AI is slowly entering the crypto trading process, and we're also seeing the advent of AI crypto tokens, but what long-term impact will this have on the cryptocurrency market?
This article will discuss eight ways artificial intelligence impacts the crypto market and the potential of AI crypto.
1. AI can improve blockchain efficiency
AI and blockchain technology both interact with data, so their symbiosis can take data use to the next level. At the same time, integrating AI and machine learning into blockchain can make system architecture more efficient. AI can help make the distributed ledger more secure and energy-efficient. Platforms utilizing machine learning will be better able to adapt their blockchain for specific tasks.
2. AI systems can detect fraud
AI can be a good risk management tool if it's capable of detecting fraudulent schemes. Its algorithms can use risk benchmarks and specific investment goals to optimize cryptocurrency portfolios.
AI algorithms can make the cryptocurrency market safer to access, encouraging more trading and investments and growing the market development potential.
The combination of AI and blockchain will help prevent cybercrime and fraud. The trading process will be more secure if machine learning detects suspicious activity effectively. Among other things, this will enable us to create solutions for identity management during signup, analyze crypto data, and automate KYC processes to prevent illicit transactions on the blockchain.
3. Smart contract development
Currently, independent entities program smart contracts and some of them suffer from inefficiencies. Deploying artificial intelligence in these processes can help create bug-free smart contracts and test them for formal verification, like root cause detection and analysis and automated troubleshooting. Another use case is software engineering based on searches.
4. Automated trading development
Significant improvements can be made to algorithmic trading with the introduction of AI technology in the crypto market. Trading profits are bound to increase. Complex mathematical models are mainly being used to develop algorithmic trading at the moment, and their operation principles are far inferior to AI. This is because these models are based on code written by humans. AI will help overcome their limitations and make it possible to select an optimal trading strategy for each risk level.
5. Reduced mining costs
Crypto mining can be very resource-intensive in terms of finances, hardware, and other technology. Using AI can limit video element resource use in the mining process. It can optimize computational algorithms and models in the code system used for mining, thereby increasing the mining speed considerably. Such solutions are already being applied in practice.
6. Storing AI training data safely
Attendees of the most recent World Economic Forum summit in Switzerland discussed ways of using blockchain technology to store AI training data. If such decentralized storage is achieved, it will actively prevent any single user from obtaining a monopoly on AI development. Data providers will receive payment for the data in cryptocurrency.
7. Investment optimization
AI-based computational technologies will let us forecast market movements and create a comprehensive data analysis to improve the interaction between market elements. At the moment, cryptocurrency investments are based on fundamental and technical analysis like all other investments, which only allows for a superficial notion of market movements. AI will analyze vast data volumes, including news and messages on forums, to predict crypto market shifts quickly and accurately.
This can help one choose the perfect trading strategy on a case-by-case basis. Natural language processing powered by AI could recommend the best crypto to trade. Moreover, AI can eliminate the risk of losing money due to an incorrect investment strategy. It will let investors predict price movements in real-time on the basis of AI data analysis.
8. Blockchain gaming
You can use generative AI in blockchain gaming to create new digital assets within the gaming environment. You can even use it to make the games. Essentially, we could have AI crypto tokens for specific blockchain games like there are currently metaverse tokens for specific metaverses.
The potential of AI cryptocurrency tokens
AI crypto tokens have a host of benefits, which include better security, user experience, scalability, and more. They can be developed to build and automate trust or efficiency in multiple crypto ecosystems. AI crypto tokens and coins can also power AI-based apps and projects, including DEXs. They can improve the platforms underlying investment protocols, text and image-generating services, etc.
AI crypto coins and tokens will provide holders with access to services powered by AI tech. What's more, AI will become an important part of metaverses and other smart contract-based products.
The AI sector of the crypto industry's market cap was $6.3 billion in October 2023. Bitget Wallet's on-chain market data indicates a widespread increase in AI token values, influenced by OpenAI's video model, Sora. Since the introduction of an AI-sector token leaderboard on Bitget Wallet on February 16, notable increases have been observed: ATAI surged by up to 445%, WLD by 120%, and SORA by 166%. The total trading volume for the AI sector exceeded $3.4 billion.
Select tokens are rising in value, but that may be a short-term trend. According to the Motley Fool, the search is still on for a pure AI token with broad investor appeal.
Two of the biggest AI crypto tokens by market cap are Render and Akash Network, according to CoinGecko. However, neither one is an actual AI crypto token. Akash powers cloud computing, and Render is a token for distributed computing. While there's no doubt AI can make the computing process more powerful and more efficient, the concepts of cloud computing and distributed computing are far from new.
Conclusion
There's reason to believe AI crypto technologies will be the next big market tendency. They have transformative potential in terms of how people manage assets, transact, and make investment decisions. The technology can make using cryptocurrency safer, faster, and more efficient for businesses and individuals. AI can help reduce the risks of market manipulation, fraud, and human error, making cryptocurrency investments more trustworthy and reliable.
Finally, AI can help advance the crypto sector, but it will probably take some time for pure AI tokens to come into existence and even more before they become successful in the crypto market.
Contributors
