Are digital currencies in the field of artificial intelligence a good investment opportunity? Introducing the best projects
More than half of institutional traders surveyed by JPMorgan believe that artificial intelligence and machine learning will be the most influential technology in shaping the future of business in the next three years; At a time when it seems that the entry of this technology into the field of digital currencies has changed the perspective of the financial experts of this industry to some extent.
The article you read below is a translation a note It is from Ren & Heinrich’s page on Medium and is not an investment recommendation.
What is digital currency based on artificial intelligence?
This class of cryptocurrencies are relatively new projects that attempt to integrate artificial intelligence with blockchain technology. The application of these projects is very diverse and includes everything from finance to games. Also, the extent to which these projects rely on artificial intelligence is also very different.
How will artificial intelligence grow digital currencies?
In general, AI makes existing processes more efficient. For example:
automation
In the future, many large and small processes can be simplified and accelerated using artificial intelligence. These processes can include analyzing which cryptocurrencies are good investment opportunities to automated data collection.
Fraud detection
AI can recognize obvious patterns that, for example, warn users about suspicious wallet addresses or the possibility of fraud in certain cryptocurrency projects.
Autonomous processes
Smart contracts enable the implementation of complex processes in the blockchain. Thanks to artificial intelligence, this mechanism can be taken to a new level in the future. For example, smart contracts can be automatically adapted or regenerated based on certain characteristics.
User experience
Artificial intelligence can recognize behaviors and usage patterns and optimize or create specific functions and services accordingly. As an example, we can mention the automatic and correct filling of transaction forms.
Disadvantages of using artificial intelligence in digital currencies
Artificial intelligence is powerful, but it can also have various negative aspects.
Misuse of data
Artificial intelligence works based on the analysis of large volumes of data. Users have to provide a lot of sensitive personal and financial information to algorithms, which we know from experience will not always be used for the benefit of users.
Mistakes occur
Artificial intelligence is based on programming, which can also contain errors. In recent years, artificial intelligence has grown a lot. However, this technology has not yet reached full maturity and various risks of its use still remain.
Increased dependence
If you entrust the execution of certain processes to an automated assistant, you are practically making yourself dependent on it.
The best digital currency projects in the field of artificial intelligence
It is difficult to accurately assess digital currency projects active in the field of artificial intelligence. However, here are 5 examples of projects that use artificial intelligence for different purposes.
SingularityNet
SingularityNET allows developers to publish their services on a decentralized platform and earn native AGIX tokens.
Fetch
Fetch is building AI-based platforms and services that allow anyone to build and run their own AI service at any scale.
Ocean Protocol
Ocean Protocol connects data providers and consumers in a blockchain-based marketplace whose innovative model relies on tokenization of data sets and data services.
IAccess ARL
iExec RLC aims to create a decentralized marketplace for computing assets such as processing power, applications, datasets, etc.
AI number
Numerai is building a decentralized data science platform on the Ethereum network that will allow developers to compete against each other to create effective predictive machine learning models.
Right now, there are at least 60 cryptocurrency projects that use some form of artificial intelligence. Given the current popularity of artificial intelligence, it is likely that many more projects are being developed that utilize this technology.
Investment potential in current market conditions
The largest AI-based cryptocurrencies by market capitalization have outperformed Bitcoin over the past 30 days. However, the value of these tokens is still 80-90% below their historical peak.
The major part of the current upward trend is the result of advertising and the general change in the trend in the digital currency market. Many investors are looking for projects with future growth potential, some of which we can find among the top 10 cryptocurrencies in terms of price performance in the last 30 days.
Among the 10 best-performing digital currencies, 6 of them have a market cap of only a few million dollars, and one of them has a market cap of $400,000. Therefore, there is likely to be enormous growth potential. However, the low market value also means that a few whales can easily manipulate the price and push it up or down.
Also read: Definition of Bitcoin from the point of view of ChatGPT, the controversial artificial intelligence these days
investment opportunities
The AI-based cryptocurrency sector is still very small. As we can see, the market value of the largest artificial intelligence digital currency project in the overall market ranking is slightly more than 200 million dollars. This means that investing at this stage can have great potential in the future. However, you should be careful.
What lessons can we learn from the previous market hype?
Many people got rich during the initial coin offering (ICOs) hype of 2017-2018; But if you examine these projects, you will see that most of them have failed long ago.
Analysis of available data shows that IPO tokens have lost about 80% of their value on average one year after listing.
We can see the same pattern throughout the period and even after the hype of the DeFi field in 2020 to 2022 and the hype of the NFT market in 2021 to 2022. While some powerful projects such as UniSwap, Avi and Board IP Yacht Club maintained their position at the top of the market, many others lost value.
It seems that digital currency projects based on artificial intelligence will experience a similar trend.
Is Now a Good Time to Buy AI Tokens?
Still, the price trend of other digital currencies is highly correlated with Bitcoin. The author of this note believes that Bitcoin has bottomed out, but given the recent bounce, a price correction is likely. So it is better to wait for the market correction instead of chasing the price peaks.
During the next bull market, AI-based cryptocurrencies will ride the wave of positive sentiment and show great returns. But when this wave subsides, only a few projects will still be profitable and others will lose their value.
This means that when you have decided to buy a digital currency project in the field of artificial intelligence, make sure that You set your profit target and exit the market on time. Do not invest in these projects for a long time. Keep some cash and reinvest in projects that have survived the market frenzy.
Also read: Best cryptocurrencies to invest in 2023
last word
As in the field of DeFi and NFTs, projects that combine artificial intelligence with blockchain technology will add new value to the cryptocurrency market. There are definitely potentials for investing in this category of digital currencies; But we have to wait and see which one of them can finally continue to grow.
Of course, other challenges remain.
Although digital currencies have gained popularity over the past few years, the market is still a relatively small space. Many people still struggle to understand concepts like decentralization, blockchain, Dao, trustlessness, etc. The term artificial intelligence is also very technical and difficult for ordinary people to understand. So don’t expect it to be quickly accepted by the mass of users.