Crypto's AI Love Affair: A Reality Check

Hey everyone,

We all love a good crypto narrative, don't we?

Just like the DeFi boom in 2020 and the Metaverse mania in 2021, the beginning of 2023 played host to the emergent Artificial Intelligence (AI) crypto narrative fueled by none other than ChatGPT.

Developed by OpenAI, ChatGPT launched on November 30th, 2022 and is the first real breakthrough in AI technology that's accessible to the masses.

It took a mere five days for ChatGPT to reach 1 million users – the fastest online service ever to reach this milestone, beating household names like Instagram and Netflix to the punch by months, even years.

And if that record wasn't good enough - the AI super-app reached 100 million users within two months after launch, firmly catapulting AI (with all its hopes, dreams and world-ending fears) into the Zeitgeist.

With the unprecedented growth in the use of generative AI services like ChatGPT and viral text-to-image generator, MidJourney, it's no wonder that the hype around AI snowballed into cryptoland.

After all, the invention of the blockchain (and Bitcoin) in 2008 was revolutionary in and of itself, so it's only natural that the crypto crowd wanted in on the action when ChatGPT made people realise that AI will change the world.

One thing is for sure, AI tech is here to stay. It's been progressing faster than ever, with breakthroughs in the generative AI space taking place within weeks of each other, sometimes even days.

The momentum of the AI snowball took hold of crypto this January, with popular AI tokens like SingularityNET (AGIX) and Fetch.ai (FET) doing a casual 5-10x in a matter of weeks. Suddenly, everyone was talking about how AI's marriage with crypto is a match made in heaven.

But, as we stand today, the snowball has melted. AI tokens' rapid price appreciation has lost momentum since its peak in February. While this may coincide with consolidation amongst the leading crypto asset prices like Bitcoin and Ethereum, it still begs the question - is AI's synergy with crypto and blockchain technology the future, or just another passing fad?

Let's find out.

Crypto's AI Love Affair: A Reality Check

Today, we'll be attempting to separate fact from fiction when it comes to AI and crypto. Eliminating the buzzwords and cutting through the jargon is the only way to assess whether we're undergoing an exponential technology revolution.

Before we dive in, it's crucial to note that plenty of tokens lack actual use cases around AI, but are lumped into the AI category anyway. We found tonnes of "AI coins" that don't even use AI, so this was our first process for elimination.

We've narrowed it down to the three AI-crypto projects showing the best promise of marrying the two technologies. Although, as you’ll see, all these projects still have a long way to go to achieve that goal.

SingularityNET

SingularityNET, a novel project spearheaded by Dr Ben Goertzel, one of AI's leading figures, is the first project we're examining.

Built atop the Cardano blockchain, it's the world's first decentralised AI marketplace. And for those of you who aren’t up to speed with what that entails - imagine a big store where people can find, purchase and use different AI computer programs that can think and learn like humans. People can use these programs to perform tasks like understand what someone is saying or recognize what’s in a picture. The store’s secret sauce is that it’s decentralised i.e. it’s not only owned by the SingularityNET Foundation, but also by all the different developers, contributors and publishers who list AI programs on the marketplace.

And, by the way, a side quest of theirs is to foster the development of Artificial General Intelligence (AGI). Basically, Skynet from the Terminator movies.

SingularityNET's blockchain ecosystem comprises 13 protocols in development or already functioning as integral parts of the system. Among the notable advancements is MeTTa, a unique coding language tailor-made for SingularityNET's objectives. Accompanying MeTTa's alpha release is the Distributed Atomspace (DAS) knowledge store, a novel piece of tech designed for long-term data storage, which is crucial for AGI development.

While SingularityNET has a strong team, partnerships, and roadmap ahead of them, its mission isn't without challenges. Currently, the platform's AI projects and services lack the impressive quality seen in private companies with substantial funding, often resembling college-side projects rather than cutting-edge AI tech.

