For investors, artificial intelligence (AI) was one of the top crypto narratives of 2023. The sudden arrival of ChatGPT out of seemingly nowhere had everyone talking about artificial intelligence and the emergence of new AI crypto tokens.
Yet, if you look at a list of the top AI crypto tokens right now, it's slim pickings. Only a handful rank among the top 200 cryptocurrencies by market cap, and only two have market caps north of $1 billion. The crypto market needs the equivalent of a ChatGPT token with broad investor appeal, and so far, it hasn't found one.
The search for pure-play AI crypto tokens
One problem, quite simply, is that some AI crypto tokens are not really AI crypto tokens. For example, consider Render (RNDR -6.65%) and Akash Network (AKT -6.28%), both of which rank as two of the top AI crypto tokens by market cap, according to CoinGecko.
Render is a token for distributed computing, while Akash Network is a token for cloud computing. Yes, AI can make the computing process more efficient or more powerful in both cases, but the concepts of distributed computing and cloud computing have been around for a long time. As a result, I would not consider them pure-play AI cryptos.
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In terms of a pure-play AI crypto token, two of the most intriguing options are Fetch.ai (FET -5.17%) and SingularityNET (CRYPTO: AGIX). Fetch.ai is a decentralized machine learning network, while SingularityNET is a blockchain-powered AI marketplace. But both launched before the current generative AI trend powered by ChatGPT took off. And with the recent launch of the new ChatGPT Store, I'm not as bullish on these two tokens as I was last year.
Where are the billion-dollar market opportunities?
Certainly, there are a lot of big ideas for the future intersection of AI and blockchain technology, and that means the potential for the emergence of new billion-dollar market opportunities. For example, the decentralized blockchain oracle network Chainlink (LINK -4.89%) is looking at possible AI use cases that can tap into the power of blockchain technology. A recent Chainlink developers' conference included a discussion of artificial intelligence and featured Eric Schmidt, the former chief executive officer of Google parent Alphabet (and now a Chainlink strategic advisor).
At the end of 2023, Silicon Valley venture capital firm Andreessen Horowitz unveiled a list of possible blockchain use cases for AI. Theoretically, any of these use cases might become the basis for a new crypto token with real-world utility and broad popular appeal. For example, consider blockchain gaming, where generative AI might be used to create new digital assets within a gaming environment. Or, AI might become the game maker itself. Conceptually, an AI crypto token created for a specific blockchain game would be similar to a metaverse crypto token created for a particular metaverse world.
Also, at the annual World Economic Forum summit in Switzerland this year, participants discussed possible ways that blockchain technology could be used to store AI training data. Since blockchains are decentralized and permissionless, that would theoretically prevent any one company from having a monopoly on the future of AI. Essentially, you would pay for AI training data with a crypto token, and providers of the AI training data would be compensated with those crypto tokens as well.
Are any AI crypto tokens a buy right now?
From my perspective, there are two primary reasons to invest in an AI crypto token. The first is that it is a pure-play AI crypto token specifically created to leverage the power of generative AI. The second is that it offers obvious utility and has a clear billion-dollar market opportunity. Right now, there are AI crypto tokens that meet one of these conditions, but not both.
So, buyer beware. There are plenty of crypto tokens that are trying to win over investors by including "AI" or "GPT" in their names. That approach might have worked in 2023, but the search is now on for an AI crypto token with real-world utility.
Despite the rapid pace of innovation within the generative AI sector, it's unlikely that we'll see the first multibillion-dollar crypto token by the end of this year. These things take time to develop, especially in a field as new as generative AI. That said, I'll certainly keep an eye on new developments at the intersection of AI and crypto.
