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Forbes Advisor provides this content for educational purposes only and is not intended to assist you in deciding whether to invest in cryptocurrencies. When investing in cryptocurrencies or other investments, you should always obtain appropriate financial advice and only invest an amount that you can afford to lose.
It's hard to imagine two technologies that reflect the zeitgeist more than artificial intelligence (AI) and cryptocurrencies, so it's no surprise that these two fields have come together in the form of AI cryptocurrencies.
We looked at some of the largest AI cryptocurrencies by market capitalization, according to CoinMarketCap*. First, here's a primer on what they are.
What is cryptocurrency?
Cryptocurrency is a type of digital currency and is known to be a very risky investment. These can be consumed and traded, but they are not issued by central banks or held in traditional financial institutions.
Instead, they are decentralized. This means that records of your balances and transactions are not managed by your bank or payment provider, but instead by volunteers who use specialized software to keep track of everything.
Volunteers participate because doing so gives them the opportunity to earn valuable cryptocurrencies without paying any fees.
Massive speculation in the value of cryptocurrencies has led to a boom in both the number and value of assets in this space in recent years, peaking in November 2021 and crashing in spring 2022.
What is AI?
Artificial intelligence (AI) is a field of computer science that enables machines to make data-based decisions that increasingly mimic human intelligence.
Popular recent examples include AI-generated artwork, where a program creates digital art by interpreting a user's prompts written in natural language, and applications that allow users to “write” according to a submitted outline. Contains ChatGPT.
In both cases, the output is so close to what a real human would create that it can be mistaken for human creation, and these applications are becoming increasingly sophisticated.
The use cases for AI are virtually limitless, and the technology is even making its way into the cryptocurrency space.
What is AI virtual currency?
AI cryptocurrencies are tokens that power AI blockchain platforms such as The Graph. Users spend tokens to use the benefits of artificial intelligence integrated with the platform.
We looked at some of the leading AI crypto projects based on market capitalization to see how AI is being used within the industry.
Near Protocol (NEAR)
Market capitalization: 5.2 billion pounds
Near Protocol (NEAR) is a platform for developers to build decentralized apps (dApps). As a layer 1 blockchain, Near is a rival to Ethereum, but faster and with higher throughput. It accomplishes this through a unique “sharding” technique that splits the blockchain into smaller subchains, each with a different validator running on them.
NEAR is currently trading at £4.96.
Rendering (RNDR)
Market capitalization: 2.8 billion pounds
Render allows artists to access the computing power they need to render computer graphics from cryptocurrency miners who lend them their graphics processing units (GPUs). This project was launched in 2017.
RNDR is the native currency of the Render project, and users use it to access miners' GPU power. The system works based on a proof-of-work consensus mechanism.
RNDR is currently trading at £7.40.
Bitensor (TAO)
Market capitalization: 2.7 billion pounds
Bitensor aims to revolutionize the development of machine learning platforms and build the neural internet. The project is establishing a peer-to-peer marketplace of machine intelligence where AI models can combine their intelligence to essentially create a “digital hive mind.” This innovative decentralized approach is designed to enable rapid scaling and knowledge sharing between AI systems.
Bittensall (TAO) was trading at £420.93 on April 2, 2024.
Graph (GRT)
Market capitalization: 2.5 billion pounds
Graph is a protocol for indexing and querying data on a blockchain, similar to how Google indexes and queries data on websites. Indexing blockchain data can be difficult, but The Graph aims to change that by organizing data into smaller “subgraphs.”
GRT, its native Ethereum-based cryptocurrency, is worth £0.26 at the time of writing, down from its February 2021 high of £2.09.
graph price
Theta Network (THETA)
Market capitalization: 2 billion pounds
Theta is a blockchain purpose-built for video streaming. It aims to decentralize video streaming and operate a peer-to-peer video distribution network.
The company's promise, like many Metaverse business plans, is to reduce costs, transfer power from corporations to the masses, and cut out middlemen. Seeta said this vision will give a bigger pie to content creators and make videos cheaper for consumers.
THETA is currently trading at £2.05
How can investors buy AI cryptocurrencies?
Many AI cryptocurrencies can be purchased using several cryptocurrency exchanges, similar to traditional cryptocurrencies such as Bitcoin and Ethereum.
To trade, investors must open an account. This often involves some identity verification steps and requires you to deposit fiat currency. You will then be able to navigate to the page for the AI cryptocurrency you wish to purchase within the exchange, enter the amount you wish to purchase, and execute the transaction.
How can investors store AI cryptocurrencies?
Most exchanges offer free crypto wallet functionality to store the private and public keys needed to use and trade crypto assets. If investors wish, they can store their keys in an offline cold wallet.
Cold wallets are safer than hot wallets because they are less likely to be targeted by hackers. However, if an investor loses their cold wallet login information, they will not receive any support to regain access to the keys that they would need to obtain in a hot wallet.
Is AI cryptocurrency safe?
Whether AI cryptocurrencies are safe from hackers and crypto market fluctuations depends on how investors store them and their attitude toward risk.
Regarding the latter, no virtual currency is safe from market volatility, and 2022 was the year in which the volatility of virtual currencies was exposed.
The UK's financial watchdog, the Financial Conduct Authority (FCA), has repeatedly warned against investing in cryptocurrencies, saying people should be prepared to lose all their money.
And when it comes to hackers, crypto wallets and exchanges will likely continue to be targeted by criminals, leaving people's assets at the mercy of the security they and exchanges implement.
Cold wallets are a hedge against hacking, but they are vulnerable when connected to a web-connected computer.
Meanwhile, attacks on exchanges continue. Exchanges may tighten security measures as hackers expose weaknesses, but the cat-and-mouse game is certain to continue.
Cryptocurrencies are not regulated in the UK. The UK regulator, the Financial Conduct Authority, has repeatedly warned investors that buying cryptocurrencies risks losing all your money with no possibility of compensation.
