AI Tokens – What Are They, And How Do They Work?
One major thing we are all aware of is the rise in disruptive technologies. Now, the joining of Artificial Intelligence and cryptocurrency has brought the use of AI tokens to prominence.
What are AI Tokens?
Artificial Intelligence (AI) tokens can be viewed from two angles. Firstly, AI tokens are cryptocurrencies that utilize AI to improve security, scalability, user experience, and other factors in the crypto space. Secondly, AI tokens are digital currencies that power AI-based apps or projects. These include decentralized marketplaces, image or text generation, AI investment protocols, etc.
AI meets Crypto
The most relevant example of how AI meets crypto is in the AI chatbot called ChatGPT. OpenAI developed ChatGPT in 2020 as a language model. Since its inception, ChatGPT has sparked interest both within and outside the crypto space. The rise in popularity of Chat GPT further cements the extent to which AI can affect the crypto world. For example, the creators of the Tron token are looking to develop an AI-based decentralized payment system that aims to support the chatbot.
Other than ChatGPT, examples of popular AI Tokens include AGIX, FET, NMR, ALI, OCEAN, and HERA. These AI tokens have also benefitted from the increased recognition of the use of AI in cryptosystems. In February, AI tokens like FET, AGIX, and OCEAN soared to higher levels in terms of market value from their low tide since January last year.
How AI Tokens work
Various AI tokens work based on the solutions they aim to provide. Looking at some of the popular AI tokens, the way they work is as follows
This is the AI token for the decentralized platform Singularity NET. The decentralized marketplace provides a platform for people to buy and sell AI-related services using AGIX as the primary form of payment.
FET is the medium of exchange used on the Fetch system. Fetch is an infrastructure that provides all the resources needed to build, deploy and sustain an AI system. It enables users to develop autonomous software agents that perform tasks like data analysis and prediction.
The AI token HERA is used on the AI-powered pathfinder with the same name. As a pathfinder, HERA uses machine learning to identify the most profitable trading routes for users trading on decentralized exchanges.
Numerai is the AI portfolio management system that utilizes NMR as an incentive. Data scientists are rewarded with the AI token, NMR, for making accurate predictions and accessing the platform’s services.
AI tokens work like regular crypto tokens; the only differentiating factor is that they are more streamlined toward AI processes.
Although AI tokens are still in their early days, it has a market size of about $1.7 billion. Compared to the crypto market size, this figure is still considered small.
However, as companies start recognizing the potential of AI tokens, the market is expected to grow significantly. For example, the announcement of Microsoft’s investment of $10 billion in OpenAI, ChatGPT’s developer, led to more interest in the nexus of crypto and AI. With more investments like this, artificial intelligence is on its way to being one significant technology that shapes the future of crypto trading.