Some 1000 Crypto Companies Are Exploring AI: Here Are 3 Challenges & 3 Benefits

by Murtuza Merchant, Benzinga Staff Writer
June 7, 2023 10:23 AM | 2 min read |
Zinger Key Points
  • AI can transform crypto with enhanced security, streamlined smart contracts, and novel decentralized apps.
  • The nascent AI-crypto market grapples with standardization issues, high expenses, and regulatory ambiguity.

There are currently over 1,000 crypto projects that are using artificial intelligence (AI) in some way, according to Coinbase COIN.

The market capitalization of crypto projects directly developing AI models on the blockchain, applying AI to decentralized applications, or solving for AI-related issues is still fairly low at only 0.07% of the total across all tokens.

However, the vast majority of these projects are still in the early stages of development.

Also Read: Coinbase CEO's War Cry After SEC Sues Crypto Exchange: 'We'll Get The Job Done'

The report, titled "At the Intersection of AI and Crypto," found that there are a number of challenges that are hindering the growth of the AI-crypto market. These challenges include:

  1. Lack Of Standards: There is currently no standard way to build or deploy AI models on the blockchain. This makes it difficult for developers to build interoperable applications and for investors to evaluate the potential of AI-based projects.
  2. High Costs: The cost of developing and deploying AI models on the blockchain is still relatively high. This makes it difficult for small and medium-sized projects to compete with larger, more established projects.
  3. Regulation: The regulatory environment for AI-based projects is still unclear. This is making it difficult for investors to assess the risks and potential rewards of these projects.

Despite these challenges, AI has a lot of potential:

  1. Improve the security of blockchain networks: AI can be used to identify and mitigate security threats, such as DDoS attacks and smart contract vulnerabilities.
  2. Make smart contracts more efficient: AI can be used to automate tasks that are currently performed manually, such as contract verification and dispute resolution.
  3. Create new decentralized applications: AI can be used to create new decentralized applications, such as decentralized finance (DeFi) applications and non-fungible token (NFT) marketplaces.

The AI-crypto market is still in its early stages, the report concluded. But it has the potential to be a major growth area in the years to come.

Now Read: After Binance, SEC Accuses Coinbase Of 'Acting As Unregistered Broker' In Lawsuit

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