The backlash against ChatGPT has started. At the end of March, Elon Musk and 2,600 other tech leaders called for an immediate six-month pause on ChatGPT's development. That comes on top of increasingly ominous warnings from tech leaders about the potential perils of artificial intelligence (AI), as well as new concerns the Federal Trade Commission (FTC) might attempt to regulate ChatGPT.
If you're concerned about the fate of humanity and keeping humans safe from potential robot overlords, this is probably a good thing. However, if you're worried about the future valuation of AI crypto tokens, this is a very negative development. Here's a closer look at how the backlash against ChatGPT might impact the valuations of AI crypto tokens going forward.
Popping the ChatGPT balloon
Since the start of the year, top AI crypto tokens have skyrocketed in value. SingularityNET (AGIX 2.24%), for example, is still up 830% for the year. Fetch.ai is up a stunning 295%. And plenty of other AI crypto tokens have jumped from complete obscurity to being written up as the next hot AI crypto token. All of this started, of course, as soon as the first public version of ChatGPT launched on Nov. 30.
With every new iteration of ChatGPT since then (we're now up to version 4), crypto tokens have rallied. For example, when ChatGPT-4 came out on March 14, some crypto tokens immediately skyrocketed in value. So the obvious takeaway from the new ChatGPT backlash is that investors can no longer count on similar types of rallies going forward.
Image source: Getty Images.
Moreover, it is likely that the days of crypto tokens proudly heralding their relationship with ChatGPT might be coming to an end. When ChatGPT was the hottest topic in tech, crypto tokens rushed to get in on the generative AI trend. In mid-March, for example, The Graph highlighted how it would start using ChatGPT to explain data calculations and summarize information for users.
Separating AI winners from losers
Ultimately, I think the market for AI crypto tokens will fork. There will be one market for classic AI tokens and one market for generative AI tokens. Classic AI tokens will focus on safe, agreed-upon approaches to AI. For example, AI is used for facial recognition, and this classic use case for AI dates back to the mid-1960s. Nobody is calling for a halt to this kind of AI research.
Meanwhile, crypto tokens jumping on the generative AI bandwagon are the ones that could face selling pressure. In the world of artificial intelligence and machine learning, "generative AI" refers to the ability to generate content (such as text, audio, photo, or video) based on a simple text prompt. For example, DALL-E enables users to create an image based on a text prompt within seconds.
Are any AI crypto tokens safe to buy?
While SingularityNET has obviously been a beneficiary of the recent ChatGPT craze, the founder of SingularityNET, Dr. Ben Goertzel, has been heavily involved with AI since the early 2000s. He has worked on groundbreaking AI projects, such as Sophia the Robot, and pioneered the idea of bringing AI to the blockchain back in 2017. In January 2018, SingularityNET partnered with Ethereum to launch its new token. So there's obviously a long track record here and a tremendous amount of innovation firepower.
CRYPTO: AGIX
Key Data Points
One of the goals of SingularityNET's blockchain-based AI was to avoid the exact type of nightmare scenario being suggested by Elon Musk: a runaway super-intelligence that goes from responding to simple text prompts to ruling the world. Putting AI on the blockchain ensures that no one entity (such as a particularly nefarious James Bond-type villain) can fully control the AI since blockchains are, by definition, decentralized.
Investment takeaways
The big takeaway here is to invest in AI crypto tokens only if you believe in the underlying business model, not because a new token is promising some magic integration with ChatGPT. While I'm confident in tech leaders' abilities to find some way to develop ChatGPT ethically and safely, the fact remains that ChatGPT could become a lightning rod for future controversy. And that makes tokens based around ChatGPT risky. One can just imagine what might happen if Washington lawmakers get into the act, eager to prove that they are "tough on ChatGPT."
It's also important to keep a long-term mindset. While the field of AI is developing at an exponential rate, it will likely take several more years for it to develop into the multitrillion-dollar industry predicted by some consulting firms. So as you look to invest in AI crypto tokens, focus on those that can afford to wait out any moratorium on ChatGPT development. The best crypto tokens, such as SingularityNET, are already developing real-world use cases and building long-term value.
