What are AI Tokens? – A Complete beginner’s Guide

There has been a growing interest in AI (artificial intelligence) in recent months. AI is a nascent technology with the ability to revolutionize numerous industries, including crypto. Many blockchain enthusiasts believe AI can play a vital role in the development of DeFi (decentralized finance).

It is no surprise that several new crypto projects are adopting the elements of AI. In this article, we will explain in depth what AI tokens are and take a look at some of them.

In simple terms, AI tokens are crypto assets that employ AI technology to improve user experience, security, and scalability, among other factors. In addition, These tokens can be used to power AI-based projects, such as decentralized exchanges or marketplaces, and investment protocols.

The Advent of ChatGPT

Launched in 2020, ChatGPT has gained popularity over the past few months, particularly within the education and crypto sectors. OpenAI is the company behind the chatbot that generates human-like text as well as performs other tasks like answering questions, processing information, and many more.

Several prominent crypto players are rooting for ChatGPT to disrupt the crypto industry in the coming months. For example, the founder of the Tron network, Justin Sun, said in February that he would launch an AI-based decentralized payment platform based on the chatbot in the near future.

The possibilities of AI have driven tech giants to invest heavily in OpenAI. Recently, Microsoft injected over $10 billion into the ChatGPT developer, boosting interest in the technology.

Since late last year, AI tokens have seen significant gains, with some rising by over 70%. As of March 2023, these tokens have a total market capitalization of $1.9 billion. That figure represents a 3% jump from the previous month.

Benefits and Challenges of AI Tokens

As AI tokens continue to build momentum, there are several roadblocks on the way, such as the regulatory uncertainty surrounding the crypto industry and inadequate public knowledge of how AI-based projects work.

On the other hand, AI tokens provide limitless possibilities for new platforms and use cases.

Notable AI Tokens

AGIX

AGIX is one of the most used AI tokens. It’s the native token of the decentralized platform SingularityNET, which provides a market for users to purchase and sell a wide selection of AI-related services and products. One of the major features of SingularityNET is that it supports the trading of data, models, and other tools needed to improve AI. In other words, the platform is powered by and developed to benefit AI.

FET

This AI token serves as the medium of exchange for Fetch, a decentralized platform designed to develop intelligent autonomous tools and software. The platform makes the creation of prediction bots possible.

NMR

NMR is a token used by the AI-based decentralized hedge fund Numerai. The firm uses AI to predict possible investments.

ALI

ALI (Artificial Liquid Intelligence) token is used by image generator Alethea. The platform uses an AI protocol called CharacterGPT to create AI-based characters using text descriptions. Alethea utilizes ALI tokens for transactions.

Hera

Hera is a token used by Hera Finance, a pathfinder algorithm that helps users to find the most efficient and profitable trading paths on DEXs (decentralized exchanges). Holders of Hera tokens participate in the project’s governance and are allocated a percentage of the protocol’s revenue.