Introduction

Bitcoin, the first cryptocurrency, appeared in 2009. The widespread use and development of cryptocurrencies (DeFi) began in 2013. Decentralisation, anonymity, security – this is just a small list of advantages of cryptocurrencies over centralised currency (fiat). Also cryptocurrencies usually have high liquidity, which is ensured by the interest in it. DeFi owes all these advantages over fiat to blockchain, a decentralised network.

Blockchain is a chain of blocks with encrypted information. It has no single control panel, not even its creator. Only the community has all the power. This systеm allows technology to evolve in accordance with the demands of the audience.

An example of technology development can be smart contracts with the automation of processes, and now blockchain is of interest to many IT specialists. For example, from the development of quantum technologies and artificial intelligence. Not surprisingly, this has led to the integration of artificial intelligence into cryptocurrencies. 

Artificial intelligence (AI) is an autonomous systеm with algorithms of actions aimed at solving tasks for which a human is needed.

The advantages of AI and cryptocurrencies have led to the creation of cryptocurrencies that function on AI algorithms. But every AI model has different algorithms, as well as different goals and principles. And how can finance be related to AI?  This is what our article will be about.

History and development of AI in cryptocurrency

AI models are created to perform tasks that only a human could do. For example, processing and analysing data, this “skill” (rather ability) allows to create predictions based on analytics. Not only automation is the difference between AI and search engines or WEB 2 programs.

AI and blockchain are not interconnected, moreover, they cover different areas, but that doesn’t mean they are opposites. Their mutual integration can bring benefits to both blockchain and AI:

The first cryptocurrencies built with AI in their code appeared in 2017. The network was called Render Network and the network token was called RNDR. Now it is clear that it is not worth making the main bet on cryptocurrencies with artificial intelligence. After all, out of more than 160 such projects at the moment, only 20 are really worthy of attention. 

 Technologies and applications of AI

The ability to process data has led to machines learning how to predict prices. This has been made possible, thanks to machine learning. Analytics that relies on facts and experience – retrospective analytics, also called predictive analytics. But that’s not the only capability of AI.

But what exactly is machine learning? It is a method of creating AI algorithms. For example, a computer is shown 100 different tables, the computer “sees” some common features and remembers them. If there are 1000 samples, the computer will “understand” better. This is exactly what is done when creating trading bots to automate trading.

Algorithms for predicting cryptocurrency prices are not 100% accurate, but they are also trustworthy. After all, they rely on regularity rather than emotion or “survivor’s error”.

When it comes to countering fraud, we can immediately think of smart contracts. Usually, they are made by humans, so there is a risk of error due to human error. In addition, there is even a fraud method based on smart contracts. Smart contracts were created for security and automation of the transaction process: Once certain conditions are fulfilled (the seller and the buyer agree on them in advance), the transaction is automatically executed. But if smart contracts are created by artificial intelligence, with fraud protection, cyber security will become several levels higher.

But unfortunately, machine learning can’t teach AI to identify cryptocurrency that has been used to fund crime. However, our AnyExchangeBest exchange service will do a great job with this. After checking on AML, you will get a report about all your cryptocurrency, we can even check some individual coins. Besides, you don’t have to worry about your personal data, as our exchanger doesn’t collect it.

 Advantages and features

Artificial intelligence will be able to increase the efficiency of trading companies as it will be able to make deals instantly. Many brokerage companies claim that if 80% of deals are completed in 1 second, it is a bad result, but 99%+ is a good result. Without automation of trading processes this is impossible.

Even in mining AI will find its application. Even before transactions are sent to the pool, it will be able to check the liquidity of their senders and block illiquid transactions from being included in the blockchain.

AI analyses data faster and more accurately than humans. The processing of large volumes of data and virtually unlimited customisation of algorithms make AI an ideal assistant to a trader, in any DeFi sphere. 

But if you have your own clear strategy or you believe that only a trader and only he or she can make deals, you need to know the current cryptocurrency rate. You can find out the current exchange rate on our website AnyExchangeBest. By the way, if you are making a profit, we can exchange your cryptocurrency for fiat, make a money transfer to a card or cash by courier directly to your door, even if you are abroad. All you need to do is place an order.

Nowadays, decentralised applications (dApps) work on the basis of the Ethereum blockchain. Yes, the very network that brought smart contracts and is trying to automate everything possible.

 Popular projects and initiatives

 Fetch.ai

Fetch.ai is a decentralised cryptocurrency project based on the Ethereum blockchain, AI, and machine learning. Its native token, FET, helps to trade, find smart contracts, and optimise the energy systеm.

It has existed since 2018, and despite a price drop in 2019-2021 and 2022, its market capitalisation in 2024 was $1.89 billion. Its goal is to form a new digital economy. Its AI model is based on open source code, which allows it to

Analytics algorithms are based on predicative modelling, i.e. they predict future events based on past events. These algorithms try to identify patterns and how some events affect others. This is a prime example of the application and consequence of machine learning.

