There is a lot written about the combination of Artificial Intelligence (AI) and blockchain technology. It is one of the most transformational technology movements in modern times. A new trend is now coming up at the intersection of cryptocurrency and artificial intelligence (AI): the advent of AI-based cryptocurrencies. These are some of the most promising projects in the market. They have become integral components of the crypto ecosystem thereby unlocking transformative potential across finance. In this blog, we look deep into the concept of AI cryptocurrencies, what they are, the practical uses they serve, and the related challenges. We also talk about how they can promote the crypto industry and its adoption in the mainstream finance industry.
All about AI-based cryptocurrencies?
AI cryptocurrencies, also sometimes referred to as coins, are digital assets linked to blockchain projects that use AI to improve their functionality, security and overall performance. They operate at the intersection of AI and blockchain technology. These digital assets work as utility tokens within AI-based projects, applications, and services. Moreover, these currencies also feature AI-powered predictive models, automated trading systems, and smart contract platforms. Contrary to regular cryptocurrencies, which mainly work as a medium of trade, AI coins use refined AI and machine learning algorithms that can automate trading procedures, analyse data, and also forecast market movements.
Used cases of AI-based cryptocurrencies
- The new AI-focused cryptocurrencies aren’t just for trading. Rather, they help manage and run AI technology from decentralized computing networks to secure data marketplaces.
- AI cryptocurrencies access AI services, purchase AI models, or participate in governance. Everything happens automatically through the blockchain without the need for intermediaries.
- The main function of these tokens is to facilitate access to and utilize AI-related services and resources within a decentralized ecosystem such as access to AI models, computing power, or data. AI tokens can be used to purchase computing power for training and deploying AI models.
- They could also be used to manage and share data securely, and access datasets for machine learning. AI needs lots of data to work well. These cryptocurrencies can help track who owns what data and who can use it and ensure people get paid fairly when their data is used to train AI systems.
- Additionally, they also participate in decentralised marketplaces.
What may AI-based cryptocurrencies deliver: data analytics, security and identity
Predictive data analysis
AI technology plays a crucial role in rapidly analysing vast amounts of information to predict market prices and trading opportunities, improving investment efficiency.
Improved cybersecurity and fraud detection
AI technology plays an important role in identifying suspicious patterns and activities to detect fraud and improve security, maintaining a high level of security. AI algorithms analyze transaction patterns and data. Thus, it allows for the detection and prevention of fraudulent transactions on the blockchain before they occur.
ID verification
The emergence of zero-knowledge (ZK) proofs, a technology that allows a human to prove themselves without revealing any personal information is spectacular. Going ahead, the on-chain biometric verification whereby one is checked for their identity autonomously by an AI is expected to be increasingly powered by artificial intelligence and blockchain.
AI agents
These combine artificial intelligence with blockchain technology to enable decentralized network development and smart contract automation.
AI smart contracts
AI-based smart contracts use blockchain technology to significantly enhance the efficiency and security of smart contracts. Machine learning AI algorithms employ natural language processing that can simplify this process by allowing developers to write smart contracts using plain language.
Main AI-driven cryptocurrency projects
1. Artificial Superintelligence Alliance
It creates smart and autonomous software and tools such as AI Agents aimed at companies that enable the deployment of data analytics, decision-making, and prediction bots. These AI agents powered by AI algorithms enable them to perform complex tasks. The Artificial Superintelligence Alliance utilises the FET token as its primary currency used to pay for transactions on the network.
2. Bittsensor
Bittensor is another AI-driven cryptocurrency project that leverages the power of a blockchain-based machine-learning network, creating a decentralized neural network for developing, sharing and monetizing AI tools, including machine intelligence. Its structure enables collaboration between AI models, rewarding useful contributions with TAO digital coin.
3. Internet Computer
The Internet Computer Protocol is a newly launched blockchain project that aims to extend the functionality of the Internet by enabling the creation of all kinds of DApps and Web3 services. It revolutionizes the way developers create and launch their decentralized applications. ICP enables the integration of AI algorithms directly into smart contracts and DApps, allowing them to support complex calculations and decision-making processes autonomously. Thus, traders can use AI to optimize their trading strategies, manage risk, and even automate trading and financial services.
Risks with AI tokens
Although AI tokens are gaining popularity, they still face various risks. Market volatility, regulatory uncertainty surrounding the cryptocurrency market, security concerns, competition from other AI projects and digital tokens, and a lack of public understanding about the complexities of many AI-based projects can be quite complex and may provide risks for investors.
The integration of AI in cryptocurrencies raises ethical and security concerns. The ethical implications of AI in digital currency, such as decision transparency and accountability, require careful consideration. Another challenge is the lack of transparency in AI decision-making processes. Ensuring accountability when algorithms make financial decisions is an ongoing debate in the crypto community and regulatory bodies. As developers bolster security features through AI, they must also address potential vulnerabilities like algorithmic biases and cyber-attacks.
Therefore organizations and investors need to carefully weigh the benefits against their specific security requirements, regulatory obligations, and integration needs before adopting these emerging technologies.
Forward-thinking
As the industry evolves, and the integration of AI and blockchain technology continues to grow and mature, we can expect to see more innovative applications of AI in the cryptocurrency space. As a result, these AI cryptocurrencies will play an increasingly important role in shaping the future of AI development, data management, and decentralized applications, changing the way we invest and interact with blockchain technology, and driving their value and market capitalisation.
