized treatment recommendations. According to a 2018 article, it was founded by a Chinese team of senior scientists from Baidu and Microsoft, plus some of the top university professors. (Who these scientists and professors are is a mystery.)
Sounds interesting, right? Well, at the time of writing, the project appears to no longer exist. As far as the internet is concerned, it has pretty much disappeared.
One of its last pieces of coverage was in 2018 when Cryptoslate wrote that it was “working to establish an automated medical value chain that will create digital data blocks based on a patient’s real-time vital signs… AIDOC then uses diagnostic modules to help pinpoint the cause of the problem and then lay out possible paths of recourse.”
AIDOC was last available on an exchange in September of 2022 before Huobi delisted it.
Now, the cryptocurrency ecosystem is far more mature than in 2018. Fake projects are more easily spotted, investors have been stung enough times, and the community has learned its lessons. But the AIDOC story is a cautionary tale nonetheless. Everyone is interested in AI now, and the subsequent pump is happening, but the market won’t always look this good.
Don’t be fooled by the buzzwords, and do your own research.
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