AI tokens are more attractive than valuable, says Coinbase analyst

While technologists continue to use artificial intelligence (AI) issues in all business settings, a Coinbase research report suggests that AI-related tokens may now be overpriced, at least in the short to medium term.

The rising popularity of generative AI has spurred a number of great crypto sub-ecosystems over the past couple of years. However, Coinbase research analyst David Hahn is “cautious” about the long-term sustainability of many AI tokens due to the rapid changes in AI.

One of the challenges in crypto AI projects lies in the core of both technologies. While crypto projects often aim for decentralization, current AI offerings rely on centralized entities and data sources, Hahn argues.

Additionally, most projects in the niche fail to attract investors – resulting in an under-indexed capital allocation.

The report highlights two opportunities for the crypto AI ecosystem: leveraging blockchain data to create human-readable transactions and analytics, and decentralizing the largely centralized AI infrastructure. However, Han said:

“The future of decentralized AI, as currently assumed by many in the crypto industry, is not guaranteed – in fact, the future of the AI ​​industry is still largely undecided.”

Despite the negative outlook, many AI tokens have recently outperformed Bitcoin (BTC) and major stocks like Nvidia and Microsoft. Coinbase attributes this to market sentiment built on the broader crypto market and supported by relevant AI news headlines.

The crypto AI narrative is likely to be further reinforced by the continued development of the crypto market and the advanced AI sector. However, Coinbase suggests that driving “meaningful adoption” of AI requires more than just decentralization.

It should be noted that the AI ​​ecosystem is currently in its infancy and needs to at least “understand the underlying business narrative” and ultimately provide a viable alternative to today's crypto assets.

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Vitalik Buterin, the founder of Ethereum, who praises Coinbase's suggestion for meaningful progress in the crypto AI sphere, recently said that AI can be useful in eliminating errors buried in the code.

In the year On February 19, Buterin shared his excitement about the AI-powered audit to identify and fix buggy code in the Ethereum network, describing it as a “big technical risk” for the network.

According to Crypto.com data, AI tokens have a total capitalization of $51.18 billion as of March 8. These tokens serve AI-based projects, applications, and services, such as decentralized AI marketplaces, AI-powered trading algorithms, and AI-driven decentralized organizations to name a few.

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