How quickly they fall out of fashion
AI related Cryptos are seeing a long overdue price retrace, with the hype seemingly fading out. Let's take a closer look to see if this sector of Crypto is only a short term fad, or if the top projects have real potential to compete with the AI giants in the tech world.
How to judge if a new narrative is solving a real problem?
Is there a major technology breakthrough or invention of a new protocol that made blockchain/crypto applications much more powerful?
- Uniswap kickstarted DeFi, allowing anyone to list and trade tokens in a completely open way.
- Axie Infinity kickstarted Blockchain Gaming, attracting millions of gamers from third world countries to try games and earn decent income (even though not sustainable long term)
- NFTs give gaming assets super powers: all in-game assets and currencies can be tokens and NFTs, which makes them last forever and interoperable across games. This way the publisher cannot take your game assets away, and you can easily trade them when you don't want to play anymore. Secondary markets of game items, skins, and currencies are a huge economy already.
- Layer-2s solve transaction fee and speed problems of Ethereum
- Alternative Layer-1s tackle other usecases of blockchains that Ethereum cannot accomplish.
Are there major shifts in other business sectors and economies that pushes them to adopt blockchain and Crypto for specific benefits?
- Privacy coins are always useful to make payments and combat censorship. Although a grey area, there will also always be shady activities conducted with privacy coins.
- Crypto exchanges attract users and share fees with their tokens, so when a certain exchange becomes popular within some specific country or area, their token becomes popular.
- CBDCs and cross-boarder payments are integrating public blockchains for ease of settlement.
- Entertainment, music, and fashion brands partnering with NFT brands like Bored Ape. in order to appear hip in the creator economy and attract more viewers.
- Sports brands like NBA, MLB, and Soccer clubs partnering with infrastructure providers like Polygon, Flow, and Chiliz to easily sell digital collectibles to their fans. This gives them a easy solution and generates real revenue.
Now lets look at AI Crypto Narrative.
Is there a major technology breakthrough by using AI in Crypto Projects?
No, all the hype is around ChatGPT, OpenAI, Stable Diffusion etc which are centralized companies that have nothing to do with Blockchain or Crypto.
AI Crypto projects have not made any significant changes in the past two years, and there hasn't been new AI cryptos launched for a while.
Currently no AI features can help Crypto users. There are no AI trading bots that can help you make profits, or AI models that can make transactions run faster or cheaper.
Are there major shifts in AI businesses that makes them adopt Blockchain or Crypto for specific benefits?
No, none of the huge AI platforms like ChatGPT, OpenAI, Stable Diffusion etc have plans to adopt Crypto. People are able to use these tools just fine without putting Blockchain or Crypto into the mix.
While there are other "theoretically superior" AI platforms that utlize Crypto, such as decentralized marketplaces to trade AI models, or data marketplaces to look for datasets to feed into AI models, these are not new ideas as they are all old crypto projects. AND they have not gotten any traction from the larger AI industry over the years, as we will discuss in the next sections.
Why are AI Cryptos all the hype suddenly?
After ChatGPT became the fastest application in history to hit a million users, prompt investments by the likes of Microsoft and Google were made into the AI sector. This resulted in AI altcoins exploding, as speculation ran rampant.
Analyzing some top projects that are supposedly involved with AI
The Graph $GRT
First there's The Graph $GRT, which tops the AI coins list on CoinMarketCap.
Although The Graph is dubbed the "Google of Blockchain", and is used in all major blockchains to index and query data, its usecase is very far from that of "Big Data" or anything related to AI.
The Graph DOES NOT index or query any data that's used in AI. Rather, its main usecase is to read all public blockchains and process their data in an easy to understand way for dApp developers.
If you are a DeFi application developer, you will likely use The Graph to read data from your smart contract. But if you are developing an AI chat or image generation app, the blockchain data served by The Graph will serve no purpose for you.
I really don't understand why people classify The Graph as an AI/Big Data project, because it really isn't related.
SingularityNET is one of the few legit AI projects that have a mission statement entirely focused on combining the power of Blockchain and AI.
The project's overall goal is to make it possible for consumers to acquire AI services from a variety of AI agents on the platform, allowing anyone to access AI technology or take part in its development.
Its main product offering for end users today, is an open marketplace for anyone to get access to AI services.
The AI services on this platform are able to help you with language recognition, text generate images, apply certain filters to photos etc. However, keep in mind that there are plenty of these services as SASS platforms without using Crypto payments.
On top of this, these AI models seem significantly outdated compared to the groundbreaking AI platforms like ChatGPT and Stable Diffusion. SingularityNET's AI services have much worse user experience and actual power of the AI models themselves.
On the bright side, SingularityNET does have an ecosystem of AI Crypto projects that are using SingularityNET's AI services. This means if there are significant breakthroughs in the AI Crypto space in the future, SingularityNET is likely to continue benefiting from this narrative.
There are some good things around the SingularityNET project, such as its strong founder Ben Goertzel who was an AI Pinoeer behind the Sophia Robot. But the speculation out there comparing this old Crypto AI project to the $29 Billion valuation of OpenAI is outrageous.
Fetch.ai is another top AI project on most people's radar. Its platform offers resources and frameworks to create an AI-based digital economy.
What does this mean?
Basically Fetch network has built a shared machine learning model that any network participant can use. This model is called the CoLearn.
The main applications on Fetch Network all seem to be quite vague with their product offerings.
