The recent surge in the prices of AI tokens, such as GPT-3, OpenAI and DeepMind, has been driven by a wave of irrational euphoria among investors and enthusiasts. These tokens, which represent the access to or ownership of artificial intelligence services and platforms, have seen their market capitalization skyrocket in the past few months, reaching billions of dollars.
However, this frenzy is not based on any solid fundamentals or realistic expectations of the future value of these tokens. Rather, it is fueled by hype, speculation and fear of missing out (FOMO). Many investors are buying these tokens without understanding the underlying technology, the challenges and risks involved, or the regulatory and ethical implications of AI.
In this blog post, we will examine some of the reasons why AI tokens are overvalued and why they are likely to crash soon. We will also provide some advice on how to invest wisely and responsibly in AI-related projects and assets.
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One of the main reasons why AI tokens are overvalued is that they are based on unrealistic assumptions about the potential and progress of artificial intelligence. Many people believe that AI is on the verge of achieving human-level or superhuman intelligence, and that this will create enormous value and opportunities for those who own or control AI. However, this is a misconception that ignores the limitations and difficulties of AI research and development.
AI is not a monolithic entity that can be easily measured or compared. Rather, it is a diverse and complex field that encompasses many subfields, applications and domains. AI systems can perform well on specific tasks or problems, but they are not generalizable or adaptable to new situations or contexts. AI systems also require a lot of data, computing power and human supervision to function properly and safely.
Moreover, AI is not a magic bullet that can solve all the world’s problems or create unlimited wealth. AI can also have negative impacts on society, such as displacing workers, increasing inequality, eroding privacy, undermining democracy, or causing harm or accidents. AI also faces ethical and moral dilemmas that require careful consideration and regulation. AI is not a neutral or objective technology, but rather a reflection of human values, biases and interests.
Therefore, AI tokens that claim to represent the access to or ownership of AI are not only misleading but also dangerous. They create a false sense of security and confidence among investors and users, who may not be aware of the risks and challenges involved in AI. They also create a distorted incentive structure that encourages short-term gains over long-term sustainability and social responsibility.
Why AI tokens are likely to crash soon.
Another reason why AI tokens are likely to crash soon is that they are subject to high volatility and uncertainty. The prices of these tokens are determined by supply and demand in the market, which can be influenced by various factors, such as news, rumors, emotions, trends or events. These factors can create sudden spikes or drops in the prices of these tokens, which can lead to panic buying or selling among investors.
Furthermore, these tokens are not backed by any tangible assets or guarantees. They are essentially digital tokens that rely on the trust and faith of the users and the community. If this trust is broken or eroded, the value of these tokens can plummet to zero. This can happen due to technical glitches, security breaches, hacking attacks, frauds, scams or regulatory actions.
For example, in 2017, a project called DAO (Decentralized Autonomous Organization) raised over $150 million worth of Ethereum tokens to create a decentralized venture capital fund that would invest in various projects using smart contracts.
However, a hacker exploited a vulnerability in the code and stole over $50 million worth of tokens from the fund. This caused a massive drop in the price of Ethereum and triggered a controversial hard fork (a split in the blockchain) to reverse the theft.
Another example is BitClout, a social media platform that allows users to buy and sell tokens that represent the influence or popularity of celebrities, influencers or public figures. The platform claims to be decentralized and powered by its own blockchain and cryptocurrency.
However, many critics have accused BitClout of being a scam or a pyramid scheme that exploits users’ data and money without their consent or knowledge. The platform has also faced legal threats from some of the celebrities whose names and images have been used without their permission.
Therefore, investing in AI tokens is a risky and speculative activity that can result in huge losses or even total loss of funds. Investors should be cautious and diligent before buying these tokens and should not invest more than they can afford to lose.
How to invest wisely and responsibly in AI-related projects and assets
While we do not recommend investing in AI tokens as they are currently structured and marketed, we do acknowledge that there are legitimate and valuable projects and assets related to artificial intelligence that deserve attention and support. These include:
Research institutions and organizations that conduct cutting-edge research on AI and its applications, such as universities, labs, foundations or NGOs. Companies and startups that develop innovative and useful products and services based on AI, such as software, hardware, platforms or solutions.
Communities and networks that foster collaboration and education on AI and its impacts, such as forums, blogs, podcasts, events or courses. Initiatives and movements that promote ethical and responsible use of AI and its benefits for society, such as standards, guidelines, principles or policies.
These projects and assets can be evaluated and invested in based on various criteria, such as:
The quality and credibility of the team, the vision and the mission behind the project or asset. The problem or need that the project or asset is trying to solve or address, and the value proposition or solution that it offers. The market potential and competitive advantage of the project or asset, and the traction or growth that it has achieved or expects to achieve. The social and environmental impact of the project or asset, and the alignment with the values and goals of the investors.
Investing in these projects and assets can be done through various channels and mechanisms, such as:
Donating or sponsoring to support the research or development of the project or asset. Buying or holding equity or shares in the company or startup that owns or operates the project or asset. Participating or contributing to the community or network that supports or benefits from the project or asset. Advocating or endorsing the initiative or movement that advocates or endorses the project or asset.
Investing in these projects and assets can also provide various benefits and returns, such as:
Gaining access to or ownership of the project or asset and enjoying its features or functions. Earning income or dividends from the profits or revenues generated by the project or asset. Learning from or collaborating with the experts or peers involved in the project or asset. Making a positive difference in the world by supporting a good cause or a noble vision.
AI tokens are a new phenomenon that has emerged in the crypto space, but they are not a reliable or sustainable way to invest in artificial intelligence. They are based on unrealistic assumptions and expectations about AI, and they are subject to high volatility and uncertainty. They also create a distorted incentive structure that encourages short-term gains over long-term sustainability and social responsibility.
Instead of investing in AI tokens, investors should invest in legitimate and valuable projects and assets related to AI that have a clear vision, a solid value proposition, a strong market potential and a positive social impact. These projects and assets can be evaluated and invested in based on various criteria, channels, mechanisms, benefits and returns.
By investing wisely and responsibly in AI-related projects and assets, investors can not only protect their funds but also support the advancement and improvement of artificial intelligence for the benefit of humanity.