How to Use AI in Crypto in 2024

As projects on the intersection between artificial intelligence (AI) and cryptocurrencies are popping here and there, let’s check out which of them are really worth attention.

In this guide, we are going to explain how you can benefit from the simplest AI-powered instruments to advance your understanding of the cryptocurrency market and kickstart your Web3 career in development and marketing.

Using AI in crypto: Highlights

AI and blockchain are among the most impressive modern technologies of data processing and transfer. As such, there are plenty of opportunities for them to be integrated with each other.

• Usage of artificial intelligence in crypto has been in the spotlight since the inception of OpenAI’s ChatGPT in Q4, 2022 and GPT-4 model launch in 2023.
• Multiple altcoins are promoting themselves as “AI cryptos,” but only a few of them are really using AI and ML in their underlying projects.
• While investing in “AI cryptocurrencies,” crypto enthusiasts should be super careful as they are increasingly volatile.
• Besides trading, newbies in Web3 can learn how to write smart contracts or even audit them in an automated manner.
• AI chatbots based on the GPT-4 model are good at writing content in plain English: Web3 newcomers can easily learn about crucial technical concepts in blockchain and even start creating content themselves.

Learning basic techniques of using AI in crypto might be a smart bet for users with various backgrounds and levels of computer science knowledge. At the same time, the concept of crypto AI remains heavily overhyped: Many tokens aggressively use it in marketing campaigns to lure new retail investors.

What is AI?

Artificial intelligence or AI is the technology that allows computers to simulate the processes of human intelligence. AI also represents the specific field of study in computer science (CS) that develops and analyzes the behavior of intelligent machines and their usage in problem solving. In some cases, “AI” is used to describe these computational machines as well.

For non-CS users, the AI sphere is interconnected with neural networks that are sophisticated machine learning models designed to emulate the interactions between the neurons of the human brain.

In both digital and “real-world” segments, artificial intelligence can fuel an impressive number of use cases. Powered by GPT's large language model, ChatGPT by Sam Altman's OpenAI is a chatbot that represents a textbook example of an AI tool that can be accessed even by users with no previous coding expertise.

What is OpenAI’s ChatGPT?

ChatGPT is a new-gen language model developed by OpenAI, co-founded by Sam Altman. It is part of OpenAI's GPT-3.5 architecture, designed to understand and generate human-like text based on the input it receives. ChatGPT leverages deep learning techniques to provide natural language processing capabilities. That makes it highly versatile for a wide range of applications, from answering questions and generating creative content to assisting with research and automating tasks.

ChatGPT is the brainchild of Sam Altman, a prominent figure in the tech industry. Altman has played a key role in OpenAI's mission to advance artificial intelligence and make it more accessible.

ChatGPT's public release in late 2022 stole all the headlines in the media and caused the first-ever phase of AI euphoria in retail.

What are AI cryptos?

AI cryptocurrencies or AI cryptos are altcoins that are associated with the developments in artificial intelligence in some ways. Based on the market situation in Q4, 2023, we can identify three categories of what is called “AI cryptocurrencies” by the media.

1. AI cryptos: Technology. There are some blockchain systems that combine the usage of AI/ML and decentralization. For instance, Cardano-associated SingularityNET launched AI cryptos AGIX and SOPH as part of its experiments with Sophia The Robot.
2. AI cryptos: Fundraising. Other projects use cryptocurrency as a way to raise funds to fuel research and development activity in the AI segment. Vectorspace AI (VXV) is an example of this category of tokens.
3. AI cryptos: Marketing. The majority of AI tokens only use the narrative of AI in their marketing strategies. For instance, IMGNAI and some other beneficiaries of Q1, 2023, AI tokens rally.

Crypto enthusiasts can effortlessly find AI cryptos on large trackers. On CoinGecko, these currencies can be observed in the "Top Artificial Intelligence (AI) Coins by Market Cap" dashboard. 

In the "Categories" section, you can also see the dynamics of the entire segment. On CoinMarketCap, the relevant category is called "Top AI & Big Data Tokens by Market Capitalization,” displaying a broader number of assets.

AI in crypto in 2024: Best ways to use it

Here’s how AI-powered protocols, instruments and platforms can be helpful for cryptocurrency users with different levels of tech skills.

Trading AI cryptocurrencies

Buying and selling cryptocurrencies somehow associated with artificial intelligence is the simplest way to benefit from AI crypto mania. Just like with other types of altcoins, the user needs to open the position on the right phase of hype. Also, as AI cryptos are highly volatile, traders should not be too greedy.

