Blockchain technology is undoubtedly one of the most disruptive and innovative technologies we’ve seen in the 21st Century. Prior to it, the idea that we could see currencies being issued and spent without the interference of a central bank was unthinkable. 2024 especially has shown us that crypto can soar to new heights.
Another disruptive technology has been artificial intelligence (AI), which has become especially prominent in the last few years. From ChatGPT to Alexa, AI has become a part of our daily lives and we are constantly pushing the boundaries of what it can do.
It comes as no surprise then that top crypto exchange Coinbase has taken a massive leap to embed AI in the crypto space by launching its first AI transaction on the platform.
Coinbase Takes an AI Leap
In a recent post to Twitter/X, Coinbase CEO Brian Armstrong announced that the site has completed its first transaction based solely on AI. This essentially meant that one AI program bought AI tokens from another.
“AI agents cannot get bank accounts, but they can get crypto wallets. They can now use USDC on Base to transact with humans, merchants, or other AIs. Those transactions are instant, global, and free,” the post said.
As Armstrong has explained, AI tokens are data strings that AI programs use to learn. Models like Chat-GPT essentially work by analysing large data sets of human language and their output is based on this. When an AI analyzes a data set on art styles, for example, it will be able to reproduce this art when prompted by a user.
Thus, the ability to buy these AI tokens from another program is a huge leap for AI and was made possible specifically using cryptocurrency. This is because, as Armstrong has explained, AI cannot open or operate bank accounts but they can with crypto wallets.
However, the ability to engage in commerce is a gamechanger for AI because it ups their capabilities significantly. We talk about Alexa and other AI assistants in our day-to-day lives but they are limited in what they can do for us. Alexa can add things to your Amazon shopping list but she can’t book your plane tickets for you. This is because AI programs aren’t designed to handle currency and no banks currently allow AI to operate bank accounts. But with crypto as a workaround, these programs can trade with one another, and even with other humans.
This shows one of the advantages that crypto has over fiat currency in that it is decentralized and thus, AI integration is easier. This development also comes only weeks after Armstrong advocated for AI models to be given access to crypto wallets.
He described it as them being able to participate in the economy and he believes that this will make them more efficient assistants for humans. Clearly, Armstrong is passionate about AI and its potential benefits for crypto users, especially in light of the growing use of the tech.
AI and the Crypto Space
We’re seeing AI being used much more in various fields but how is the crypto space taking advantage of this technology? So far, a few key examples stand out:
- AI-Focused Tokens: As many of us know, you can make crypto about basically any idea and AI is not excluded. A number of AI projects have launched crypto tokens as a way to raise funds and the public has been enthusiastic about this. A look at current crypto presales will show various AI project tokens listed and they usually go on to great successes. 2024 has been especially good for the presale scene and it is not unusual to see these projects raise millions before they even hit exchanges.
- AI-Based Trading: Crypto users have embraced bots over the years to make their trading process easier and AI has found itself in the mix. Several bots exist in the market that automatically make trades based on pre-set market conditions such as tokens hitting certain price points. Some bots have been designed to simply trade based on strategies that will maximise profits and they are also becoming more popular. You also have traders turning to AI tools like Chat-GPT to predict the next big token or what price swings major assets will see. Overall, AI models are finding a lot of use as trading assistants for crypto investors.
- AI-focused Blockchains: Blockchain ecosystems are always having to undergo changes, whether it’s switching protocols, changing names, and so on. Making these major decisions usually involves an internal decision from the team behind it or having the community vote. Now, we’re seeing more blockchain networks outsource decision-making to AI. These include directly asking AI models for advice or having AI baked into the backend. These AI programs analyse the ecosystem and the state of the industry and offer suggestions based on this.
- AI-Generated Assets: While it is certainly easier to create a crypto or an NFT than it is a fiat currency, technical know-how is still a barrier to entry for many. This is all changing with the advent of AI-generated assets. A number of resources have popped up that allow consumers to instantly create NFTs using AI models. This means no coding and no complex process. Over time, we can expect to see this being used for more blockchain-based assets, which will only make the market more robust.
An AI-Crypto Future
This development from Coinbase is a small step in the direction of greater AI-crypto collaboration. If AI programs are able to trade crypto assets easily, they will be able to, as the company’s CEO has explained, participate in our economy. This means buying plane tickets, paying bills, and so on. Many fiat-based establishments might not be ready to make this leap but the crypto sector seems all too willing and ready.
We can expect more experimentation with this concept over the next few months, and even a rollout of services that Coinbase users (and soon others) can enjoy.