$TAO & Crypto AI: What You Need to Know
Bittensor: Incentivizing Decentralization of AI
It’s a bloody day in the markets, with BTC outflows spooking the participants and bringing down majors and smaller tokens alike. Through this all, some tokens in the AI space have reared their heads and look to be already recovering…
Bittensor’s TAO, currently the #1 AI token, has quickly recovered from today’s marketwide selloff, at one point up some ~15%. There’s a lot to unpack when it comes to the possibilities between crypto and AI, and Bittensor is no exception. The protocol aims use blockchain to incentivize the decentralization of AI production, an important effort.
Keep reading to learn more about Bittensor ⬇
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Introduction
With the recent explosion and increase in the popularity of AI, many have come up with different theses as to where AI and crypto intersect. These innovations hold the potential to revolutionize various aspects of our digital lives, from managing digital assets to preserving intellectual property and combating fraud. Notably, this convergence has given rise to two prominent trends:
The integration of AI with blockchain infrastructure, like Render ($RNDR), Akash ($AKT), or Fetch.ai ($FET).
The emergence of protocols incentivizing the production of machine learning intelligence, like Bittensor ($TAO).
Blockchain’s previous AI applications largely concentrated on infrastructure, enabling AI/ML model storage and GPU rentals. This led to trends like token-incentivized reinforcement learning, zkML, and blockchain-based identity registries to combat deep fakes. Simultaneously, a parallel trend is gaining momentum: protocols incentivizing intelligence.
In this report, we delve into the intersection of AI and crypto, with a focus on Bittensor and the $TAO token, exploring their roles in the Peer-to-Peer Intelligence Marketplace and the rise of a Digital Commodity Marketplace.
Taking advantage of the most recent Revolution Upgrade that took place on October 2, we also provide a historical overview, sector outlook, competitive analysis, and insights into the value proposition of $TAO.
Overview
Bittensor is an open-source protocol with a core mission: to drive AI development through a blockchain-driven incentive structure. In this ecosystem, contributors are rewarded with $TAO tokens for their efforts.
Bittensor functions as a mining network, utilizing token incentives to encourage participation while upholding principles of openness and decentralization. Within this network, multiple nodes host machine learning models, collectively contributing to the pool of intelligence. These models play a crucial role in analyzing extensive text data, extracting semantic meaning, and generating valuable insights across various domains.
For users, essential functionalities encompass the ability to query the network for access to intelligence, engage in miners and validators for $TAO token mining, and oversee their wallets and balances.
Bittensor’s network relies on contributions from a diverse range of stakeholders, including miners, validators, nominees, and consumers. This collaborative approach ensures that the best AI models rise to the top, enhancing the quality of AI services offered by the network.
The supply side has two layers: AI (Miners) and blockchain (Validators).
Miners within the Bittensor network host AI models and make them available to the network, with their success being determined by the quality and performance they deliver.
Miners are compensated with $TAO based on the intelligence they contribute to the network (although this depends on the specific task at hand).
Top-rated models are in higher demand and result in more revenue for miners.
Validators serve as evaluators within the network. They assess the quality and effectiveness of AI models and manage user requests. This way, validators rank models based on their performance for specific tasks, helping consumers find the best solutions. The more accurate and consistent their evaluations, the more they earn in rewards. Similarly, inconsistent evaluations can result in penalties, ensuring that validators maintain high standards.
Validators are incentivized with $TAO to rank miners based on their “intelligence contribution”.
Validators are also responsible for routing inputs to produce the best output. This is achieved by forming coalitions between Miners (models) that complement each other (subnetworks).
On the demand side, developers can build applications on top of Validators, leveraging (and paying for) use-case-specific AI capabilities from the network.
Nominees are individuals who hold $TAO tokens and actively support specific validators by delegating their tokens to them. This delegation helps validators garner more support and rewards. Nominees themselves earn rewards for their participation in this process. If a validator underperforms or if a nominee believes there’s a better option, they can shift their support to another validator.
Consumers are the end-users of the AI models provided by Bittensor. They can range from app developers integrating AI capabilities into their applications to chatbot users seeking high-quality responses.
Consumers prioritize receiving accurate and valuable answers.
Developers, in particular, choose validators they believe best meet their requirements to ensure the delivery of top-notch AI services to their users.
The product of coordination between the stakeholders listed above results in a network that promotes the best models for a given use case. With anyone able to experiment, it’s hard for closed-source businesses to even compete
If you’re finding this information useful, you can access our full Bittensor Analyst Insight for FREE.
Our full 50+ page report goes over the intricacies of the Bittensor protocol, how Crypto and AI may intersect, the case for $TAO, and more.
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