How to profit from the AI boom in crypto 💥

GM! Welcome to Milk Road PRO – your weekly dose of crypto knowledge that unpacks more than a freshly dropped, open-source large language model. 🤖

Today, we stay at the forefront of the market by revisiting the intersection of crypto and AI.

Q1 2024 was like the perfect storm for AI tokens — everyone was bullish, and prices soared higher than a kite in Chicago. 

But, as with all good things, the bubble had to burst. And burst it did! 🫧

The prices of these tokens have dropped more than -50% from their all-time highs. 

But hey, don't cry over spilled crypto! Instead, let's see this as an opportunity to reassess the potential of AI in the crypto space.

Looking at this chart, you might be scratching your head and asking: 

Was it all just hype, or are we on the brink of a resurgence for AI tokens?

P.S. To be fair, Ethereum was also down -18% during the same period. So, it’s not just the AI tokens feeling the blues. 🎷

In order to answer the question above, today we’re diving into:

Our goal is to dive deep into the AI market to uncover if we can capitalize on it. 

Spoiler alert: We believe there’s a profitable path ahead. 🤑

However, this opportunity is a bit different from what we're used to. But don't fret—we'll explain why this is a different ballgame and how we plan to approach it.

If you're a passionate investor in cutting-edge technologies like blockchain and AI, this report is a must-read for you. 👓

WHAT IS THE CURRENT STATE OF AI? 👀

Since the debut of ChatGPT in November 2022, we've cruised past the initial AI hype bubble.

Throughout 2023, despite the overall market stagnation, AI remained a hot topic.

Interest in AI continues to heat up, even though market enthusiasm has decided to take a nap. But maybe that’s just in crypto, because Nvidia has been booming, up ~60% in the last 6 months. 🚀 

Nvidia's been the golden child of the AI era, thanks to its production of those oh-so-essential GPUs.

As AI adoption increases, so does the demand for Nvidia's products, ultimately driving up stock prices. 📈

So, the question is: Who else will benefit from this AI boom, and how?

To put it simply, AI are 'machines' trained on vast amounts of data, crafted by skilled engineers.

It's very likely that the entire world will eventually hop on the AI bandwagon to stay competitive. 

AI brings massive efficiencies, making it a no-brainer for businesses aiming to maintain their edge.

Think of it this way. 

If AI performance matches that of your $5,000-a-month assistant but costs only $50 a month, will you still keep your assistant?

P.S. AI won't make you a coffee though—not yet at least! 😂

So let's take a look at the crème de la crème of AI models and see how they excel in various areas:

The best performing models are: 

Don’t worry if you’re not familiar with the names. The key takeaway is that the top-performing AI models come from tech giants! 

Is it a coincidence? Nope. These companies have access to:

This is crucial to understand. The combo gives major tech giants a significant advantage and makes them tough to compete with.

There are rumors that each new version of ChatGPT causes the downfall of hundreds or even thousands of startups. 😔

But don't be discouraged. We believe there's something that could level the playing field. We'll discuss that shortly. 

First, let's revisit whether we need AI on the blockchain in the first place.

DO WE REALLY NEED EVERYTHING ON THE BLOCKCHAIN? 🤔

We'll kick things off by exploring the unique advantages that blockchains offer and why an increasing number of companies are jumping on board. 🚂

Then, we'll try to explore if there is some parallel with AI on blockchains. 

Stick with us, as it's crucial to understand that:

While some innovations naturally fit on the blockchain, others, though appealing, don't align with the practical needs and preferences of most users. 🤖

Although at one point, we all believed everything needed to be onchain. ⛓️

Reality is that most people don't care about that. Values like trustlessness, transparency, censorship resistance, and self custody aren't strong enough arguments for the majority of people. 

They won't use products or services simply because they're on the blockchain. Instead, they focus on user experience, quality, and price. 💲

The crypto industry learned the hard way that blockchain adoption will be driven by companies (supply side), not users (demand side). 

What do we mean by that? Products won't be built on the blockchain because users want them, but because it's more profitable for companies to build on the blockchain. 

We can see that blockchains are being adopted by major companies like Stripe, PayPal, BlackRock, and Visa. Why? 

Because blockchains offer better infrastructure alternatives. 

For example, PayPal isn't launching its own stablecoin on Solana because users demand it. They're doing it to reach a larger market and offer cheaper, faster transactions.

If they didn't, someone else would, and they'd lose their edge. ⛸️

This marks a shift in blockchain adoption from the user side to the supply side.

Okay, that makes sense. Now, let's shift our focus back to AI.

To invest wisely in AI tokens, we must create a robust thesis. 

A key element of this is figuring out who will spearhead AI x blockchain adoption: users (demand side), companies (supply side), or maybe neither?

So let's try to figure that out quickly before we dive into exploring some AI tokens.

Do users need AI on the blockchains?

Let's think about it for a second. Most people use AI to answer questions or ask AI to perform specific tasks. 

So, what do they really care about?

They want quick and accurate answers while spending as little as possible. In broader terms, it all comes down to the same things: user experience, quality, and price.

And so, will AI on the blockchain improve any of that? No. Users don't need AI on the blockchain. ⛔

Fine, let's examine whether the supply side can benefit from blockchain implementation.

Is there an analogy similar to PayPal? In other words, are there any incentives for Google or Microsoft to start using blockchains for their AI models?

Again, no.

Are there any catalysts that might change this?

Possibly. Certain regulations and compliance requirements could push major AI players to use blockchain. However, it's still an open question and seems to be years away.

But what is clear is that people want to invest in or speculate on the AI boom regardless. 

And beyond buying stocks of Nvidia or big tech companies like Microsoft or Google, their options are very limited. 

Therefore, AI tokens are a promising avenue for people to capitalize on this trend. 🚀

So, even without a robust thesis, there might still be ways to capitalize on this trend after all. 🤔

But before we explore some options, we want to explain the use case when AI and blockchain integration make perfect sense.

WHERE AI MEETS CRYPTO ➕