In addition, while the concept of a decentralised AI marketplace is “innovative”, it necessitates a disparate mix of entities reaching a consensus on the direction of development, which can be slow compared to a streamlined approach that we're seeing from companies like OpenAI.

All that aside, we still need to mention the most significant thing blocking SingularityNET's AI marketplace from achieving mass adoption. Being a dApp, the marketplace requires users to transact in its native token, AGIX.

While this aligns with the ethos of crypto, widespread adoption of this token has yet to occur. As a result, it would be a massive point of friction for new users trying to engage in commerce on the marketplace. Especially when they can access ChatGPT (a far superior AI-consumer product compared to the services offered on Singularity's marketplace) in seconds. And not to mention eliminating the need to hold a volatile altcoin or learn to transact with a dApp using MetaMask.

SingularityNET's focus on decentralisation, while commendable, may only be enough to attract users if it offers a superior value proposition. Therefore, the platform needs to address these concerns and improve the quality of its products to achieve mainstream adoption.

Fetch.ai

Fetch.ai offers a novel approach to blockchain technology by amalgamating AI and machine learning (ML) into its decentralised, open-source platform. Harnessing the power of its native FET token, Fetch.ai deploys Autonomous Economic Agents (AEAs) that perform economic transactions independently based on the AI's decisions.

The platform's Open Economic Framework facilitates the AI agents' interaction, providing services ranging from weather updates to easing service delivery across various sectors.

The Fetch.ai ecosystem is built upon three fundamental pillars: Autonomous Economic Agents, the Open Economic Framework, and Smart Ledgers. This structure enables the creation of an AI-based economy, potentially revolutionising industries such as healthcare, manufacturing, and financial services as they shift towards digitisation. Its applications, including Axim and CoLearn, emphasise the AI aspect of Fetch.ai, providing tools for machine learning collaborations and business insights.

The concept of AI agents has gone viral recently within the non-crypto world with the rise of AutoGPT. This is a cutting-edge AI technology that generates text and code in a more general sense than traditional language generation tools. It utilises GPT-4 as its foundation and empowers the AI to function independently without requiring prompts from the user for each action. If you've been lucky enough to see one of these things in action, it's mindblowing.

Early use cases have brought AI applications like ChatGPT to life and made them useful in the real world, from automating tasks that go into planning weddings (think writing up lists and placing goods and services orders) to analysing customer feedback to generate insights that can inform business strategy and even acting as a broker in negotiating leases.

AutoGPT and Fetch's AEAs are strikingly similar. While AutoGPTs are already tackling real-world issues, it remains to be seen if Fetch can position itself as the go-to platform for creating and deploying autonomous agents within Web3 to fulfill users' economic goals. This could be Fetch's big opportunity, particularly given the considerable potential that AutoGPTs are demonstrating in the real world.

However, with the concept of Web3 still having a sour taste in most people's mouths after its flash in the pan in 2021, it's going to be a long and hard road to get crypto users to move their focus away from Pepe and other flashy memecoins to more productive endeavours. Only time will tell.

Despite the AI-centric branding of Fetch.ai and its promising opportunity with AEAs for Web3, things aren't all rosy when it comes to the project's positioning:

1. The platform's true offering appears vague and limited when examined closely.

2. While the concept of an AI-based economy is enticing, the applications built on the platform largely align with standard blockchain use cases, such as decentralised exchanges, staking, and other typical dApps.

3. AI-related projects are few and far between, with the bulk of the hype likely tied to the AI-centric naming convention rather than a broad range of AI-focused applications.

So, while Fetch.ai presents an intriguing blend of AI and blockchain, potential users and investors must understand its current limitations and the discrepancy between its AI branding and the functional applications available on the platform.

Alethea

And now, on to the sparkly new toy in the AI-crypto sandbox. Alethea.ai is our dark horse in today's mix and match of promising AI-crypto projects. And they're one that we think could actually succeed in intertwining the two revolutionary technologies.

