How Can AI and Web3 Co-exist?

Technology is changing at breakneck speed. In 2021, everyone was going crypto crazy, with VCs funnelling enormous funds into blockchain startups. However, as the crypto winter cooled the market following a series of high-profile debacles, the crypto-hype died down almost as quickly as it came.

By the end of 2022, in the wake of the FTX collapse, web3 was on the ropes, and AI was lurking around the corner. The launch of several LLMs, namely Chat GPT and Bard, sent markets into a frenzy, and the once web3-friendly VCs increasingly turned their heads to AI.

Although web3 firms searching for funding may feel that AI has stolen their thunder, these two emerging technologies have incredible potential when used together. Let’s find out how AI crypto projects are leading the way in merging two of this century’s most exciting technologies.

Explosive Growth of AI: From Academic Niche to Mainstream Adoption

The evolution of artificial intelligence (AI) has been remarkable. From its beginnings in academic research to a slow permeation into data analytics and now with readily accessible AI tools, it's become an aspect of many of our daily routines.

AI's meteoric rise can be attributed to a confluence of factors. One is the burgeoning sophistication of AI algorithms. Neural networks, the building blocks of AI, have become increasingly capable of learning, adapting, and making complex decisions, enabling advancements in natural language processing, machine learning, and robotics.

Prior to the launch of Chat GPT, most people weren’t particularly interested in AI. We knew algorithms were making important decisions for us in the background when we shopped online or browsed Netflix, but their direct impact was hard to measure.

Open AI’s LLM changed everything. The world went AI mad, and it's now one of the most discussed topics by politicians in Washington and Beijing and everyday people at the dinner table.

AI Funding Erupts

The rise of AI isn't just fueled by scientific breakthroughs and technological advancements; it's also driven by a tidal wave of investment. Venture capitalists, tech giants, and even everyday people are pouring money into AI startups and projects.

• Venture capitalists invested a whopping $137 billion in AI startups globally in 2022, a staggering 145% increase from the previous year, according to a report from CB Insights. This figure is expected to continue climbing, with estimates reaching $225 billion by 2025.
• The stock market is reflecting the AI boom as well. Companies like NVIDIA, a leader in AI hardware and software, have seen their share prices skyrocket in recent years. As of October 2023, NVIDIA's stock price has increased by over 1,000% compared to five years ago.
• Big tech companies like Google, Microsoft, and Amazon are also major players in the AI game. Google alone spent over $31 billion on AI research and development in 2022, and Microsoft recently announced a $4 billion investment in AI chatbot developer Anthropic.

The wave of funding and speculation is reminiscent of the crypt bull market in 2021. And there’s been plenty of talk in the web3 community about how this redirection of funding has hit the industry.

Web3 Funding Sacrificed for AI?

In December 2022, $BTC crashed below $20k as the crypto winter reached its darkest moment. A combination of factors, including the FTX collapse, rising inflation, high interest rates, and arguably a shift towards AI, had hit the market hard.

Looking at the chart of Bitcoin (the largest cryptocurrency by market capitalization), we can see that an implosion followed its explosive rally in 2021. The crash resulted in plenty of speculation that suggested the cryptocurrency industry was finished, and it would be remembered as one of the greatest bubbles in the history of modern capitalism.

There’s no doubt that during the bear market, funding for web3 projects dried up, and plenty of funds were redirected to different sectors, including AI. However, forecasts of doom appear to have been misplaced as the crypto markets have rallied this year in tandem with the AI industry.

Bitcoin has returned over 140% in the past 12 months as its price has surged from $16k to $42k. Other notable cryptocurrencies and projects have experienced similar recoveries. Solana ($SOL) has returned an astounding 500% in the last year, and Ethereum ($ETH) has also rallied by close to 100%.

Market trends suggest that AI and crypto are already co-existing. But what does this partnership actually look like? Let’s find out by examining some of the leading AI crypto projects.

Top 3 AI Crypto Projects

As AI and blockchain technology evolve, they’re converging to create new and innovative possibilities. AI crypto projects are at the forefront of this convergence, harnessing the power of AI to enhance decentralized applications (dApps), optimize blockchain protocols, and empower users with greater control over their data.

1. Fetch.ai ($FET)

Fetch.ai is a pioneering AI crypto project that aims to revolutionise the way we interact with decentralized applications (dApps) and autonomous organisations. By embedding AI into its blockchain architecture, Fetch.ai enables dApps to learn, adapt, and respond to input autonomously.

One of the key features of Fetch.ai is its ability to create decentralized autonomous organisations (DAOs). DAOs are self-governing communities that operate on blockchain technology. They allow members to make decisions and manage assets in a transparent and democratic manner.

Fetch.ai's AI-powered DAOs can automate tasks, optimize resource allocation, and make data-driven decisions, enhancing the efficiency and effectiveness of these decentralized organisations.

2. Ocean Protocol ($OCEAN)

Ocean Protocol is an AI and crypto project that addresses the challenges of data privacy and monetization. Ocean Protocol creates a secure data marketplace where users can buy and sell data while controlling their privacy.

Ocean Protocol's decentralized data marketplace utilises smart contracts to facilitate secure and transparent data transactions. AI algorithms can be embedded into these smart contracts to automate data preparation, analysis, and modelling, providing valuable insights and generating revenue for data owners.

3. NetMind Power ($NMT)

NetMind Power is a decentralized platform where users access GPUs to train AI and machine learning (ML) models. The platform is built on the Ethereum blockchain and pools together idle GPUs from across the world.

GPU demand has soared due to the growth of the AI industry. These processors are critical for training AI and ML models in massive data sets, and demand is outstripping supply. NetMind leverages blockchain technology to create a system delivering GPU services to users.

The $NMT token is used as a medium of exchange on the platform and to reward those who add their GPUs to the network. This project uses blockchain technology to provide vital services to the AI sector and shows how these two technologies cannot only co-exist but also directly benefit from one another.  

Final Thoughts on AI and Web 3 Co-existing

The launch of Chat GPT sent the AI industry into a frenzy. Money from private investors and VCs flooded into AI projects, and established companies in the space, most notably NVIDIA, saw their valuations skyrocket. Although it initially appeared that AI would deal a fatal blow to an already beleaguered crypto industry, the opposite appears to be the case.

This year, the crypto market has rallied alongside AI stocks. The AI crypto projects that have gathered momentum this year show that AI can enhance blockchain technology and crypto can benefit AI researchers and engineers.