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It’s hard to think of a subsector of crypto more hyped up than AI. AI-based tokens—meaning tokens that rely on AI for some of their utility—are everywhere from Injective, which uses AI to “to rapidly ask, search and find relevant info when building on Injective” to AnimeAIToken, which does… well, I’m not exactly sure.
It’s hard to miss these tokens since some of them have pumped more than a freshly drilled Texas oil well. Injective, for example, saw its token increase by 300% since June when it announced a simple integration with OpenAI.
I’ve hesitated to take most of the newcomers seriously since I assumed that they were vaporware freeloading on the AI hype train. However, there’s been a growing narrative, spread by the likes of the Bankless bros and others, that crypto can be the currency of AI agents.
The thinking goes like this: as AI starts to proliferate and become a part of our everyday lives, these AI agents will want to start acquiring currency to achieve their goals and that the easiest way for them to do so would be using permissionless and natively digital currencies that exist entirely online, in their domain.
In fact, if you ask ChatGPT what characteristics it believes future AI agents will look for in a currency, it starts describing cryptocurrency, including properties like censorship resistance, decentralization, and the ability to use smart contracts.
Since this narrative has only been getting louder, and since I'm starting to find the idea compelling, let's take a closer look.
Who’s building AI Crypto?
One of the earliest AI/crypto plays is Fetch, which, if my X/Twitter feed is any gauge, is one of the winners of the attention war being fought among AI coins. The company originally focused on drone technology then pivoted to AI in 2018. At the time, Fetch’s team said their goal was to create “autonomous economic agents” that could pay taxes, take out insurance, and enter into legal agreements autonomously.
By 2020, it launched its layer 1 mainnet, but it wasn’t until earlier this year, as OpenAI and its ilk took off, that its token FET started to moon.
According to its website, Fetch.ai is “the first open network for AI agents.” A place where “AI agents can connect, search, and transact to form dynamic marketplaces.” When I reached out to Fetch asking for a description of how AI is used within the product, they said their flagship product, DeltaV is an AI-based chat interface that leverages written conversations to understand & complete tasks for users.
There’s also Render (RNDR). Render is a distributed GPU rendering network which users rent GPU power. Originally aimed at artists and studios, RNDR was well positioned to fit into the AI narrative because GPUs are also the hardware necessary for powering large language models, which are a type of AI that are designed to understand and generate human-like language.
But is it AI?
While these are all interesting projects, they seem more like a product that incorporates AI, than AI products themselves. As I continue to dive into AI coins, I’m starting to wonder if there are any tokens that fit into the “crypto for AI” narrative—or if the market is just hyping up any token that has anything to do with AI.
AI typically means that there is some sort of neural network, and in the case of AI crypto projects, it’s unclear to me if there’s any genuine artificial intelligence at work—beyond an integration with OpenAI or some form of chatbot.
In the case of Render, the team behind the project doesn’t really claim to incorporate AI into their product, but their product that can be used to power AI—and it appears degens have put two and two together. Who knows, maybe AI will want to transact in a currency that can also be used to rent the hardware that fuels it?
While I believe that AI-related tokens are gaining traction because of the “crypto will be used by AI” narrative, these tokens don’t really live up to the narrative hype—at least not yet. And, to be fair, how would anyone yet know what would entice future AI agents to use a particular coin?
Will FET, INJ, or other AI tokens be the currency of future AI agents? It’s all TBD. But the increase in market cap of most AI-related tokens says to me that crypto investors don’t think this narrative is going anywhere, anytime soon.