Agents can create new business models, negotiate and close deals on your behalf. You only need to click one button to launch them, not modify existing code.

Oasis Network

Oasis Network is a Proof-of-Stake, AI-based Tier 1 blockchain with a native ROSE token. Its main goal is privacy and scalability.

Privacy wants to make users anonymous, but in a way that makes their interactions with each other accessible.

Proof-of-Stake protocol and execution of smart contracts are independent of each other. This allows the creation of decentralised applications with improved data security. Also, the protocol has high throughput and hence low fees. The ecosystem is ideal for WEB 3 applications.     

As we can see, AI in tandem with blockchain influences even the development of WEB 3. What to say about markets!

 Impact on the market and economy

We’ve already said that smart contracts written by AI will be free of errors, mistakes and mistakes. This is true, because artificial intelligence, by definition, does not make mistakes. But if you create an AI whose code will have settings aimed at fraud and theft of cryptocurrency, what can prevent it?! Such fraud is possible, because such a scheme was very popular with fraudsters even before the emergence of AI-powered cryptocurrencies. But cryptocurrencies and blockchains have an open code, so it will be possible to check and find out whether this AI model is fraudulent or not. However, are all crypto-enthusiasts programmers who will be able to understand the code? But the AI will be able to understand it. 

Besides, we should remember that AI algorithms have a positive impact on the development of cryptocurrencies. 

All these facts say that AI will affect the cryptocurrency market – extremely positively. Their implementation in the installations of miners will help to check the liquidity of all wallets and transactions in the pool of unconfirmed transactions. There will be faster and better tracking of sub-sanctioned person wallets, etc.

The concept behind this blockchain innovation that enables financial freedom is this:

AI is the compliance controller of all rules, especially the legality of all smart contracts. But unfortunately, the concept with order and all the perks is still quite far from being realised. But if you want to become financially free, the AnyExchangeBest service will help you. 

On our service you can find out the current exchange rate and get all the advantages of a cold wallet – anonymity and unhindered access to your coins and tokens. And all the advantages of hot: fast exchange of cryptocurrency to fiat. What’s more, you can order cash delivery anywhere in the world on our website! We will gladly make a money transfer to our client.

 Future and prospects

Despite all the pluses, the technology has not escaped criticism and is also subject to the minuses of cryptocurrencies. For example, volatility, and sometimes low liquidity. Incidentally, the price of many (if not all) AI cryptocurrencies fell in the second quarter of 2024. AI algorithms cannot predict the market with 100% accuracy. 

And there is nothing to say about the grey area of the legal aspects of DeFi. Artificial intelligence will only complicate this. As many countries don’t trust AI: Italy (member of G7, EU, NATO and one of the leading countries in the world) banned Chat GPT-4 in 2023.

It’s hard to give accurate predictions, as the IT field is also evolving and AI is part of it. But the benefits of automating transactions are many, algorithms can be customised and analytics with AI is more accurate even now. Also, AI will be able to create norms for the right base of crypto, taking into account all the cases, precedents, successes and failures.

Even if most of the community is sceptical about such cryptocurrencies: Tokens can be integrated into almost any network, and if at least 10% of crypto-enthusiasts see prospects in this area – the sphere will develop. А 

Conclusion

Artificial intelligence was first mentioned in 1956, i.e. even before the first programming language and the Internet, much less cryptocurrencies.

With the help of machine learning, AI can be taught virtually anything. In cryptocurrencies, AI algorithms can bring huge benefits: Making mining easier and faster, finding favourable deals, etc. All the work will happen easier, but human involvement will be necessary.

However, I think the main benefit is fighting fraud and cybercrime. After all, if you load double human verification into the algorithm or make transactions using simplified double authentication – crypto will become more protected than it is now. And if we introduce the ability to challenge false transactions (such a function is already available in the Optimism network, but it is possible within 24 hours) – it will definitely prevent cryptocurrency from losing liquidity.

And if AI algorithms using the same machine learning are created with the purpose of stealing coins and tokens, bypassing the protection of other AI systems! Only a more advanced artificial intelligence will be able to resist such machines. Experts note that AI-powered cryptocurrencies are not very famous, but only for now. In addition, they are generally considered safer, because of the greater possibilities of autonomy and automation.

Also the legal and regulatory framework can solve this. If you create a programme that allows new AI to be created and machine learning to be used only with regulations and rights in mind, then laws will be enforced. But implementing it across the board will take time. And the public will view any restriction negatively.  

However, for the enthusiasts, note: Artificial Intelligence is not a panacea. There are jobs that people will simply refuse to trust to a robot rather than a human, regardless of AI development. The prospects and potential, though, are enormous.