Imagine your NFTs coming to life and chatting with you like your best friend; that's the sci-fi reality Alethea is trying to build. It's like Pinocchio but with blockchain – with significantly less lying.

Launched in 2021, Alethea is a research lab turned tech startup that's shaking hands with generative AI and blockchain to create “intelligent NFTs”. They're not just creating art but teaching it to talk back.

The golden child of this endeavour? Alice, the first intelligent NFT, auctioned at Sotheby's for a whopping $478,000.

In a world where people already talk to their Roombas, Alethea is onto something. They've got their sights set on developing their own metaverse, Noah's Ark, where these NFTs could come out to play. Their latest invention, CharacterGPT, translates text into characters, adding a whole new realm of possibilities.

But while they've got Mark Cuban's seal of approval, let's not forget that Alethea popped up during the 2021 bull run when Metaverse mania was at its height.

The downside? At its core, Alethea is more of an NFT/Metaverse project than an AI pioneer. They're using the latest AI breakthroughs, but they're not the ones breaking ground. Yet, given their focus on current AI applications, Alethea could just be the most relevant AI-focused crypto project in today's landscape.

So, is Alethea more than just hype? The jury's still out on that one, but they've definitely caught the correct wave at the right time when it comes to generative AI products.

Is Any of This Real?

So, here we are, at the crossroads of AI and crypto, staring at the promise of utopia while wrestling with the spectre of unfulfilled hype.

Let's be honest for a moment: AI in the real world, as ChatGPT exemplifies, is advancing at a breathtaking pace. No arguments there. But the same can't be said for its AI-crypto counterparts. Years of development and still no market-ready products to show for it. That's not progress; it's purgatory.

Now, don't get me wrong. The potential is there, and the promise is tantalising. But without product market fit within the broader AI landscape, these projects are like a Ferrari stuck in a traffic jam - all revved up with nowhere to go.

And as for the hype? Well, remember, kids: FOMO is the enemy of reason, especially when placing bets in crypto.

Now let's look at the blockchain side of things. AI doesn't solve crypto's biggest problems right now: transaction speed, exorbitant fees, and user adoption.

The idea that AI and blockchain are kinds of panacea for each other's problems is misguided. It's like expecting a Band-Aid to fix a broken leg. Just because ChatGPT was a success doesn't mean it can benefit blockchains.

And remember that crypto was invented to solve a specific set of problems. Believing that it can fix everything is the kind of delusion born from memecoin hype.

That's not to say AI won't benefit crypto someday; it's just hard to see within the generative AI space, which is all the rage right now.

The recent pledge of $10 million by Bitget for developing the Fetch.ai ecosystem is a testament to the fact that while the initial AI-crypto mania of 2023 has waned, there's still a steady stream of interest from investors. They're betting on the future, but as we've seen, the moonshot bets can be an unwieldy beast full of twists, turns, and the occasional faceplant.

So, what's the takeaway here? The convergence of AI and crypto is not an instant win. It's a process, a slow burn with moments of brilliance interspersed with periods of disappointment.

A narrative is just a story we tell ourselves, and stories are subject to interpretation, embellishment, and outright fabrication. By all means, trade the narrative (if you're early) but don't invest for the long term based on it. Invest based on the facts. And right now, the facts are that AI doesn't solve crypto's problems, and crypto doesn't solve AI's issues.

As for the hype? Well, the hype is a double-edged sword. It can inspire, motivate, and drive innovation. But it can also blind us to reality, lead us astray, and leave us holding the bag when the music stops. So don't let the hype make decisions for you.

Instead, look beyond the narrative, do your due diligence, and remember: there's no such thing as a sure thing.

For these simple reasons, I’m not going near AI-crypto tokens with a ten-foot poll right now. Maybe I’d change our mind if one of them came out with a product that is as mind-blowing as ChatGPT, but for now, we’ll get back to stacking ETH.

Thank you for reading. Share this post with a friend if you found it insightful.

— Luca