In the first half of this year, it was easy to see that AI and crypto are combining to create powerful technologies. By integrating on-chain tools, builders are creating smarter, safer, and more efficient ways to support AI tasks, verify data, and train AI models.
With the approvals of Bitcoin and Ethereum ETFs (and the upcoming possibility of a Solana ETF), crypto has firmly established itself among traditional investment vehicles. There is only one question: what are the decisive opportunities for early adopters in the biggest bull market ever?
The Intimate Relationship Between AI and Blockchain
Developers are often attracted to the intersection of AI and blockchain technologies: blockchain provides the perfect infrastructure for AI to operate securely, decentralized, and efficiently.
Blockchain technology supports AI in many important ways: from verifying data to efficiently distributing computing power; from training AI models to providing end users with some much-needed privacy in an increasingly digitized world. Unlike previous generations of AI that were only connected to the Internet, AI agents in blockchain can operate on a scalable and secure infrastructure. This brings them closer to performing simple to complex tasks with incredible efficiency and reliability, without the risk of centralized servers and databases.
Sam Altman, arguably the biggest name in the AI industry, has expressed confidence in the integration of blockchain systems and artificial intelligence with the Worldcoin project. Erik Vorhees – a pioneering crypto entrepreneur – has also turned to the AI space with Morpheus and Venice AI – two projects that explore the supply and use of AI to achieve fair access for all.
And it’s not just builders who believe crypto and AI are evolving in tandem; professional investors are among them. Pantera Capital – an early investor in Coinbase, Circle, and BitStamp – is raising $1 billion for a new fund focused entirely on crypto AI projects.
The AI and blockchain market is booming
In the first two quarters of 2024, crypto-AI has successfully attracted the attention of investors, with over $98.8 million invested. The valuation of AI tokens is even more impressive, with a total market cap of $26 billion. These numbers paint a clear picture of explosive growth potential in this space.
As things stand, AI-blockchain integrations are predicted to add $20 trillion to the global economy by 2030. And there are plenty of startups emerging that are attracting the attention of venture capitalists. Projects like Nexus Laboratories and Bittensor have shown a strong ability to drive and maintain market share.
Nexus Laboratories recently closed a $25 million Series A round to continue harnessing the power of blockchain to verify AI data, ensuring accuracy and reliability.
Bittensor takes a different approach by integrating the entire cryptocurrency ecosystem into the training of AI models. Like Bitcoin, Bittensor also operates its own blockchain. The key difference is that instead of relying on energy-intensive mining, Bittensor miners validate blocks through AI-related tasks. By completing the given tasks, they are essentially contributing to the training of AI models. In return, they are rewarded with attractive incentives, encouraging them to continue validating blocks honestly to support the network. Like Nexus, Bittensor is also backed by VC firms. Its native token of the same name – TNSR – boasts a market cap of nearly $75 million and is said to be leading the way in tokenized artificial intelligence ecosystems.
Professional Investors’ Outlook on Crypto-AI
Projects that combine blockchain with AI are considered the most under-tested opportunities in the current market by angel investors. But investing alone is not enough – we must immediately seize the opportunity when it appears. Looking at the growth of crypto-AI projects, it is clear that they have the potential to attract more mainstream attention, leading to an increase in value. By getting in early, angel investors can capitalize on this growth potential and achieve higher returns relative to the risks.
Despite the excitement surrounding all the projects that combine AI and blockchain, we cannot underestimate the challenges of experimenting with something new.
First, the sector is still in its early stages, which means that while many projects have solid theoretical foundations, they are still far from being tested in the real world and therefore carry a high level of risk. Then there is the issue of regulatory oversight. Governments around the world are still trying to figure out how to harness AI responsibly and are only just starting to warm up to the concept of cryptocurrencies. Having fewer regulations to stifle innovation doesn’t mean we’re off the hook.
Finally, it’s important to avoid entrepreneurs who are just looking to capitalize on opportunities without a clear vision. With projects built on cutting-edge and disruptive ideas, the potential for long-term success is just the starting point. Investors should look for companies with strong fundamental values that align with their mission. As always, due diligence is an invaluable tool for investors eyeing the crypto-AI space, so be sure to do your own research!
