In recent days, there has been a lot of talk about AI technology and how it is changing the world as we know it. But AI isn’t just replacing writers and authors, it is also changing the way cryptocurrencies are run and built.
Read on to learn about AI cryptocurrencies, what they are, and what this change in technology means for the future.
What Are AI Cryptocurrencies?
AI cryptocurrencies, while they may sound nefarious, aren’t as bad as you would think. AI cryptocurrencies are cryptocurrencies which are built on AI run or managed blockchain platforms. The most popular AI cryptocurrency is one called The Graph and it is used to model data.
It’s important to know that using AI in cryptocurrency isn’t necessarily a bad thing, and in most cases, it is used to improve the user experience. Blockchain technology is notoriously difficult to navigate without a computer science background, and AI is used to enhance a blockchains interoperability and user interface. It is also used to improve blockchain security.
What most people don’t like about AI cryptocurrencies is that they are often used to support other AI projects and engines. When they are used in this way, they may be replacing the job of a human which is what upsets users as they picture their own job one day being replaced by AI.
How Are AI Cryptocurrencies Used?
The most popular AI cryptocurrencies are often used to run trading and investing engines, as AI is better able to collect and synthesize the information provided than humans are. It then uses this information to develop automatic trading algorithms. Before you panic, know that AI is often used in traditional stock trading in the fiat world in the same way.
Trading money or cryptocurrency is notoriously complicated, and AI helps take the pressure off humans when it comes to predicting trends and monitoring outcomes. Sure, you can do all this without AI, but it will take a human much longer and likely a master’s degree in math to develop the same or similar algorithms for trading.
At the same time, the individual developing these algorithms could also take the fall if the algorithm doesn’t bring the company anticipated increases in revenue. Which brings us to the bright side of using AI to develop trading algorithms, as there are rarely mistakes, and a human doesn’t lose their job when the AI developed algorithm doesn’t work.
Sure, a company can “fire” an AI program, and switch to a new one, but this isn’t taking food out of someone’s mouth, per say, and in general we see using AI to develop these algorithms as more humane.
In addition to the trading world, AI cryptocurrencies are also used to develop predictions and model data from other types of data sets. Some of these data sets are focused on security, training the AI to monitor for irregularities in the blockchain and sever a connection before a hack or breach can occur.
Is AI Good for Cryptocurrency?
Overall, AI is good for cryptocurrency, as it is always important to improve blockchain security and AI removes the human error aspect of developing AI algorithms. It is also impossible for humans to monitor a blockchain for breaches or hacks 24/7, and AI is one of the best ways to secure a blockchain without needing to worry about tiredness or taking breaks.
Not only that, but AI blockchains are able to do the jobs of humans more quickly and efficiently, as they are able to process large amounts of data faster than a human can. This leads to increased efficiency of a blockchain and may help lower energy consumption of the blockchain.
In general, we see AI cryptocurrencies as a good thing for the cryptocurrency world as it serves to improve many blockchain functions which are currently lacking. It also helps to increase the safety and security of a blockchain platform which is a major concern that is currently contributing to the lack of support for widely adopting cryptocurrency.
Related: What is Impervious AI?
Are There Any Downsides to AI Cryptocurrencies?
The main downside to AI cryptocurrencies the potential for technological issues. While you remove the human error aspect, AI technologies aren’t perfect yet. This means the AI could make a mistake or break at a critical moment and a data breach could still occur.
It is also worth noting that AI is taught to learn from information which is already available. It may be unlikely for AI to develop an incorrect algorithm, but if a weakness already exists in a blockchain when AI technology is applied, it may not be able to bridge that weakness as the initial data set will be incorrect.
Also, remember, the number one way blockchains are hacked is by employees or those who work on the blockchain they inevitably end up hacking or stealing money from. AI can’t prevent all these hacks, as someone who works with the AI system may be able to circumvent it and the hack could still take place. But it does add another layer of security in most cases.
Should You Buy AI Cryptocurrencies?
AI cryptocurrencies may or may not be investment grade. Many of them function as a utility token, having a use on a certain AI platform or system. If you use this platform or system, then purchasing said AI cryptocurrency can be beneficial because you will be able to use the system as intended.
But if you are just looking for a cryptocurrency to invest in, AI coins probably aren’t a good type of coin to focus on. Many of them are still new, and many are not a good store of value. If you are looking to invest for investments sake, it is best to stick with a well-known store of value cryptocurrency like Bitcoin or Ethereum.
Don’t forget that most cryptocurrencies are still widely unregulated. This means that even if you purchase an AI coin for use with a platform, there is still a chance you may lose your money. Always investigate any platform before you invest and ensure that it is a legit project with checks and balances in place.
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