The biggest crypto exchange in the US is giving a warning in regards to the artificial intelligence (AI) narrative within the digital asset space.
In a new report titled “Crypto’s AI Mirage,” Coinbase analyst David Han says that many AI-focused altcoins are likely in an unsustainable hype cycle due to the excitement surrounding AI industries.
“Our contrarian view is that the value potential for many AI tokens may be overstated as a result of broad attention on the AI industry, and that many AI tokens may lack sustainable demand side drivers in the short to medium term.”
While AI-focused altcoins may be “decentralized” on a blockchain, Han argues that decentralization in and of itself isn’t enough to out-compete already-existing AI solutions in traditional, centralized industries, both from a business and a regulatory standpoint.
Han notes that centralized projects also have the advantage of typically having a faster and more concise development process.
“Crypto’s role in AI does not exist in a vacuum – any decentralized platform is competing against existing centralized alternatives and must be analyzed in the context of broader business and regulatory requirements. Thus, supplanting centralized providers purely for the sake of ‘decentralization’ is
insufficient, in our view, to drive meaningful adoption. Generative AI models have existed for a handful of years, and already retain a certain level of decentralization due to market competition and open source software.
A recurring theme throughout this report has been to acknowledge that crypto-based solutions, while often technically feasible, still require an enormous amount of work in order to reach feature parity with more centralized platforms – and said platforms are not going to remain stagnant in the interim. In fact, centralized development is often faster than decentralized development due to consensus mechanisms, which can pose challenges in a fast-evolving field like AI.”
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