What results from the combination of cryptocurrencies and artificial intelligence?

A bitcoin that appears to be conscious and codes itself in the manner of Japanese haikus? Unfortunately not, though a new class of crypto coins will see trading worth billions of dollars.

With the introduction of bots like ChatGPT and Bard, machine fever has spread to the cryptoverse, where interest in tokens linked to blockchain projects involving artificial intelligence (AI) is soaring.

According to data firm Kaiko, average daily volumes for the largest coins, including SingularityNET, Fetch.AI, and Render, surpassed $1 billion in early February, reaching a two-year high.

The breadth of blockchain-based services for AI applications includes payments, trading models, machine-generated non-fungible tokens, and marketplaces built on the blockchain where customers can pay developers in cryptocurrencies.

According to Eric Chen, CEO of decentralized finance platform Injective Labs, “this is exciting, it’s one of the first times machine-learning applications are being brought on-chain in a big way,” but he also cautioned that “the digital asset space is no stranger to hype, speculation, and overzealous expectations.”

The investment returns have been good thus far. The utilization of OpenAI’s ChatGPT in February contributed significantly to the 60% increase in the CoinDesk Indices Computing Index, which comprises tokens related to artificial intelligence.

Although trading volumes decreased in March, they are still higher than the sector’s long-term average, and numerous tokens have beaten bitcoin with returns that range from 150% to 780% so far this year, according to Kaiko analyst Dessislava Aubert.

A good example of this increased investment is CryptoGPT, which this month raised $10 million in funding and allows users to sell their data to AI firms.

Despite this year’s excellent returns, the AI-crypto industry is still small; CoinGecko’s AI-classified coins have a combined market valuation of $2.7 billion, a tiny fraction of the $1.2 trillion global crypto market.

Although trading volumes decreased in March, they are still higher than the industry average over the long run, and many tokens have beaten bitcoin, with year-to-date gains ranging from 150% to 780%, according to Kaiko analyst Dessislava Aubert.

Additionally, there has been more investment in the field, with instances like CryptoGPT, which this month secured $10 million in funding and allows users to sell their data to AI firms.

Nevertheless, despite this year’s great gains, the AI-crypto industry is still a small niche. The aggregate market valuation of CoinGecko’s AI-classified coins is $2.7 billion, a tiny fraction of the $1.2 trillion global crypto market.

Market participants cautioned that some ventures might be riding the AI wave without a long-term strategy, and given how young the field is, winners will probably be few and far between.

According to Ryan Rasmussen, a research analyst at Bitwise, “there is a place for AI and blockchain to see some synergy, but I don’t know how many of the current projects are using it well.”

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Investors are hopeful that they can cut through the hype and find projects that will help solve some issues, attract more users to blockchain products, and ensure some reliable profits because of the promise of AI-connected crypto apps.

According to Pranav Kanade, portfolio manager at VanEck, “some specific AI projects may actually end up being the ‘killer app’ for public blockchains.”

According to Kanade, the emergence of decentralized computing networks may soon enable users with extra graphics processing unit (GPU) capacity to share it with other users so that resource-demanding AI learning models can be implemented.

Similar to this, some market observers believe that blockchain-based marketplaces provide a simple means for system developers to increase their market share and for smaller users to obtain cutting-edge AI technology.

One of the largest such marketplaces is SingularityNET, whose token’s market worth increased this year from $52 million to nearly $414 million.

Blockchain could also be used as evidence to distinguish between artificial intelligence and human-generated information in future use cases.

According to Todd Groth, head of index research at CoinDesk Indices, many investors are aware they might be in it for the long haul but are hoping a few big wins would make up for the risk.

“You’re investing in projects, many of which will never be completed,” he continued. You only need a handful of names that will succeed.