Artificial intelligence: Beware of AI coins!

While the crypto sector was in the spotlight in 2021, two years later it is artificial intelligence. ChatGPT has triggered a real AI hype that runs through almost all areas of the economy. As a result, this attention is bringing fresh capital to companies and assets labeled “AI” amid what should be a bad macro environment.

Artificial intelligence in the crypto sector

The same hype is now also evident on the crypto market. He is just recovering from the hardships of the past year. Nevertheless, coins that claim to be related to the field of artificial intelligence stand out in particular.

In the last 30 days, there has not been an AI coin with a market capitalization greater than 10 million US dollars that has had a negative performance. Of the top 30 AI-related cryptocurrencies, eleven have more than doubled in price. The top five projects in the space by market cap right now are: The Graph (GRT), SingularityNET (AGIX), Fetch (FET), Ocean Protocol (OCEAN) and iExec RLC (RLC).

Price plus is just hype

The outperformance of the AI ​​coins compared to other cryptocurrencies can be classified as temporary and not based on sustainable factors. The topic of AI is certainly receiving more attention, but that alone will not mean that all AI blockchain protocols will soon be ready for commercial use.

After all, they don’t have the mass of data that ChatGPT gets through data silos from Web2 corporations. Without data, no successful artificial intelligence. Accordingly, decentralized AI protocols still have a much longer way to go than their centralized counterparts from Silicon Valley. Entry and access to data sources have largely yet to be developed.

Memo Metaverse

The Metaverse hype of 2021 provides a blueprint for the price increases of the AI ​​coins. When Mark Zuckerberg announced in October 2021 that he would rename Facebook to Meta, all Metaverse coins experienced an incredible rally. Supposedly decentralized metaverse projects, which had never been heard of before, were able to increase their prices more than tenfold.

Many of them – Sandbox and Decentraland excluded – completely collapsed afterwards. Investors quickly realized that projects like Somnium Space Cubes, Senso or Mars4 were primarily castles in the air.

This is not to say that all AI coins will fail and have no substance – not at all – but be aware that in a few weeks or a few months the euphoria will drain from the inflated prices.

Investing in AI coins makes sense?

Projects like The Graph, SingularityNET, Fetch, and Ocean Protocol are all challenging projects that have proven they can do more than just build beautiful websites. It is often about setting up decentralized AI marketplaces. However, as exciting and important as such use cases are, investors should not have high hopes of a commercial establishment in the near future.

As with the previous Metaverse hype, you should be careful of the many little free riders who suddenly climb up. On the other hand, if you love entertaining speculation, cryptocurrencies related to artificial intelligence are in good hands. As with everything, you have to know what you’re doing.