In Q1, 2023, during the first and the hottest crypto frenzy, some AI cryptocurrencies rallied by 1,500% in a few days. Bad Idea AI (BAD), the favorite AI cryptocurrency of the Shiba Inu (SHIB) community, is the latest coin that managed to rally in this sphere.

To start trading AI cryptos, you need to check the corresponding category on trackers (“Top Artificial Intelligence (AI) Coins by Market Cap" on CoinGecko, or "Top AI & Big Data Tokens by Market Capitalization” on CoinMarketCap). Then, after choosing the cryptocurrency to buy, in the “Markets” dashboard, you can choose the most relevant trading pair on centralized and decentralized exchanges.

Mastering Web3 with ChatGPT

Instead of using search engines and info portals for information on Web3, you can always ask ChatGPT about all things crypto. As of Q4, 2023, its datasets are trained enough to provide comprehensive, detailed and correct answers on basic questions.

For instance, this is how it describes Cardano (ADA), the second largest proof-of-stake L1 blockchain:

Cardano is a blockchain platform founded by Charles Hoskinson, one of Ethereum's co-founders. It focuses on scalability, sustainability, and interoperability. Cardano employs a unique proof-of-stake consensus mechanism called Ouroboros, which enhances energy efficiency and security. It aims to provide a secure and transparent infrastructure for smart contracts and decentralized applications (DApps). Cardano's two layers separate the settlement layer (ADA cryptocurrency transactions) from the computation layer (smart contracts), enabling flexibility and preventing network congestion. Additionally, Cardano emphasizes peer-reviewed research and academic rigor to improve blockchain technology's robustness and reliability, making it a promising platform for the future of decentralized finance (DeFi) and more

We requested ChatGPT as follows: “Please explain to me the basics of Cardano in 100 words.”

However, regarding latest developments, its answers can either be too vague or incorrect due to the usage of legacy data. In some cases, ChatGPT provides the corresponding disclaimer. For instance, when asked about the deflationary status of Ethereum, the chat provided outdated information:

As of my last knowledge update in September 2021, Ethereum (ETH) was not deflationary, meaning there was no maximum supply cap like Bitcoin's 21 million coins. Ethereum operated on a different issuance mechanism, using a combination of block rewards and transaction fees to incentivize miners and secure the network. This meant that the total supply of Ether could continue to increase over time

As such, we strongly recommend using ChatGPT only for learning basic concepts, and not for developing processes and trends.

Writing smart contracts

At the same time, in software engineering, ChatGPT provides correct and detailed answers. For instance, here’s how it can help you master smart contracts engineering for EVM-compatible blockchains.

To check out this functionality, we asked ChatGPT to demonstrate a sample of an ERC-20 token (the most common token standard in EVM) for the Polygon blockchain: “Please write a sample of ERC-20 token on Polygon blockchain.”

In this sample, MyToken is the name of the ERC-20 token, while MTK is the symbol or ticker for the token. The constructor function initializes the token with an initial supply capped at 1,000,000 tokens and assigns them to the deployer's address. This contract inherits from OpenZeppelin's ERC20 contract, a widely used library for ERC-20 tokens.

This sample can be deployed to testnet or mainnet via modern development tools like Remix, Truffle, or Hardhat.

Creating content on crypto

Last but not least, you can express yourself and benefit as a cryptocurrency marketer with ChatGPT. It is perfect in writing streamlined texts on various themes regarding cryptocurrency, blockchain, decentralization, Web3 and so on.

To become a master of AI-generated content on crypto, you need to study prompts, i.e., standardized commands designed to create more detailed, sophisticated and accurate articles than those generated with simple questions.

For instance, let’s ask ChatGPT to explain the basics of Ethereum Virtual Machine (EVM) in this way: “Please explain the basics of Ethereum Virtual Machine in a less formal tone. Mention BSC, Tron, and Polygon.”

Think of the Ethereum Virtual Machine (EVM) as a big computer in the sky. It's not a real machine, but it's like a super-smart computer that lives on the internet. This computer can run programs called "smart contracts." These contracts are like little computer programs that follow rules and do things automatically when you send them some cryptocurrency, like Ether.

Now, Binance Smart Chain (BSC), Tron, and Polygon are like neighbors to Ethereum. They also have their own smart contract computers, but they work a bit differently. People build and run their smart contracts on these platforms, just like they do on Ethereum's EVM.

As such, ChatGPT just demonstrated the benefits of EVM and explained the basics of cross-blockchain compatibility in Ethereum-like blockchains.

Bottom line

Artificial intelligence can be used in crypto in multiple ways. It removes the need for specific tech skills even for junior developers and auditors, let alone marketers and content creators. Also, AI tokens, with their high volatility, should not be overlooked by spot and futures traders.