What Is an AI Token? Crypto Coins Surge as Investors Ride the AI Boom

Alongside rapid developments in artificial intelligence (AI) and the fluttering popularity of cryptocurrencies, a new trend is emerging: AI tokens.

These tokens, which support AI-based projects, applications, and services within the blockchain ecosystem, have seen a remarkable surge in value as investors ride the wave of artificial intelligence.

(Photo : KIRILL KUDRYAVTSEV/AFP via Getty Images)

A photo taken on November 23, 2023 shows the logo of the ChatGPT application developed by US artificial intelligence research organization OpenAI on a smartphone screen (L) and the letters AI on a laptop screen in Frankfurt am Main, western Germany.

AI Tokens Riding the Artificial Intelligence Boom

NVIDIA, the AI chipmaker, recently surpassed Saudi Aramco to become the world's third most valuable company. OpenAI, the leader in generative AI, signed a deal in February that valued the artificial intelligence company at at least $80 billion.

These events that characterize the AI boom have not only revolutionized industries but have also made a significant impact on the crypto market.

Coins linked to AI-focused crypto projects have experienced a surge in value, mirroring the rise of tech stocks like Nvidia. This surge is being driven by an insatiable investor appetite for applications like machine learning, which are at the forefront of AI innovation.

According to data from CoinGecko (via Reuters), the combined market value of AI-linked tokens has ballooned to an astonishing $26.4 billion, up from just $2.7 billion last April. This represents a staggering increase in value and highlights the growing interest in AI within the crypto space. Tokens linked to AI projects have outperformed even Bitcoin, with gains ranging from 145% to 297% in the past 30 days alone.

The CoinDesk Indices Computing Index, which includes AI-linked tokens, has also seen significant growth, rising over 165% in the past 12 months. This outpaces even Bitcoin's rise to record levels, demonstrating the growing importance of AI within the crypto market.

Blockchain Networks

One of the key drivers behind the surge in AI tokens is the potential for blockchain technology to address some of the challenges facing the AI industry. Issues such as privacy and the need for computing power could potentially be solved through the integration of blockchain and AI technologies.

Speaking with the press, Markus Levin, co-founder of blockchain data storage firm XYO Network, believes that as both AI systems and blockchain networks continue to grow, we will see more and more use cases fusing the two industries. This fusion of technologies could lead to even greater innovation and adoption in the years to come (via Reuters).

Meanwhile, investment manager VanEck has made bullish predictions of AI crypto projects, estimating that revenue from these projects could reach $10.2 billion by 2030 in their base case scenario, and over $51 billion in their bullish scenario.

VanEck points to the use of crypto tokens as rewards, the development of physical computation infrastructure, data verification, and transparency in proving digital ownership as primary areas where blockchain technology adds real-world value to AI development.

However, while the potential for AI tokens is significant, picking winners and losers in this space could be challenging. Ahmad Shadid, founder of AI-focused blockchain startup io.net, notes that investors are beginning to realize the importance of products that are uncorrelated to the crypto market.

Shadid believes that offering crypto tokens as incentives allows for quick scalability, as demonstrated by his company's plans to launch a token later this year.

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