Investment in Artificial Intelligence: A Guide to AI Tokens and Coins

The future is looking bright as the rapid rise of AI continues to surprise modern society with the advancement and investment at breakneck speeds. It’s not just traditional markets being influenced by the increase in demand for AI-adjacent technologies; the crypto markets are experiencing a similar disruption with the rise of AI Tokens.

These tokens are projects that actively develop AI solutions on blockchain platforms or create blockchain-based services that aid AI and machine learning companies. It’s no wonder that AI tokens are gaining so much hype and attention from investors around the world. The question on everyone’s minds is whether a crypto-AI revolution is on the horizon, and if there is a safe way to invest in it. In this guide, we will explore the answers to these questions and take a closer look at some of the best-performing AI tokens currently on the market. Get ready to discover the exciting possibilities that the future holds for AI and crypto!

The Bullish and Bearish Case for AI on Blockchains

AI and blockchain are two technologies that have the potential to revolutionize the way we handle online transactions and the global economy. The blockchain’s decentralization and AI’s autonomy can work together to increase productivity, reduce costs, and streamline several industries. By investing in the right combination of blockchain and AI technology along with its associated tokens, you may be able to reap significant gains in the future.

While AI has become a buzzword in recent years, there are only a few use cases where combining it with blockchain technology can produce positive outcomes. Many AI token projects have objectives that are either impractical or overly ambitious and come with high risks. Some projects use AI as a buzzword to generate hype without providing any meaningful AI features. This approach could lead to short-lived interest in this market sector built primarily on hype.

Top AI Tokens and Coins

Bittensor (TAO)

Bittensor is a blockchain project that aims to create a decentralized marketplace for computing resources. Its native token is TAO, which acts as a reward for miners and validators. Bittensor hopes to expand to over 1000 subnets. The project has great potential but faces major feasibility, governance, privacy, and security challenges. The prospects are uncertain, but the recent hype generated by AI has led to significant growth in its market cap.

Render Network (RNDR)

Render Network is a blockchain project that pools idle graphics processors (GPUs) and sells them to users who need GPU power to render images and videos. The native token of the network is RNDR/RENDER and can be used as a staking token for validator services and to reward node operators who provide GPU services to the network. The token has witnessed massive gains in recent months due to Otoy’s OctaneX app launch and Render Network’s decision to include AI image generation and editing.

The Graph (GRT)

The Graph is a decentralized data analysis platform that helps make services like dApps decentralized. It serves a valuable purpose in the blockchain space by collecting and organizing blockchain data, promoting broader development and adoption of dApps. GRT is the native token of The Graph protocol, used to incentivize participation in the network and as the protocol’s governance token. The token’s market cap has quadrupled in six months. If the role of AI in blockchain expands, GRT and The Graph will be at the center of it all.

Fetch.ai (FET)

Fetch.ai is a blockchain-based project that aims to create a decentralized network of AI agents to execute various online tasks independently. Its native token is FET, which pays for AI agent services and rewards other participants. Fetch.ai has partnerships with major organizations like Deutsche Telekom and Bosch. Although the project lacks a viable product, its potential has driven significant market growth.

Other Promising AI/Blockchain Projects

Ocean Protocol (OCEAN)

Ocean Protocol aims to create a trading ecosystem for data on the blockchain. Such a data exchange could provide AI/ML developers with high-quality data sets for securely training their models.

Numerai (NMR)

Numerai is a unique blockchain protocol owned by a hedge fund. It runs data science tournaments that challenge participants to create AI data models that can improve and enhance the fund’s investment returns.

Injective (INJ)

Injective is a DeFI-focused Layer-1 blockchain developing next-generation finance apps for prediction markets, spot and derivative trading, and more. To make these apps more accurate and efficient, the protocol uses elements of AI.

Investment Strategies for AI Tokens

The investment strategy for AI tokens is not dramatically different from the ones we recommend for regular tokens. The fundamentals remain the same – do your research and don’t get carried away by rapidly rising token prices or market capitalization.

Due Diligence

When considering an AI project for investment, don’t rely solely on metrics like token market cap. Instead, focus on fundamentals like the project’s use case, the developers behind it, collaborations, community participation, and competition. Additionally, do your due diligence by studying the white paper, tokenomics model, roadmap, regulatory compliance, and security track record.

Diversification

AI tokens exist in a particularly high-risk space within the wider crypto markets. Diversification is a key component of success. Using the same logic, consider restricting your AI token investments to just 10% of your total crypto allocations. The quantum of long-term risk here is too high to recommend any more than that under the present market conditions.

Hype

Investor sentiments in crypto markets are driven by hype and narratives, often disconnected from reality. The buzzword “AI” has benefited many tokens since 2023, but some use it to cash in without genuine development teams.

Feasibility

Blockchain and AI integration is still in its early stages and the success of such projects is uncertain, even those led by talented experts. Recent spikes in AI token valuations are largely based on speculation and hope for future value creation.

The Risk

There are several reasons why blockchain experts consider AI tokens to be a relatively high-risk crypto investment option. We can boil it down to the following broad factors

AI technology faces regulatory challenges and lawsuits related to privacy and intellectual property violations. Blockchain is also under regulatory pressure in the US and EU. This creates a high potential for regulatory risk associated with AI tokens.

Conclusions

The AI blockchain ecosystem is new and volatile. AI tokens are a high-risk investment due to market volatility, evolving technology, and compliance issues. To invest safely, adopt a conservative strategy, research, and invest a small portion of your crypto portfolio. Learn2.Trade can help you stay calm and invest for the long term. Subscribe today for our expert view.

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Note: Learn2.trade is not a financial advisor. Do your research before investing your funds in any financial asset, product, or event. We are not responsible for your investment results.