We're seeing it again, aren't we? These headlines capture the bombastic collision between AI and crypto. This increase is all being fueled by a trending social media craze around projects such as $TAO, $INJ and $FET. Phoenix Group's data tells a compelling story: thousands of engaged posts, millions of interactions. It's exciting, intoxicating even. Before you jump in headfirst, ask yourself: have we learned nothing from history?
Don’t get me wrong, I’m not one of those who thinks AI can’t and shouldn’t revolutionize every sector from transportation to education. The actual question is do putting AI and Crypto together mean innovation by default. My sense is that we, as good investors, should continue to demand some skepticism on our behalf.
Echoes of the ICO Mania?
Remember the ICO boom of 2017? Promises of industry-revolutionizing blockchain silver bullets, whitepapers chock-full of gibberish jargon, and instant millionaires (at least on their balance sheets). All but a handful of those projects are now dust, their tokens valueless. The underlying tech was as legit as it gets, but the hype train was way ahead of the actual reality. Are we witnessing a playbook repeat with AI crypto?
The numbers are impressive. With nearly 19,000 active posts and nearly a million cumulative likes, shares and comments in a day, $TAO is on a roll. $INJ breaks a million interactions. Even those that are more under the radar, such as $NEAR and $RENDER are gaining HUGE numbers. All of that social media buzz does not translate into any intrinsic value. It's attention, and attention can be fleeting. We all know that.
This reminds me of the dot-com bubble. Companies with a dotcom in their name had their valuations sent to the moon, even if they had no business model to speak of. The internet was indeed a revolutionary game-changer, but despite common lore, not every website was going to make it big. AI will have a transformative impact. As we’ve seen in this current hyped-up wave of crypto-fueled connectivity, having AI attached to your whitepaper does not guarantee success.
Centralization Masked as Decentralization?
One of crypto's core tenets is decentralization. But just how decentralized are these AI-powered projects? Are we actually just replacing traditional, corrupt, centralized systems with AI-guided ones? This change would have the effect of increasing the power of a few developers or corporations.
Think about it. Who controls the algorithms? Who trains the AI models? Just a handful of states and localities hold the vast majority of these resources. Because of this, the promise of a truly decentralized and trustless system rings hollow. So let’s ask ourselves. Otherwise, are we just creating a fancier form of centralized control under the seductive promises of AI and blockchain.
And what about algorithmic bias? Or this, because AI models are trained on data, and if that data is biased, the AI will just continue those biases. Might this result in arbitrary or discriminatory results that play out in more decentralized systems? These are the kinds of ethical questions we ought to be grappling with long before we start throwing millions into AI crypto ventures.
Sustainable Value, or Just Hype?
In the end, the long-term success of any crypto project will depend on their ability to provide sustainable value. Is your AI integration addressing a genuine real-world need? In other words, does it provide a measurable value to its users? Or is it simply a branding ploy meant to woo new investors?
It’s easy to get dazzled by the shiny new technological toy that is AI. Dig deeper. Understand the underlying technology. Assess the team behind the project. And most importantly, ask yourself: does this project have a clear use case and a robust governance model? If the answer is no, it’s likely time to pursue other opportunities.
Look, I’m not making the blanket statement that every AI crypto project will end up tanking. There will be winners, no doubt. Unfortunately, most of these investments will likely pass into well-deserved oblivion. In the end, investors will be left with duped wallets and poisoned palates.
Remember, greed clouds judgment. Don’t fall victim to the fear of missing out (FOMO) and rush into making emotional purchases. Take AI crypto with a big grain of salt. Put time and attention toward building the right projects, ones that demonstrate strong fundamentals and a long-term vision. Do not forget the powerful lessons learned from past bubbles.
Investing in crypto is already risky enough. Avoid increasing that risk by pursuing the flavor of the month. Be skeptical, evaluate independently and invest responsibly. Your financial future depends on it.
