Coinbase Report Cautions Overhype of AI-Related Crypto Tokens
Summary:
The current hype around AI-related crypto tokens may be exaggerated, according to a Coinbase research report. Rapid changes in AI require caution regarding the longevity of AI tokens. The research highlights a key challenge; while crypto projects aim for decentralization, AI is heavily reliant on centralized components. Despite this, many AI tokens have recently outperformed Bitcoin and major stocks, attributed to market sentiment and AI news coverage. The report suggests that for meaningful adoption, more than just decentralizing AI components is required. The future of the AI industry is largely unpredictable currently, as it is still in its early stages.
As technology professionals delve deeper into the practical applications of artificial intelligence (AI) across various industries, a recent study conducted by Coinbase infers that the current hype surrounding AI-related cryptocurrency tokens might be superfluous, at least in the near to mid-term future. The recent surge in AI's inherent generative potential has stimulated the growth of specialized cryptocurrency sub-ecosystems over the past few years. David Han, a research analyst at Coinbase, suggests that the swift progress in AI necessitates caution when considering the longevity of most AI tokens. A significant hurdle for crypto-AI projects lies in the inherent nature of the two technologies. Crypto projects typically advocate for decentralization, but the existing AI landscape is heavily reliant on centralized elements and data sources, as per Han's argument.
Moreover, most ventures in this specific sector have been unable to lure investors, leading to under-investment. The research presents two potential growth areas for the crypto-AI landscape - enhancing the blockchain data to generate more easily readable transactions and analyses, and assisting in the decentralization of the predominantly centralized AI establishments. Han, however, noted that the vision many in the crypto industry have for a decentralized AI future is not a given, given that the trajectory of the AI industry is largely unpredictable at this point.
Despite the somewhat bleak forecast, several AI tokens have recently outpaced Bitcoin (BTC) and significant stocks such as Nvidia and Microsoft. This performance was largely attributed by Coinbase to the market sentiment established by the broader crypto market and bolstered by AI-related news coverage.
AI tokens demonstrate a broad range of returns on days when BTC experiences a downturn, according to coinbase.bynder.com data. The narrative of crypto-AI could further solidify with the ongoing positive trends in the crypto market, coupled with the robust performance of the AI sector. Coinbase, however, proposes that triggering 'significant adoption' will entail more than just the decentralization of AI components.
It's noteworthy that the AI ecosystem is in its embryonic stage and must, at the very least, comprehend the fundamental trading narrative before offering a comparable option to today's cryptocurrency assets.
Endorsing Coinbase's suggestions for significant advances in the crypto-AI arena, Ethereum's co-founder, Vitalik Buterin, recently suggested that AI could play a vital role in eliminating deeply embedded bugs in its code.
On February 19, Buterin voiced his enthusiasm for AI-assisted auditing to discover and rectify flawed code within the Ethereum network, characterizing it as the most considerable technical threat to the network.
As of March 8, AI tokens collectively boast a market capitalization of $51.18 billion, based on data from Crypto.com. These tokens are utilized for AI-powered projects, applications, and services, such as decentralized AI marketplaces, AI-supported trading algorithms, and AI-steered decentralized autonomous organizations, among others.
Published At
3/8/2024 8:14:42 AM
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