Beware of crypto grifters looking to crash the AI party

Beware of crypto grifters looking to crash the AI party

The cryptocurrency industry has seen its fair share of scams and controversies, and now it seems that crypto hustlers are attempting to capitalize on the buzz surrounding artificial intelligence (AI). In this article, we’ll delve into the emerging trend of combining AI and crypto, shedding light on the dubious business models that attempt to merge these two unrelated fields.

While it’s still in its early stages, it’s becoming increasingly evident that this new wave of hustle will introduce a slew of crypto tokens aiming to ride the AI hype. As history has shown us during previous hype cycles, when all you possess is a crypto thesis, it may seem tempting to apply decentralized databases to everything. In this emerging landscape, we can discern three distinct, albeit questionable, flavors of the “AI plus crypto” trend.

  • AI Token Access: The first, and perhaps the least problematic, concept involves using cryptocurrency tokens to access AI models or services, similar to the way ChatGPT operates. This pitch often exploits the confusion surrounding the use of the term “tokens” in both AI and crypto contexts. In AI, tokens represent a unit for processing, such as a word or common syllable within a large language model (LLM). Although some AI services accept cryptocurrency payments, crypto tokens do not possess any unique qualities that make them particularly suited for interacting with LLM tokens. Nevertheless, be prepared to encounter entrepreneurs trying to convince you otherwise.
  • Data Marketplaces: Another questionable approach attempts to revive the “data is the new oil” meme from the 2017 crypto ICO boom. In this case, grifters promote tokens that claim to reward individuals for contributing their personal data to AI training models, often referred to as “data marketplaces.” This concept was flawed in 2017, and it remains so in 2023. If you have an online presence, your personal data is essentially public knowledge, making it difficult to monetize, whether through blockchain or any other means. Beware of anyone suggesting otherwise.
  • AI and GPT Tokens: Finally, expect to see tokens emerging with “AI” or “GPT” in their names (yes, we already have those!). Many cryptocurrency projects prey on the excitement of individuals who make decisions based on superficial pattern associations. Rest assured that some will exploit this tendency to the fullest.

For genuine AI developers, none of these “AI plus crypto” tokens make logical sense. However, the cryptocurrency industry has a history of generating subpar business models, hoping that venture capitalists will be either gullible or greedy enough to repackage them. This often involves rebranding existing crypto businesses in an attempt to offload tokens onto unsuspecting retail investors.

For instance, consider the case of Helium, originally founded as a wireless network for the “Internet of Things” trend in the early 2010s. In 2019, with support from crypto funds, Helium pivoted to create a crypto-based model that aimed to function as a “grassroots telco.” Users could purchase physical hotspots and earn network tokens (HNT) for operating them. However, the project’s reputation suffered due to questionable economics for hotspot owners and evidence of spoofing.

Another example is Worldcoin, backed by Sam Bankman-Fried and led by Sam Altman, which aimed to scan irises in exchange for crypto tokens. This project purportedly sought to kickstart a basic universal income experiment and create an “identity network based on proof of personhood.” However, it raised concerns about the security of biometric data and its treatment of vulnerable populations.

In summary, it’s crucial to remember that cryptocurrencies primarily offer a censorship-resistant store of value that transcends borders, essentially functioning as accounting software. AI, on the other hand, strives to mimic and enhance human thought. These two technologies exist at opposite ends of the creativity spectrum for a reason.

FAQ’s:

What is the relationship between cryptocurrency and artificial intelligence (AI)?

Cryptocurrency and AI are two distinct technologies with different purposes. Cryptocurrency primarily serves as a decentralized store of value and a means of conducting borderless transactions. AI, on the other hand, aims to replicate and augment human thought and cognitive processes.

Are there legitimate use cases for combining cryptocurrency and AI?

While there can be innovative applications at the intersection of cryptocurrency and AI, many projects in this space are speculative and lack practical value. It’s essential to scrutinize the legitimacy and feasibility of such ventures.

What are “data marketplaces” in the context of crypto and AI?

“Data marketplaces” refer to platforms that claim to reward individuals for contributing their personal data to AI training models through cryptocurrency tokens. However, the practicality of monetizing personal data in this way is often dubious.

How can investors differentiate between legitimate projects and crypto-AI scams?

Investors should conduct thorough research, scrutinize the project’s team, assess the technology’s feasibility, and consider the value proposition. Beware of projects that promise quick and unrealistic returns without a clear use case.

What should individuals be cautious of in the crypto-AI space?

Individuals should exercise caution when encountering projects that exploit buzzwords like “AI” or “GPT” in their names or claims. Additionally, skepticism is warranted when personal data is involved, as its monetization through crypto tokens can be highly questionable.

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About Victor Dsouza

Victor Dsouza is Crypto Journalist. He is keen to write about crypto tokens, crypto presale, you can follow him on twitter and LinkedIn.

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