What Are AI Tokens?

Technological advancement never ends. That is why the period we are living in is called the digital age. The advent of artificial intelligence (AI) is the latest technology trend, and it has come with full force while integrating cryptocurrency. The AI space is rapidly growing with the potential to revolutionize the entire world, including our way of living, our work orientation, and the way humans interact. There have even been comments on how AI could replace human employees. One of the latest trends in the AI space is AI tokens. Let’s get deeper into it.

Artificial Intelligence Defined

“Artificial” and “intelligence” are two different terms, with “artificial” meaning “man-made” or “not natural” and “intelligence” meaning the ability to apply acquired knowledge and skills. In simple words, artificial intelligence, or AI, is an imitation of human intelligence processes by computer systems or machines generally. It is also an arm of computer science that focuses on the development of smart machines that can function efficiently without human intervention.

An investment by Microsoft Corporation (NYSE: MSFT) into the ChatGPT creator OpenAI has sparked more interest in the artificial intelligence world. And the chatbot has displayed mind-blowing potential, indicating the possibility of an AI having an impact directly on the blockchain in the future. An example is OpenAI’s ChatGPT which gave some intriguing responses to what it would do with money. Amazingly, the chatbot said it would invest, acquire more resources, and more which signifies the potential of an AI to make investment decisions that suit human goals. As a matter of fact, developers can train AI to do anything, including detecting illicit activities.

The four major types of AI are Reactive Machines, Limited Memory AI, Theory of Mind, and Self-Awareness.

• Reactive Machines cannot form memories. Instead, they are mainly reactive and designed to execute certain tasks. Due to the lack of memory, they cannot use past experiences to make decisions.
• An example of Limited Memory AI is self-driving vehicles with an in-built program that runs the systems. Machines with Limited Memory AI are unable to develop fresh ideas.
• The Theory of Mind AI will enable machines to understand and remember emotions. They will have true decision-making capabilities similar to humans. A lot of research works are ongoing concerning this type of artificial intelligence.
• Self-Aware is the future of AI, when machines can react like human beings. As the most advanced type of AI, these machines will have their own emotions, be aware of the feelings of others in their environment, and be conscious of their mental state.

What Are AI Tokens?

Typically, AI tokens are digital tokens used to access AI technology by means of payment and get available AI products and services on the blockchain. They are designed to power AI-based projects such as decentralized exchanges, investment protocols, image or text generation services, and more. AI tokens support AI projects and use artificial intelligence to improve scalability, user experiences, security, and market predictions. Automatically, AI-powered tokens give governance to their holders.

Many crypto enthusiasts have their fingers crossed on AI-based tokens with the confidence that they may lead the next bull market cycle. This prediction is not far-fetched, especially with the impressive performance of these tokens.

Use Cases

The application and use cases of AI tokens vary according to their types. Some of the popular use cases of AI include portfolio management, image generation, marketplaces, pathfinding, predictions, autonomous organizations, and so on.

The standard uses cases of AI tokens within the AI space are the following:

• AI tooling and infrastructure. AI infrastructure encapsulates almost all the stages of the machine learning workflow. It consists of the software, hardware, data, computing resources, and other tools required in building AI systems. These infrastructures are also responsible for the deployment and sustainability of the systems. Every talent working on AI technology, such as software engineers, data analysts, data scientists, and DevOps, utilizes AI infrastructure to test, train, and deploy AI algorithms.
• Decentralized AI marketplaces. These are accessible to anyone interested in buying and selling AI-related products using AI tokens. However, these marketplaces are decentralized, preventing a particular entity from controlling the platform. The only acceptable form of payment in this marketplace is AI tokens.
• AI-based portfolio management. This is managing and optimizing investment portfolios using AI algorithms and techniques. This act includes risk management, asset selection, portfolio rebalancing, and other activities. Data scientists are paid AI tokens as incentives to reward them for submitting accurate predictions to the platform. The same token is used to access the services available on the platform.
• AI-backed image generation. AI-powered image generator generates images that answer users’ input.
• Private data for building AI models. Private data has the potential to enhance research and business outcomes. Despite being considered the most valuable, there are access challenges concerning control and privacy. As such, an AI token addresses this issue as it monetizes data and ensures data privacy.

Examples of AI Tokens

There are different types of AI tokens with different use cases. They include:

• FET – the acceptable medium of exchange on the Fetch.ai system.
• AGIX – the native token to the SingularityNET decentralized platform, which allows holders to buy and sell different products and services related to AI.
• ALI – this token is used to generate character NFTs and is useful for upgrades, transactions, and incentivizing on the Alethea AI.
• NMR – the token associated with the Numerai AI-based decentralized hedge fund. The platform rewards its contributors with NMR tokens.
• Hera – this token gives its holders governance rights on the Hera system.

Benefits and Challenges

A major benefit of AI tokens is their built-in decentralization and security, which makes them useful in building AI applications required to ensure privacy and protect sensitive data. Also, the current position of AI tokens in the market proves that their integration with blockchain technology proves the possibilities for an AI-backed DAO and other innovative solutions.

Also, AI tokens give users access to AI-based products and services, including AI-powered investment protocols, image or text generation service, decentralized marketplaces, etc. The tokens give holders a sense of inclusion in the growing industry.

Similar to cryptocurrencies, a major challenge AI tokens pose is regulatory concern. At the same time, many still grasp the idea of some kind of token backed by AI and supporting AI. As a matter of fact, the term “AI” is just settling with so many people- both young and old. The various AI projects could also be challenging to understand, even for those with prior knowledge of the crypto space.

Conclusion

AI tokens have the potential for sustainable growth and high demand. The built-in AI coins made statements with their arrival and have managed to gain significant ground. Experts are already predicting continued expansion for AI tokens, which most are already living up to with upward trends.