Understanding Artificial Intelligence Cryptos
As of December last year, Artificial Intelligence (AI) cryptos have experienced a surge in popularity and have proven to be a lucrative investment opportunity. These innovative projects aim to blend the power of blockchain technology with the capabilities of artificial intelligence. From the financial industry to the gaming sector, there is a wide range of potential applications for these new technologies. While some projects rely heavily on AI, others may utilize it to a lesser extent.
Investing in AI cryptos offers the potential for significant returns, as the technology continues to gain traction and evolve. The ability to analyze and interpret vast amounts of data with the help of AI algorithms can provide valuable insights that can inform decision-making in a variety of industries. As these technologies continue to mature, it is expected that the opportunities for profitable investment will continue to grow.
Ways in Which Artificial Intelligence is Enhancing Cryptocurrencies
The use of AI has the potential to enhance a variety of processes and make them more efficient. Here are a few examples:
Automation: With the help of AI, numerous large and small processes can be streamlined and sped up in the future. This could range from the analysis of which cryptocurrencies offer good investment opportunities to the automatic compilation of data.
Fraud detection: AI can identify unusual patterns that alert users to potential issues, such as suspicious wallet addresses or a high probability of scams associated with certain crypto projects.
Autonomous processes: Smart contracts allow for complex processes to be executed on blockchains. AI has the potential to take this to the next level, for instance, by automatically creating or adapting smart contracts based on specific criteria.
User experience: By recognizing usage patterns and behavior, AI can offer or optimize certain functions and services. One example of this is the automatic and accurate completion of transaction forms.
Drawbacks of Artificial Intelligence in Cryptocurrency
Artificial intelligence is a powerful tool, but it also has several drawbacks that users should be aware of.
Data collection: AI relies on vast amounts of data to function effectively, which can include sensitive personal and financial information that users are required to provide. Unfortunately, data breaches and unethical use of this information have occurred, and users may not always benefit from sharing their data.
Potential for errors: Since AI is based on programming, it is susceptible to errors. While significant progress has been made in this field, the technology is not yet fully mature, and there is still a risk of mistakes.
Increased dependency: When users rely on an automatic assistant to execute certain processes, they become more dependent on the technology. In the event of a malfunction or outage, this can cause significant disruption or loss.
Top AI Crypto Projects
With the increasing popularity of AI, many cryptocurrency projects are utilizing this technology, and at least 60 cryptocurrencies currently incorporate artificial intelligence in some way. It is reasonable to assume that numerous other projects using AI in the crypto space are currently in development.
Objectively evaluating AI-based crypto projects can be challenging. Here are five examples of projects that utilize artificial intelligence for various purposes:
SingularityNET provides developers with a decentralized platform to publish their services, enabling them to earn the native AGIX token.
Fetch is developing AI platforms and services that enable anyone to create and deploy AI services on a large scale.
Ocean Protocol enables decentralized publication, discovery, and consumption of data.
iExec RLC seeks to establish a decentralized marketplace for computing assets, such as computing power, applications, and datasets.
Numerai is constructing a decentralized data science platform on Ethereum that allows developers to compete in creating effective machine learning prediction models.
The Investment Potential of AI Cryptos in Today’s Crypto Market
In the past month, the biggest AI cryptocurrencies by market cap have outperformed Bitcoin. Nevertheless, they remain significantly lower than their all-time highs, down by as much as 80-90%.
While the upward trend we are currently seeing can be attributed to the crypto market’s general shift, the hype surrounding AI is also a driving force. Many investors are keen to jump on the bandwagon early, which is apparent when looking at the top 10 performers based on 30-day price performance: six of the ten AI cryptos with the best returns have a market cap of only a few million USD, and one has a market cap of only $400K.
This indicates a substantial potential for growth, although a low market cap makes prices more susceptible to manipulation. As such, a small group of whales can significantly affect the price in either direction.
The AI crypto sector is still relatively small, with the largest project having a market cap just above $200 million, which barely places it in the top 100 cryptocurrencies. This means that there is significant potential for growth and investment opportunities in this sector. However, caution is advised.
We can learn from past crypto hypes, such as the ICO hype of 2017-18 and the DeFi and NFT hypes of more recent years. While some solid projects, like Uniswap, AAVE, and Bored Ape Yacht Club, remained at the top, many others failed and disappeared. It’s likely that AI cryptos will follow a similar pattern.
Should I Invest in AI Cryptos Now and What to Consider?
The biggest AI-related crypto projects have recently outperformed Bitcoin, yet they remain far from their all-time highs. The current uptrend is driven by hype and general market reversal, with many investors eager to enter the AI crypto space.
However, it is important to exercise caution when investing in AI cryptos. While the market is still small and presents significant growth potential, history has shown that many projects that gain hype often fail in the long run. Just like the ICO, DeFi, and NFT crazes, AI crypto projects will see some solid performers, but many others will become worthless.
If you are considering investing in an AI crypto project, it’s best to wait for a price correction rather than chasing highs. Set profit targets and sell on time, rather than holding on for too long. Keep some cash and consider reinvesting in projects that survive the hype.
AI crypto projects hold potential, but it is still unclear which use cases will stick in the long run. In addition, mass adoption of crypto, let alone AI crypto, is still a challenge as many people struggle to understand the technical concepts behind it.
Conclusions
Despite the potential for growth, investors should be aware of the risks and exercise due diligence when considering investments in the AI crypto sector.
While the AI crypto market presents investment opportunities, it’s essential to carefully evaluate projects and their development teams, as well as consider factors such as market size, competition, and consider the challenges of adoption and longevity of the project’s use cases before making any investment decisions.”
