The Beginner’s Guide to AI Tokens: Should You Invest?

AI and cryptocurrency go hand-in-hand. Both are relatively new, and they utilize cutting-edge technological advancements to reshape the world. Crypto is known for its versatility and ability to merge with many other fintech products and services. As a result, it should come as no surprise that AI tokens are all the rage these days.

But how precisely do digital currencies and artificial intelligence mix together, and what do they benefit from each other? Are these AI tokens a good long-term investment, or are they just another in the line of many passing trends?

In this article, we’ll explore the core ideas behind AI tokens, take a look at some of the most prominent examples, and provide an analysis of whether there’s a bright future in front of these digital assets. Without further ado, let’s jump right in!

What Is AI Cryptocurrency?

AI cryptocurrency is a synthesis of blockchain and artificial intelligence technologies. Essentially, the tokens are used to facilitate the operations of AI-centric blockchains and gain access to their services. To better understand how these digital assets function, we should explain the core principles behind cryptocurrency and artificial intelligence.

Cryptocurrencies, as their name suggests, are cryptography-protected digital currencies used to exchange value and information by operating on platforms called blockchains. Their main benefit is decentralization and independence from standard authorities such as banks and governments.

Artificial intelligence is a branch of the computer science field that focuses on developing human-like software. The goal is to have sophisticated machines that are able to function and make decisions on levels indistinguishable from those of humans. In recent months, some notable examples include AI-generated images and language processing models like ChatGPT.

AI has seen rapid growth and expansion into many different spheres of everyday life. People use it to generate text, images, and ideas, analyze visual and written information, automate simple (though increasingly complex) tasks in a human-like manner, and so on.

That’s why it should come as no surprise that there’s been a surge in demand for AI tokens that allow users to access some of these services. This type of cryptocurrency leverages the autonomy, decentralization, and security of DeFi to provide an inclusive environment where anyone can take advantage of artificial intelligence and its strengths.

7 Best AI Cryptocurrencies on the Market

Let’s check out some of the best AI cryptocurrencies on the market. You should keep an eye out for these both for the upcoming bull run and as long-term projects and solid investments.

#1. The Graph (GRT)

The Graph (GRT) is a blockchain data indexing protocol. You can think of it like Google for Web3 blockchain information and cryptocurrencies.

The space of decentralized finance is exceptionally vast, complex, and often unaccommodating to new users. There are countless different networks that generally don’t cooperate, so it can be challenging to exchange value and data or to find what you’re looking for.

The Graph protocol aims to solve this issue by allowing anyone to build APIs that can retrieve information from the blockchain. These APIs are called subgraphs, and developers have already created thousands of them for various dApps that range from decentralized exchanges to lending platforms.

Its native token, GRT, is an ERC-20 cryptocurrency issued as a reward for indexing and as a portion of the fees for using the protocol.

#2. Injective (INJ)

Injective (INJ) is a layer-one blockchain built around the finance space. Its goal is to create a universal platform for numerous dApps that will facilitate cryptocurrency exchanging, lending, staking, and more.

The network’s properties make it suitable for building necessary features that enable all kinds of trading, such as spot, futures, and perpetual. On top of that, the blockchain supports highly capable smart contracts that are also interoperable with multiple other networks, creating a cohesive ecosystem of decentralized finance.

These smart contracts allow cross-platform value exchange between many other layer-1 networks, including Solana and Polygon. All that applicability drew in many notable investors, including names like Binance and Mark Cuban.

Injective’s native token, INJ, features a burning mechanism for deflationary purposes where 60% of it is burned to facilitate dApp operations while 40% is awarded to developers as an incentive.

#3. Oasis (ROSE)

Oasis (ROSE) is a privacy-oriented layer-1 blockchain that aims to be one of the main Ethereum competitors. It represents a platform for varied dApps from all spheres of life, including finance, gaming, the metaverse, data sharing, and more. Its main benefits are low gas fees and high throughput, which make it a compelling layer-1 alternative compared to other solutions.

To help that, Oasis is split into two layers: the consensus layer and the execution layer. That allows it to be extremely efficient and achieve a much higher throughput than the Ethereum blockchain. On top of that, it is a privacy-enabled blockchain to help with information confidentiality. It gives users a choice between making private or public transfers.

#4. Render (RNDR)

The Render Network (RNDR) allows decentralized and distributed GPU rendering focused on AI technology-enabled graphic design. The project was initialized way back in 2009 in an effort to assist various artists and companies who need complex and expensive GPU setups for their work.

Still, the RNDR token saw its first public sale in 2017, followed by a private sale in 2018, after which the network was officially launched in 2020. Today, the token’s primary use is to pay for the computer power required to render complex projects.

RNDR is an Ethereum-based ERC-20 currency that makes it benefit from the network’s smart contract capabilities. When users initiate a rendering process, their assets are locked up until the activity is finished. After that, the work remains watermarked until the payment goes through, and artists can obtain unmarked renderings.

The project is becoming increasingly popular, with AI-based image generators dominating the industry. That’s why there have been many notable investors in it, including businessmen, directors, and producers such as JJ Abrams and Ari Emanuel.

#5. SingularityNET (AGIX)

SingularityNET (AGIX) aims to be an all-encompassing solution for all things AI. It’s a blockchain platform designed to enable the creation, sharing, and monetization of various AI services, regardless of the industry. You can think of it as an AI marketplace where developers can post their projects for anyone to buy and use.

The team behind SingularityNET is the same one that developed Sophia, the world’s most famous AI robot. That credibility allowed them to raise an astonishing $36 million in just one minute during their 2017 ICO.

