The growing popularity of Artificial Intelligence (AI) is causing increased interest in Crypto-Currencies that have AI in their primary function, i.e., to be integrated with Smart Systems (Intelligent Systems), Machine Learning (ML), and Decentralized AI (dAI). One project that is receiving more media coverage and discussion around becoming a fixture in many crypto portfolios is Bittensor (TAO).
Even though Cryptocurrencies can be a very volatile and uncertain investment system, if you understand why projects like Bittensor stand out from the competition by analyzing their supply structure, potential catalysts, and long-term prospects, you can formulate an informed decision on including AI Crypto in your portfolio.
The objective of this article is to give an overview of AI-Powered Crypto-Currencies, examine how they will grow, and what the risks are to a potential investor.
Why Is Bittensor Different?
Founded in 2019 and based in Toronto, Canada, Bittensor is an AI network built on blockchain technology. Unlike many other AI tokens that do not have a clear use case or any true technological backing, Bittensor has created its own unique architecture as a decentralized platform for the creation and execution of AI applications.
Bittensor’s pure focus on AI makes it different from the majority of other tokens in the AI space that are simply generic “AI hype” coins. This is the reason it is the number one-ranked AI token by market cap, and it consistently ranks among the top 50 cryptocurrencies in the entire market.
A major distinguishing characteristic of Bittensor is its scarcity model. Currently, there are only 10.5 million Bittensor tokens in circulation, with a total supply capped at 21 million tokens, which mirrors the capped supply model used by Bitcoin and has historically been one of the factors contributing to Bitcoin’s scarcity and thus speculatively appealing price.
How Bittensor Could Benefit from the Growth of AI
With the increase in demand for creating and deploying machine learning (ML) models across a wide range of businesses and research institutions, as well as the recent growth of open-source decentralized ML solutions, the overall AI market is projected to continue to expand. The Bittensor ecosystem is designed to have an open-source platform that allows developers to create, train, and deploy their own AI applications using decentralized blockchain Technology.
In comparison, the majority of companies that build AI models are centralised and owned by a large number of corporations, with most of the funding coming from private sources. Therefore, the creation and implementation of an ML model, or application, is difficult for independent or smaller research organisations.
Additionally, as more people and companies adopt AI technology on a worldwide basis, it is anticipated that there will be an increase in demand for networks that enable and support the distribution of AI applications and for the secure transfer and exchange of data between users of AI-based applications. This may result in additional growth opportunities for Bittensor as well.
Read: Banks vs Crypto: The Growing Battle Over High-Yield Stablecoin Rewards
The Influence of Scarcity on Pricing
Scarcity is an important part of Bitcoin’s price narrative, and because Bittensor has a limited number of tokens available, some analysts think that it may develop strong price appreciation if AI and blockchain technologies converge and demand increases for tokens.
The current price of Bittensor is likely higher than that of other AI tokens due to the limited supply of Bittensor coins, giving Bittensor coins greater intrinsic value relative to other AI coins, if its network continues to grow in terms of usage and adoption. However, like all cryptocurrencies, there are many factors that influence the direction of a cryptocurrency’s price, including market sentiment, use cases being adopted, developer support, and macroeconomic trends related to cryptocurrencies.
Institutional Investment and Exchange-Traded Funds
Institutional investment may be a major potential catalyst for growth for Bittensor through the creation of exchange-traded funds (ETFs) based on the performance of Bittensor. The creation of ETFs by institutions may give the broader investing community access to invest in Bittensor without managing the complexities of establishing and maintaining cryptocurrency accounts on cryptocurrency exchanges.
ETFs offer investors a regulated investment vehicle that is a familiar method for traditional investors and could lead to more stable capital inflows into Bittensor. If Bittensor is classified as an ETF, it could provide a meaningful catalyst for further adoption of Bittensor, which is currently a niche AI token.
Bittensor Investments and Retirement Options
Bittensor and other AI-based cryptos should be approached cautiously, as crypto investment strategies do offer the possibility of becoming millionaires. Crypto markets are volatile, and although a project may offer initial returns, it may also experience large sell-offs or receive regulatory scrutiny.
Retirement expectations should not be based solely upon speculation. Investors need to evaluate and utilize the advantages of AI coins as part of a diversified portfolio. Long-term holdings should be based upon evaluating their utility within the network, whether or not they have been adopted by significant users of the technology. Risk tolerance and goals will further dictate allocation decisions. However, if AI crypto continues to build up strong technical capabilities, attract institutional interest, and meet other criteria, these coins may be an effective investment option.
Considerations and Risks to Investing in AI Crypto
AI cryptos is a relatively new concept. Most tokens are speculative in nature; many do not have deep utility or real-world adoption. Therefore, before investing heavily in AI token projects, investors should refer to current market conditions and the extreme volatility associated with the current markets. Understand the regulatory framework surrounding cryptocurrencies now and in the future.
You should also consider the likelihood that some of these tokens may not be able to fulfill the technical promises made by their teams. Moreover, it is important to understand the fundamentals of each project — including use case, team credibility, community support, and tokenomics — before investing heavily.
The Integration of Crypto and AI in the Future
The integration of AI and blockchain technology is part of a broader trend within the finance and technology sectors. Combining decentralized networks with AI capabilities has garnered significant interest from investors, whether this integration produces significant returns over the course of a retirement investment (i.e., is a good investment) or results in the development of an entirely new set of utility platforms.
As innovations continue and AI-enhanced analytics become available, AI-based crypto will have a greater impact on the investment strategies of investors, influence their risk profile, and ultimately help provide tools for automated portfolio management when investing in digital currencies and planning for long-term financial goals.
Final Thoughts
Bittensor stands out among other AI-based cryptocurrencies due to its unique characteristics that include a limited supply, a decentralized framework for AI, and an increasing recognition in the crypto marketplace. This asset has the potential to be considered a part of a long-term strategy to generate wealth; however, none of these assets has guarantees of making anyone a millionaire.
Investors considering investing in any of these cryptocurrencies should conduct extensive research, develop proper risk management strategies, and make well-reasoned decisions about the allocation of their capital among cryptos, particularly those related to high-growth and high volatility technologies (i.e., AI-related future technologies).
