Crypto Automated Trading

AI Meets Crypto

Last week OpenAI CEO Sam Altman expressed his desire to raise $7 trillion or 3.5 times the total crypto market capital to fund chip design and manufacture to meet increasing demand for artificial intelligence (AI) technology. This investment is so large that it has inspired participants to think more in terms of exponential growth. Why are we talking about this in a Crypto-focused newsletter? Because crypto traders understand exponential growth well. Also, because the Crypto-AI narrative has taken off. Prices of AI coins in the last few weeks have reflected this trend. Bittensor’s TAO token, depicted on the chart above, has grown exponentially since December. According to CoinGecko however, AI tokens have a market cap total of only $16 billion, which is less than 1% the total crypto market cap. Meme tokens are worth $23 billion.

Crypto and AI have been the two most talked about technologies in the last five years. Given the growing adoption, it makes sense that they would overlap. But many believe that the two technologies are fundamentally opposed to each other. Crypto facilitates decentralization. While AI thrives on and enables centralization through the models it is based on.

The intersection is where Blockchain technology could power decentralized AI models. Crypto rewards participation through financial incentives. Crypto’s incentive structure can encourage decentralization of AI by rewarding balanced and diverse data sources. It could also help keep control over AI out of the hands of big tech. Bittensor wants to accomplish this by creating a network of machine-intelligence. These networks have the ability to share and communicate information while assessing and ranking other network participants.

Crypto is the ultimate playground for economic experimentation and game theory. It can also serve as a financial engine for machine-to-machine transactions without reliance on trusted, centralized actors. It only makes sense then that AI would fit into the Crypto narrative. From a markets point of view, it clearly seems like this narrative is starting to take off. Watch this space.