There is AXIM, which is a tool that allows businesses to share data silos without compromising privacy
There's MOBIX, which is a bike sharing app that rewards you with tokens
There's Resotate, a decentralized social network that uses AI to curate your social feed, just like the recommendation system like the facebook timeline
The other projects are not related to AI at all, mostly just DeFi farming tokens and exchanges launched on the Fetch.ai network.
So again, while Fetch.AI has the word AI in its project, it does not seem to have anything related to the chat intepretation or image generation AI capabilities that are so popular right now. Most of the projects are simply using the network just like a smart contract blockchain like Ethereum.
Render Network $RNDR
Render is really a curious case to be mentioned so often in the AI coins category, as it has nothing to do with AI in the first place.
Render Network is a distributed GPU rending platform, that allows anyone with powerful graphics cards to share their graphics processing power with other users on the network. The users get to complete high demand graphics work, and the GPU provider received $RNDR tokens for providing processing power.
It is a great take on the GPU mining sector, but instead of letting graphics cards go to waste for the sake of mining Bitcoin and other coins, it puts them to use for actual utility - GPU rendering.
The main target of GPU rendering is like you'd expect, 3D models, Videos, Photos, Games, and anything graphics related.
You CAN technically use this power to train AI models, but saying that Render Token is an AI Crypto is completely far fetched.
Nonetheless, $RNDR is still up 3X in the past month, which just goes to show how people are pulling strands together to put any "cloud computing" or "Model" project into the AI category these days.
$OCEAN is another top contender in the AI crypto sector, and its main offering is a "data marketplace" that transforms everything into crypto tokens.
Here are some of the most popular datasets available on the Ocean Marketplace. As you can see, most of these are around Crypto prices and other financial price feeds, but it's quite a stretch to say that these datasets will be useful in the top AI platforms like ChatGPT or Image Generation platforms.
Can there be more relevant datasets on this marketplace in the future, and for larger AI companies to use this marketplace? Sure.
But it doesn't seem like there is much benefit added with the tokenization parts of Ocean Protocol, unless we are dealing with specifically Crypto related datasets.
So again, Ocean Protocol is yet another AI project that does not seem to benefit from the recent breakthroughs in AI platforms, or have high chances of being adopted by AI giants.
Alethea is the next AI project on the list. This project is a lot newer having launched in the 2021 bull market, and does have more relevant ideas to the current AI usecases.
The long term goal of Alethea is to create interactive and intelligent NFTs with AI, embedding AI animation, interaction and generative AI capabilities into NFTs. Anyone can use the NFT protocol to Create, Train and Earn from their iNFTs in the world’s first Intelligent Metaverse known as Noah’s Ark.
Their latest product is CharacterGPT, which lets anyone create avatars based on text descriptions. This tool uses similar language models like ChatGPT and text-to-image models like Stable Diffusion. So it is within the same category of tools as super powerful AI generation tools.
Alethea is a good example project that has significantly benefited from the recent breakthroughs in AI technology, by actually incorporating the latest AI models into the platform. Keep in mind that Alethea still fits in the Outside-in category of projects taking advantage of AI, Alethea is using the latest AI technologies to improve its NFT creation abilities, but Alethea IS NOT a significant AI infrastructure project that can be used everywhere like ChatGPT and Stable Diffusion.
Alethea is mostly Incorporating AI to make its Metaverse/NFT project better. It IS NOT building some revolutionary AI project that can only be done with Blockchain
Are AI Cryptos only hype driven or is there real utility?
After looking at the top AI cryptos on the market today, we can quickly see that the AI narrative is extremely hype driven. While everyone is getting interested in the AI space as tech giants are making breakthroughs, people are naturally drawn to any Crypto that resembles AI technology.
The current AI narrative feels highly similar to the Metaverse/gaming bull run in 2021.
- First Big company like FaceBook/Microsoft invests in the area
2. Then Speculation increases, prices skyrocket as people look up any coin that has Metaverse or AI in the name.
3. After a while, hype dies down, major drawdowns happen which is what we're starting to see now
4. Then afterwards, only the best projects in the niche with real utility keep building and succeed long term
From a technology perspective, I don't believe Blockchain can add benefit to AI applications in the short term. All the projects currently gaining hype are old projects from 1-3 years ago. And the only reason they are popular is because of ChatGPT gaining big traction.
There are some projects incorporating the latest AI models to improve their existing products, but these are more like SASS startups that are using AI in their business, rather than AI startups looking to build the next revolutionary AI model.
As we can see from the few AI service and data marketplace projects, their user experience is far worse than that of ChatGPT or other chatbot based platforms, and their AI models are years behind in power compared to the latest models by OpenAI.
Fundamentally Blockchains only creates delays and frictions to the access of data and models, as you have to jump through another hoop of getting a wallet. So no I don't think AI infrastructure platforms will adopt blockchain anytime soon.
That being said, there should still be short term money to be made if you can get into new AI coins as short term trades. But make sure you understand that they are only short term trades and not long term holds.
The overall interest in the AI space is still high, especially those coming from unexperienced retail investors. So if you think you are good at finding new projects early and taking profits before the hype dies down, then the AI narrative could still be worth playing as a game of musical chairs.
Thanks for reading! If you enjoyed this newsletter, please share it with your friends.
Consider Signing up to MEXC Exchange, it is a globally accessible exchange with no KYC, and has 1,500+ Altcoins for you to choose from.
MEXC Exchange: $9,100 Signup Bonus (Use code MEXC-BACON)