Artificial intelligence (AI) has been on the rise for years and it is hard to imagine the capital market without it as an important auxiliary tool. In this article, you will find out how the advent of artificial intelligence affects tading in the crypto sector and what the so-called AI tokens or AI coins are all about.

Our lawyers explain below what dangers AI tokens may entail for investors.

Artificial Intelligence – AI Coins – AI Tokens

While the crypto sector around blockchain technology was in the spotlight a few years ago, it is now the so-called artificial intelligence. This artificial intelligence ( AI) is characterised by its ability to act independently, with foresight and appropriately. In other words, it takes in information, processes it and stores it. This process makes it possible to achieve goals and solve problems.

A sub-area of artificial intelligence that is probably familiar to everyone is, for example, speech recognition. Alexa, Siri and Co. have long since found their way into the homes of millions of people.

Recently, AI has become capable of independently answering concrete questions based on the immeasurably large amount of collected data and creating entire texts for this purpose. There is currently a lot of hype about ChatGPT, which has set new standards in this regard. Recently, studies were conducted in the USA in which university exams were submitted to ChatGPT by professors for processing. The exams were passed with an average grade of C+ (equivalent to 3+).

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Legal issues arising from the use of artificial intelligence

In summary, the possibilities that such AI software as ChatGPT holds in store also inevitably lead to new legal issues. Among them:

  • Data protection: ChatGPT must comply with the provisions of the General Data Protection Regulation (DSGVO) and the Federal Data Protection Act (BDSG). This means, among other things, that personal data processed in the context of the use of ChatGPT must be protected and only used for legitimate purposes.
  • Liability: Since ChatGPT works as an automatic language model, errors and inaccuracies can occur that may lead to legal problems. In this context, the question of liability must be clarified if ChatGPT makes a mistake that causes damage.
  • Copyright: ChatGPT works with a large corpus of text that comes from various sources. It is important to ensure that the use of this corpus is in accordance with copyright laws to avoid possible infringement.
  • Transparency: When using ChatGPT, it is important to ensure that the user understands that they are dealing with an AI. Using ChatGPT for fraudulent or misleading purposes could result in legal consequences.
  • Regulatory requirements: In some cases, ChatGPT may be subject to certain regulatory requirements depending on the context in which it is used. For example, there may be regulatory requirements in the healthcare or financial services industries that need to be considered.

AI coins as a means of payment

Such groundbreaking developments will influence our future. This has long been recognised by well-known investors such as Microsoft, which invested a presumed $1 billion in early 2023 to get in on OpenAI, the company behind ChatGPT.

So what are the AI coins supposed to be good for?

Obviously, they can be used as a means of payment for possible paid versions of ChatGPT. Only those who own AI Coins can also use the artificial intelligence. The coins are thus the link between artificial intelligence and the blockchain that everyone knows by now and on which the AI is based.

Whether the AI tokens can prevail against the established cryptocurrencies such as Bitcoin, Ethereum and Co. as popular speculative assets remains to be seen.

AI tokens and the crypto market

It comes as little surprise that the run on ChatGPT and AI coins is also reflected in the crypto market. The evaluations show that there is apparently not one AI token currently showing a negative trend. If you look at the 30 best cryptocurrencies that are based on artificial intelligence, eleven of them have even more than doubled in price.

So the fact is that AI tokens are currently the all-dominant topic on the crypto market.

However, the question is: Are the price jumps sustainable developments or only due to the current hype?

The experts mainly agree that the price development of AI coins is probably only a snapshot. The topic of artificial intelligence is currently receiving a lot of attention, which is why the old trader’s wisdom should also apply in the crypto sector:

There is no such thing as bad news. It only depends on the perspective.

Consequently, the price jumps of the AI tokens are currently based on quite normal speculation. Rising demand is driving prices. And the current demand is probably largely based on the ChatGPT issue.

AI tokens as an advisable investment?

Experienced analysts immediately draw parallels to the “party” around Metaverse from autumn 2021. The Metaverse coins performed outrageously well within a very short time. Projects that were completely unknown until then multiplied their prices.

Unfortunately, some time later it became apparent that the vast majority of those coins failed completely and ended up as the infamous house of cards.

Of course, we cannot judge whether the AI coins will suffer the same fate. What is certain is that there is currently a maximum run on this sector, which naturally cannot last forever. Bitcoin and other cryptocurrencies have also shown that the swings in both directions, upwards and downwards, can be enormous. Therefore, it can be assumed that in a few months the pushed prices will drift into normal waters.

Nevertheless, it can be assumed that there will probably be some blockchain and AI projects that will develop positively – and thus also the prices of AI coins. The trick will be to identify these and not to bet on the vast majority of those coins that will fail.

AI coins and AI tokens: our advice

Whether in the crypto sector or the traditional capital market, these are the key points to bear in mind:

  • It should never be bought blindly. A deep understanding of cryptocurrencies must exist before venturing into AI tokens.
  • Don’t put all your X in one basket. In other words, diversify your investments and don’t back just one horse.
  • The crypto market in particular is subject to great fluctuations. It is not uncommon for investors to take over, which can have a huge impact on values. Microsoft’s entry into OpenAI was a recent (positive) example of this
  • No regulation offers great risks. As quickly as AI coins come onto the market, they can disappear from it. Even presumably reputable platforms like FTX have been hit out of nowhere.
  • The cyber world cannot be decoupled from the real world either. Political and economic developments thus also influence the crypto market.

AI-Coins and AI-Tokens: Our lawyers advise you on risks!

The Herfurtner law firm informs and advises you on investments in the crypto sector. So if you are planning to invest in AI-Coins, we will be happy to advise you on possible risks. We are available to you with a free initial consultation nationwide and in German-speaking countries. Use our contact form and our lawyers will get back to you promptly.