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March 13, 2024

AI tokens are more of a hype than they are valuable at this moment


While some crypto-AI tokens may yield profitable transactions, sustaining the ecosystem in the long term demands more than mere decentralization of AI components.

As tech enthusiasts explore AI's applications across industries, a Coinbase research report suggests that AI-linked tokens might be overrated in the short and medium term.

The surge in generative AI's popularity has spawned niche crypto sub-ecosystems in recent years. However, Coinbase's David Han warns that swift AI advancements make us wary of the long-term viability of most AI tokens.

One of the primary challenges facing crypto AI projects lies at the heart of both technologies. While crypto projects strive for decentralization, AI's current supply heavily relies on centralized components and data sources.

Moreover, most projects in this niche struggle to attract investors, resulting in suboptimal capital allocation.

The report identifies two opportunities for the crypto AI ecosystem: enhancing blockchain data for human-readable transactions and analyses and aiding the decentralization of predominantly centralized AI infrastructure. Nonetheless, Han cautions:

"The envisioned decentralized AI future by many in the crypto industry is uncertain. The future of the AI industry itself remains largely undetermined."

Despite the skepticism, many AI tokens have recently outperformed Bitcoin and major stocks like Nvidia and Microsoft. Coinbase attributes this to the broader crypto market sentiment, fueled by AI-related headlines.

AI tokens tend to yield higher returns on days when BTC experiences negative transactions. Source:

AI tokens demonstrate high yield distribution on days when BTC experiences negative transactions, according to

The crypto AI narrative could gain further momentum amid ongoing crypto market growth and outperformance in the AI sector. However, Coinbase suggests that achieving "significant adoption" will necessitate more than just decentralizing AI components.

It's crucial to note that the AI ecosystem is in its infancy and must grasp the fundamental trading narrative, ultimately offering a comparable alternative to today's crypto assets.

In line with Coinbase's call for substantial advancements in the crypto AI sphere, Ethereum co-founder Vitalik Buterin recently highlighted AI's potential to rectify underlying errors in its code.

Vitalik Buterin, one of the founders of Ethereum, expresses positivity towards employing artificial intelligence for rectifying blockchain glitches. Source: Vitalik Buterin on X

Buterin expressed enthusiasm for AI-based auditing to identify and rectify code errors within the Ethereum network, citing it as the network's "biggest technical risk."

As of March 8, AI tokens collectively boast a market capitalization of $51.18 billion, serving various projects, applications, and services such as decentralized AI markets, AI-driven trading algorithms, and decentralized autonomous organizations powered by AI.


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