Outside Source
A recent Coinbase report notes that the perceived value of numerous AI tokens has been overstated, leading to concerns regarding their sustainability.
David Han, a research analyst at Coinbase, highlighted the recent price surges observed in these tokens may be driven more by hype than genuine utility or usage.
Surge in AI-Related Crypto Projects Raises Questions
Based on data from CoinGecko, AI-related crypto projects have surged to a total value of $26 billion this year. A significant portion of this increase, around 30%, occurred in a single day, coinciding with the rise in Nvidia stock.
Since the start of the year, AI tokens such as Akash and Render have experienced significant increases, with gains of 146% and 99%, respectively, surpassing Bitcoin’s 54% rise. Despite these impressive increases, Han pointed out that the future outlook for most of these projects remains uncertain.
The report noted that AI tokens typically benefit from the overall bullish sentiment in the crypto market and the dissemination of AI-related news. However, Han emphasized that the current attention on AI tokens may be exaggerated.
He expressed that the perceived value of many AI tokens might be inflated due to the widespread focus on the AI industry, and these coins may lack sustainable demand drivers in the short to medium term.
Han also highlighted specific challenges faced by AI tokens like Akash Network. It operates similarly to tech giants such as Amazon and Google by leveraging users’ computing power for cloud computing in exchange for payment, which has seen increased usage. However, there have been issues such as declining potential supply and demand for Akash Network.
Furthermore, he suggested that projects like that should reconsider their token distribution strategies to attract more attention. He stressed that only “nuanced” use cases could enable these projects to compete with centralized giants like Amazon Web Services or ChatGPT.
Buterin Advocates for AI Integration
In addition to the insights provided by Coinbase, Vitalik Buterin, the co-founder of Ethereum, recently voiced optimism regarding integrating artificial intelligence to address issues within Blockchain networks.
Buterin emphasized the potential of AI-driven audits to identify and rectify problematic code within the Ethereum network, highlighting its use in mitigating the “biggest technical risk” to the network.
Meanwhile, Coinbase’s analysis points out two potential avenues for growth within the crypto-AI sector: improving Blockchain data accessibility for human interpretation and analysis and decentralizing the predominantly centralized infrastructure of AI. However, Han stresses that a decentralized AI future is uncertain, highlighting the unpredictable nature of the AI industry’s direction.
This article first appeared at CryptoPotato
