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It’s hard to imagine two technologies more of the zeitgeist than artificial intelligence (AI) and cryptocurrency, so it’s no surprise that the two fields converged in the form of AI cryptocurrencies.
We’ve looked at some of the biggest AI cryptocurrencies by market capitalisation, according to CoinMarketCap*. But first, here’s a primer on what they are.
Cryptocurrencies are a form of digital currency, that is known to be an extremely high-risk investment. They can be spent or traded, but they’re not issued by central banks or stored in traditional financial institutions.
Instead, they’re decentralised. This means records of balances and transactions aren’t controlled by banks or payment providers, instead they’re held by people who volunteer to keep track of everything using specialist software.
Volunteers participate because in doing so they get the opportunity to earn valuable cryptocurrency without having to pay for it.
Huge speculation on cryptocurrencies’ values has led to a boom in both the number and value of assets in the space over the last few years – peaking in November 2021 before crashing in the spring of 2022.
Artificial intelligence (AI) is a field of computer science enabling machines to make decisions based on data, increasingly mimicking human intelligence.
Recent popular examples include AI-generated artwork – where a program interprets user prompts, written in natural language, to create pieces of digital art, and ChatGPT, an application which is able to ‘write’ according to a brief submitted by the user.
In both cases, the outputs are close enough to what a real person might create that they could be mistaken for human creation, and these applications are getting increasingly sophisticated.
Use cases for AI are effectively limitless, and the technology has found its way into the cryptocurrency space.
AI cryptocurrencies are tokens that power AI blockchain platforms such as The Graph. Users spend tokens in order to use the platforms and the benefits of their integrated artificial intelligence.
We’ve looked at some of the leading AI crypto projects according to their market caps to see how AI is being used within the sector.
Market cap: £1.1 billion
Injective (INJ) is a finance-focused AI crypto project, specifically designed to provide tools for building decentralised finance (‘DeFi’) applications.
Injective offers margin trading, derivatives and forex futures trading across blockchains.
Injective’s native currency INJ is used to validate transactions on the network, and to cast governance votes on the future direction of the project. INJ currently trades at £14.21, down from its May 2021 peak of £15.67.
Market cap: £1 billion
The Graph is a protocol for indexing and querying data from blockchains in a similar way that Google indexes and queries data from websites. Indexing blockchain data can be challenging, but The Graph aims to change that by organising data into smaller ‘subgraphs’.
Its native, Ethereum-based cryptocurrency, GRT, was worth £0.10 at the time of writing, down from its February 2021 peak of £2.09.
Market cap: £724 million
Render allows artists to harness the computing power necessary to render computer graphics from crypto miners who are willing to rent out their graphics processing units (GPUs). The project was launched in 2017.
RNDR is the native currency of the Render project, and users spend it to access miners’ GPU power. The system operates on a proof of work consensus mechanism.
RNDR currently trades at £1.95, down from its November 2021 peak of around £5.80.
Market cap: £378 million
Oasis Network describes itself as the ‘first privacy-enabled blockchain platform for open finance and a responsible data economy’.
In practice, the project is a proof of stake blockchain network designed to enable privacy-preserving open finance, in contrast to other blockchains that offer a relative lack of privacy.
ROSE, the native currency of Oasis Network, currently trades at £0.05, down from its January 2022 high of £0.41.
Market cap: £253 million
Fetch.ai is an AI and machine learning platform based on the blockchain. Fetch.ai is all about automating business tasks such as data processing and trading. Its native cryptocurrency, FET, is used to pay for transactions on the network.
At the time of writing, FET was valued at £0.31, down from its September 2021 peak of £0.87.
Market cap: £194 million
Ocean Protocol is a Ethereum-blockchain-based platform that allows businesses and individuals to exchange and monetise data and data-based services. This might involve making data available to researchers and startups without the data being relinquished by the data holders.
OCEAN currently trades at £0.34, down from its April 2021 peak of £1.42
Many AI cryptocurrencies can be bought using crypto exchanges such as Coinbase, just like traditional cryptocurrencies like Bitcoin and Ethereum.
To trade, investors will need to open an account – which often involves some identity verification steps, and deposit some fiat currency. They’ll then be able to navigate to the page of the AI cryptocurrency they want to buy within the exchange, enter the amount they’d like to buy and execute the trade.
Most exchanges offer a free crypto wallet facility in which to store private and public keys – the credentials necessary to spend or trade crypto assets. If an investor prefers, they can store their keys in an offline cold wallet.
Cold wallets are arguably more secure than hot wallets, since hackers can’t target them as easily. However, if an investor loses their login details for their cold wallet, they won’t get the support regaining access to their keys that they should get with a hot wallet.
Whether AI cryptocurrencies are safe – either from hackers or from the volatility of the crypto market – depends on how an investor stores them and their attitude to the risks.
On the latter, no crypto currency is safe from market instability, and 2022 was the year in which crypto’s volatility was laid bare.
Bitcoin, for example, started the year at around £30,000 and ended it at around £13,000 (-56%), but not before rising to roughly £36,000 in March. Ethereum had a similar fate, starting 2022 in the region of £2,000 and ending the year at just under £1,000.
AI cryptocurrencies are no different. GRT fell from £0.44 in January 2022 to £0.06 (-86%) in December, while AGIX fell from £0.14 to £0.03 (-78%).
The UK’s financial watchdog, the Financial Conduct Authority (FCA), has repeatedly issued warnings about investing in cryptocurrency, saying people should be prepared to lose all the money they invest.
And as for hackers, crypto wallets and exchanges are likely to remain a target for criminals – leaving people’s assets at the mercy of the security that they and their exchanges implement.
Cold wallets are a hedge against hacks, but they become vulnerable once connected to a web-connected computer.
Meanwhile, exchanges continue to be attacked. Exchanges may bolster their security measures as hackers expose weaknesses, but it’s a cat and mouse game that looks certain to continue.
Cryptocurrency is unregulated in the UK. The UK regulator, the Financial Conduct Authority, has repeatedly warned investors that they risk losing all their money if they buy cryptocurrency, with no possibility of compensation.