Like any cyclical market, another crypto bull run is on the horizon. Exactly when it will arrive is hard to tell, but analysts estimate it could happen by late 2023 or early 2024
In Web3, the bear markets are a time to build and innovate, and the quiet surrounding them tends to breed ingenuity and creativity. This bear market has been no different. Within this bear market period, two new tech sectors are paving the way to lead the next crypto bull run: Artificial Intelligence (AI) and tokenisation.
Social Media has already accepted that AI is going to change everything. AI applications already range from natural language processing (NLP), speech recognition, machine learning and generative AI, to name just a few.
While both such software does not use cryptocurrencies or blockchain, the hype around these apps has catapulted crypto traders to bet on crypto AI projects and AI-focused tokens as the next area of exponential growth.
The great potential of AI and tokenisation combined
Tokenisation refers to converting real-world assets into digital tokens on the blockchain. This enables fractional ownership, increased liquidity, and easier transferability of traditionally illiquid assets such as real estate, art or commodities.
The disruptive aspect of tokenisation is something many people and businesses have yet to grasp fully. Still, its impacts could be just as momentous as AI. Its potential to transform the global economy is both fantastic and terrifying.
AI and cryptocurrency didn’t take long to ally themselves through AI crypto tokens. This new digital asset class uses blockchain technology and AI together.
They fuel AI-based projects or apps, such as decentralised exchanges or markets, services for creating images or texts or investment protocols based on AI.
Compared to cryptocurrencies like BTC or ETH, which are the native assets of a blockchain, AI tokens are created as part of a platform that is built on an existing blockchain network.
AI algorithms have the potential to significantly enhance the security of crypto tokens by detecting anomalies or predicting potential threats before they occur and make real-time adjustments.
This can help investors and traders mitigate risks during periods of volatility and even save enterprises millions of dollars in damages and lost revenue due to data breaches.
In addition to security, crypto traders can benefit from AI-powered algorithms that enable enhanced trading strategies. Compared to humans, AI can analyse large volumes of data much quicker and identify patterns and trends in cryptocurrency markets – from token prices to social media sentiment and news articles.
This facilitates traders to develop more sophisticated and profitable trading strategies, potentially leading to increased market efficiency.
AI can also enhance DeFi lending and borrowing platforms by providing more accurate risk assessment models, optimising liquidity provision and automating various processes.
While AI can now process, optimise, and handle a human-like approach to problem-solving and processes at terrific scales. Tokenisation can provide the infrastructure to remove the limitations of trading previously illiquid assets.
The historical issue with valuable assets, be it gold, silver, gems, property, bonds or fine art, has always been finding a buyer.
It is not that people didn’t want the item; it was just difficult to find someone who could afford it; this can be a lengthy process through traditional methods.
Tokenisation removes this problem and fractionalises it, meaning anyone can buy a piece of a valuable asset for a relatively small investment within minutes on both centralised and decentralised exchanges; gone are the days of a lengthy buying process.
We have only just begun to understand the actual impacts AI and tokenisation will have on the world. Various factors, including regulatory changes, technological advancements, and investor sentiment, still influence the market, and these safeguards are likely to be needed further down the road.
For many, an interconnected and instantaneous world of AI and tokenised assets sounds like something from a high-science fiction book. However, people within the crypto community recognise the long-term opportunity of investments in both areas; what better time to test this theory than in the next crypto bull market?
By Mohammed Khashogji
Mohammed Khashogji founder and CEO of Project Nexus, the simple all-in-one tokenised real-estate, crypto & stocks app.