What are Crypto AI coins and how do they work?

Generative AI tools such as ChatGPT and Midjourney have fueled debates about AI’s inclusion across business and technology domains, and AI has even reached the crypto world. As a result, many AI-based crypto projects are now gaining investors’ attention.

The link to AI has triggered positive price action for several cryptocurrencies, indicating the emergence of a new trend in the crypto market. Some investors believe that AI coins can reach the heights of previously popular trends such as the DeFi boom, the explosion of Metaverse coins or meme coins.

So, what are AI cryptocurrencies and how will this new trend shape the market?

The ChatGPT effect on the crypto market

Towards the end of 2022, many AI tools were launched, ranging from image generators to language models. But one of the tools that proved to be most impactful was ChatGPT. OpenAI’s ChatGPT acts as a chatbot and is designed to answer all questions like a human. It is one of the language models from the GPT3 family.

The good thing about ChatGPT is that it is available to everyone, and is gaining global attention. In addition, ChatGPT’s rapid success prompted various major technology players to increase their efforts to incorporate AI into their businesses.

For example, Microsoft embraced ChatGPT, struck a lucrative $10 billion deal with OpenAI, and integrated it with its Internet search engine, Bing. In contrast, Google has also launched its own AI chatbot, Bard, to compete with ChatGPT.

But the ChatGPT frenzy isn’t limited to tech companies. The crypto market is also catching up with AI because of ChatGPT. As a result, many AI-related projects are gaining a head start in the market. This type of digital asset is classified as an “AI coin.” One of the fine examples is the soaring price of The Graph token.

What are AI Crypto Coins?

AI coins or tokens are digital assets used for AI-based crypto projects. These coins allow artificial intelligence to be integrated into various projects, such as asset management, price forecasting, AI-based DAOs, and fraud detection. Like most crypto tokens, AI tokens are also used to offer governance rights or rewards to users. Additionally, these tokens can also be used to pay transaction fees.

For example, one of the best AI cryptocurrencies, AGIX by the SingularityNET platform, introduces an AI-based decentralized marketplace. It allows you to trade AI products and services in a secure and decentralized environment. AGIX plays a central role on this platform as it is the most important payment medium between users and service providers.

Another AI token, FET from Fetch.ai, offers an innovative platform that provides a complete infrastructure for AI systems. You can use the platform to build AI solutions on Web3 and use the FET tokens to use the services.

Meanwhile, many other tokens of this rising genre offer various other benefits to their users. Although these cryptocurrencies are still in development, they show tremendous growth potential.

Why Are AI Crypto Coins Suddenly Popular?

The technological development can play a big role in how the crypto market behaves. That’s why AI’s growth in recent years has affected crypto projects, with many crypto projects integrating automated systems and artificial intelligence into new Web3 apps.

Furthermore, the sudden rise in popularity of ChatGPT, Midjourney and other AI tools has increased investor interest in these projects, and in some cases increased prices. For example, data insights from CoinGecko suggest that the hype for ChatGPT and Bard resulted in up to a 16x increase in the prices of AI tokens.

AI cryptocurrencies’ ease of use and transparency is one of the reasons why traders are keen to invest in them. In addition, the tech giants are taking swift action to make AI mainstream. It has also given people hope that AI with cryptocurrencies can shape the future of Web3.

However, the AI ​​crypto market is still small. The AI ​​cryptocurrency market cap is currently around $1.6 billion. Compared to the entire crypto market, the ceiling is relatively low. Still, it’s a good start, given that both crypto and AI are developing fields.

How else is AI used in Crypto?

Although AI cryptocurrencies are trending in early 2023, the use of AI in crypto is not new. Automated tools have been part of investment and trading strategies. Cryptocurrency trading AI robots are a great example of AI and crypto convergence. These tools allow you to trade crypto even if you don’t fully understand it because robots can automatically copy other people’s trades for you (remember, you can still take a big loss if you don’t pay attention to the market!).

In addition, many other crypto trading tools allow you to develop trading strategies using insights from artificial intelligence. AI software is built with complex trained models to guide you on the best strategy.

Furthermore, some crypto robots also allow portfolio management and strategy backtesting, provide insightful indicators and a variety of other offerings to facilitate crypto trading. Popular options include Pionex, Shrimpy.io, Zignaly, and Coinigy.

The Potential of AI in Crypto

Although AI coins have yet to unlock their full potential in the market, they indicate a bright future for crypto and AI convergence. The cutting-edge AI technology could also be a game changer for digital assets. Here’s what AI can bring to the crypto space:

• Price prediction models for digital assets can save investors from the hassle of blind guesswork.
• AI algorithms can also help us eliminate fraud from the market.
• It can improve blockchain’s decentralization by limiting human intervention.
• It can help you make informed decisions so you don’t risk your assets.
• AI can also help in the sentiment analysis of a specific currency by analyzing public sentiment on social sites.
• Governments can integrate it into their compliance policies to control money laundering and digital asset taxes.

What does the future hold for AI coins?

AI coins have emerged as a genre, setting a new trend in crypto. In many ways, the rise of ChatGPT has started the success of these tokens. Now crypto projects that offer AI-based blockchain solutions are gaining attention and increasing their value.

However, it is too early to gauge the overall impact of AI on cryptocurrency. AI cryptocurrencies can become a meme coin-like fad or change the fundamental market dynamics. So if you want to invest in an AI coin, tread carefully and always do your research before investing.