The platform’s token, AGIX, is used not just to test and purchase AI services on the blockchain but also for voting purposes regarding changes in the network. The holders can also stake their tokens to earn passive income.

#6. Ocean Protocol (OCEAN)

Ocean Protocol (OCEAN) is a privacy-oriented, data-focused platform. It is built on the Ethereum network with the purpose of tokenizing data and allowing for blockchain-powered exchange of information.

Essentially, individuals and entities, such as startups, researchers, and companies, will be able to use the Oasis Network to share their data while maintaining ownership and even monetizing the process. That creates concepts such as data marketplaces and data commercialization.

The efforts of the developers behind this project should lead to an increase in information reliability. That should help anyone looking for proven data find it quickly and reliably while simultaneously supporting the researchers and publishers that came up with it.

The team has mainly focused on AI and blockchain, but they have extensive experience in big data and business.

#7. Fetch.ai (FET)

Fetch.ai brings democracy and inclusivity to the world of artificial intelligence. It aims to be a transparent, decentralized, and permissionless platform where everyone can use AI to execute various tasks.

Some of the most prominent aspects of life that Fetch.ai can be used for include transportation services, travel, energy grids, DeFi trading, etc. In essence, the blockchain leverages the power of AI to handle large datasets and make them more accessible to everyday users.

FET tokens can be used to pay for machine-learning services, to create and train “digital twins,” which are the network’s modular components, and to deploy protocols and intelligence.

Should You Invest in AI Tokens?

Whether you should invest in AI tokens depends on your goals and risk tolerance. As of the writing of this article, there’s a lot of excitement surrounding the field of artificial intelligence, and the crypto narrative closely follows that sentiment.

As a result, there are many predictions about AI cryptocurrency coins skyrocketing in price during the next bull run. However, it’s essential to know that the crypto sphere is highly volatile, and huge gains are just as possible as substantial losses.

It’s highly likely that some AI tokens will see considerable price surges, giving early investors impressive ROIs. However, it’s almost impossible to determine which tokens will do that. As a general rule, investing in a more established cryptocurrency might yield smaller returns, but it’s a safer investment.

On the other hand, obscure small-cap AI altcoins have tremendous growth potential but can disappear overnight. Another element to consider is that trends tend to come and go quickly in the crypto space. That’s why it’s difficult to determine whether any AI token is a good long-term investment.

Considering all this, one of the smartest things to do when investing in AI tokens is to set aside just a fraction of your portfolio. Remember to do your own research and find out which AI projects might be in high demand in the upcoming months. That way, if you get the right altcoin, you’ll see great returns. Otherwise, you won’t lose much of your overall holdings.

How to Invest in AI Tokens

The simplest way to invest in AI tokens is via a centralized exchange (CEX). Platforms like Binance, KuCoin, Kraken, and Crypto.com make buying crypto with fiat easy and streamlined. That makes them perfectly tailored to entry-level investors. Here’s a step-by-step guide on how to invest in AI tokens through CEX:

• Create an account with the exchange of your choice using your email or phone number.
• Complete the KYC (Know Your Customer) verification to unlock buying privileges.
• Buy crypto with fiat using your debit or credit card, wire transfer, or third-party payment service.
• (Optional) If an exchange doesn’t let you buy AI tokens with fiat directly, purchase other currencies, such as stablecoins, BTC, or ETH, and then trade them.

The downside of CEXs is that they are centralized entities that maintain ownership over your private keys as long as your assets are in their accounts. Keeping AI cryptocurrency on these platforms is a good short-term solution, especially if you plan to do frequent trading. Otherwise, it’s often wiser to withdraw your assets to a private crypto wallet.

Another way to purchase AI tokens is via a decentralized exchange (DEX). While this is a more complex process that requires some technical know-how, it’s fully private and decentralized. Here are the steps:

• Create a personal crypto wallet. You can choose between hot and cold, as well as software and hardware wallets.
• Fund your wallet using the over-the-counter (OTC) method or by transferring funds from a centralized exchange.
• Connect your wallet with the decentralized exchange using its app or website.
• Swap your assets for AI tokens. Make sure to have enough to cover the gas fee, which varies depending on the network that you’re using.

The Future of AI Tokens

The future of AI tokens looks bright in the current fintech-oriented market environment. The narrative around both artificial intelligence and crypto-related projects is mostly positive, though there are some concerns regarding bias, the potential for increased unemployment, creative repetitiveness, etc.

All of that makes AI tokens highly desirable in today’s climate. It’s most likely that artificial intelligence and relevant cryptocurrencies are going to be one of the central trends in this market cycle. As such, the value of some of the most prominent and valuable AI crypto projects will likely increase in the foreseeable future.

On the other hand, the AI space itself is relatively new, so it’s hard to make long-term estimates about where it will go from here. While ChatGPT broke many records when it came to adoption and user base, it’s difficult to tell whether that trend is going to continue.

Moreover, the crypto space is famous for its volatility, and many notable projects from one market cycle usually disappear before the next. The same will likely happen with AI cryptocurrencies. Out of the vast number of artificial intelligence-related projects, only a handful will establish themselves as noteworthy players in the DeFi space.

Key Takeaways

Artificial intelligence and cryptocurrency are here to stay, and their synthesis seems to work out perfectly. As AI finds its way into more diverse parts of our everyday lives, so will its integration with the blockchain strengthen.

At the moment, it’s one of the strongest trends and the most prominent narratives in the crypto sphere. Notable projects are likely to keep growing, and AI tokens look like a solid investment in the short term, at the very least.

Still, this combination is in its early stages, and it’s difficult to say where it will end up. So, remember to do research, invest carefully, and hopefully reap handsome rewards!