Given the spectacular popularity of ChatGPT, it's perhaps not surprising that AI crypto tokens are surging in price this year. Everyone wants a piece of this hot new niche. The most popular crypto AI token, SingularityNET (AGIX 3.06%), is up by a mind-blowing 815.27% this year. Another popular AI crypto token, Fetch.ai (FET 2.51%), is up 295% this year.
But be careful what you're buying. Some that claim to be AI tokens are actually just older crypto tokens that have been rebranded to capitalize on the latest buzzword. And some of the tokens with "GPT" or "AI" in their names or ticker symbols may be hyping more than they can deliver. With that in mind, here's a closer look at three types of AI crypto tokens I'm avoiding right now.
1. Cryptos directly piggybacking on ChatGPT's success
There have been a host of media articles and press releases involving crypto tokens and ChatGPT recently. For example, on March 15, just one day after OpenAI announced the release of the new ChatGPT-4, The Graph (GRT -1.03%) announced it was going to integrate ChatGPT into how it analyzes data from around the web.
Image source: Getty Images.
I'm always skeptical about these types of announcements, especially once social media influencers start using them to hype a token online. Even The Graph acknowledged in its ChatGPT announcement ("Using AI to Enhance the Graph Network") that using a large-language model like ChatGPT (which analyzes text) is not a direct match for what The Graph is trying to do with blockchain data, and might be harder to pull off than some might think.
2. Cryptos trying to rebrand for AI
While pivots and reboots are great, I'm also somewhat cynical about what some tokens are doing these days to position themselves as AI crypto tokens. Some of these tokens date back to 2017 or 2018, and now all of a sudden, they are "AI crypto tokens"? I especially take issue with cryptos that were "Web3" or "metaverse" tokens just 24 months ago adopting the "AI" brand. Anytime I hear about a hot new AI crypto token, I always do my due diligence.
3. Cryptos you can't explain in 2 minutes or less
Finally, avoid any crypto that you can't explain so your grandmother would understand. If the elevator pitch for a crypto involves a lot of jargon like "data tokenization," you might want to rethink buying it. In this regard, there's a lot you can learn from billionaire investor Warren Buffett, who counsels that you should invest in what you know.
So which cryptos are worth buying?
Using these three simple rules, it's possible to considerably whittle down the list of AI crypto tokens you might potentially want to invest in. Right now, I'm particularly bullish on SingularityNET (AGIX 3.06%), mostly because SingularityNET (the company) has a track record of coming up with world-class AI developments. If you recognize Sophia the Robot, then you're familiar with SingularityNET. Moreover, SingularityNET has a quick, easy way to describe itself that makes intuitive sense: it's "Fiverr for AI."
That being said, I can see why some people might be skeptical about SingularityNET. For one, its name is a clear reference to one of the most-hyped and anticipated potential events in AI: the technological Singularity. And the name of the token is a clear reference to its goal of supporting the development of an "artificial general intelligence" (AGI). So it might look like this token is trying too hard to be relevant for AI investors. Moreover, if you check out CoinMarketCap, you'll see that the AGIX token has been around since 2017, another potential red flag. Why did it take until 2023 for this token to go parabolic? Finally, the fact that AGIX is up by a head-spinning 800% in just three months might be a warning sign that it has skyrocketed too far, too fast.
But guess what? The size of the AI market is so staggeringly large that I think SingularityNET has just begun to scratch the surface of what's possible. Even with a $500 million market cap, it might be undervalued by several orders of magnitude if AI accomplishes what many think it will. As a result, I'm bullish long term on SingularityNET.
