Is AI in a Similar Bubble to the Last Crypto Bubble?

Stability AI‘s CEO, Emad Mostaque, has cautioned that the burgeoning industry of artificial intelligence could soon inflate into an unprecedented bubble. Drawing parallels to the infamous dot-com bubble of the late 90s, Mostaque anticipates an inflated hype around AI that could lead to unreasonably high stock prices.

During a conversation with UBS analysts, he predicted that this could result in “the biggest bubble of all time.” His fears are centered around the burgeoning hype surrounding AI, which he believes could surpass even the notoriety of the cryptocurrency bubble. Mostaque has referred to this anticipated phenomenon as the ‘dot AI’ bubble, which he warns has not yet begun, as reported by CNBC.

The Last Crypto Bubble

A reminiscent event was the Crypto Bubble of 2017. Long Island Ice Tea, a relatively unremarkable company known for its sugary beverage, renamed itself to “Long Blockchain Corp.,” causing its shares to skyrocket by 400% over their original price, despite no specific blockchain integrations. The company was later delisted from NASDAQ due to fraudulent investor statements, with its market cap falling to $36m from its original $138m.

What stands out about this story is that it marked the beginning of the final pump-and-dump of the blockchain, not the pinnacle of the blockchain bubble. Compared to the deceitful tactics of 2022’s blockchain swindlers, the company’s endeavor seems modest, amounting to a $138m scam involving a sugary beverage. These scammers didn’t rely on NFTs, wash trades, or ICOs. They didn’t have a Superbowl ad or resort to election fraud. Yet they could sustain their scam for a significant period, arguably outdoing Pets.com in reality distortion.

The Dot-Com Bubble of 1995-2000

Reflecting back on the dot-com bubble, it was a period of speculative investments in internet-based businesses that led to a significant increase in equity market values. The Nasdaq index, dominated by tech, witnessed a five-fold increase from 1995 to 2000. However, the tide turned when investors began to question the viability of these businesses’ models, leading to a two-year bear market.

This period culminated with the majority of dot-com stocks crashing, causing the Nasdaq index to drop by 76.81% from its peak. As a result, trillions of dollars’ worth of investment capital disappeared, and it took 15 years for the Nasdaq to recover, reaching its peak again on April 24, 2015.

Is this time different for AI?

Investors are eagerly looking for the next breakthrough as Artificial Intelligence continues to make headlines. Over one million users now use Stability AI’s Stable Diffusion, which has attracted more than $100 million from investors keen on its impressive text-to-image capabilities. Moreover, AI applications are now an integral part of many aspects of life, including social media, transportation, healthcare, and finance.

In addition to Stability AI’s offerings, generative AI tools from companies such as OpenAI and Google are making substantial impacts. It’s reported that generative AI could contribute as much as $4.4 trillion per year, and the entire AI industry could be worth up to $15.7 trillion by 2030. Despite this potential, Mostaque claims that AI still has a considerable journey ahead.

He states that AI isn’t yet ready for large-scale implementation in critical sectors like banking, despite its inherent value. Safely integrating AI into crucial systems will require more time. Still, Mostaque remains optimistic about the long-term prospects of AI. He estimates the total investment required to be around $1 trillion and believes that AI could prove to be more significant than 5G in providing access to knowledge.

In Mostaque’s view, the future will see powerful AI models running locally, rendering human coders virtually obsolete. He also predicts dire consequences for companies that fail to leverage AI properly, citing Google’s parent company Alphabet as an example. Alphabet lost $100 billion in a single day following technical issues with its Bard chatbot.

Companies like Google, Microsoft, and Elon Musk’s X.AI are vying for supremacy in generative AI, fueling heightened expectations. Nevertheless, Mostaque advises banking institutions like UBS to avoid hastily integrating AI tools like ChatGPT into their business processes. While he acknowledges the enormous potential, he emphasizes prudent investment in AI.

Mostaque’s warning reminds us that the tech industry has a history of riding the waves of hype through boom and bust cycles, as witnessed in the crypto industry. As we transition into the ‘Dot AI’ era, we should prepare for potential turbulence.

Are there any AI crypto coins that can prove profitable?

Investors looking for promising returns may want to cast their attention towards AI crypto projects, irrespective of the speculated bubble in the industry. One such project making waves is yPredict.

yPredict, a top-tier AI crypto, offers a sophisticated AI ecosystem that assists cryptocurrency traders in making insightful decisions. It achieves this by providing a series of features.

Among its offerings, yPredict uses AI to provide trading signals that give traders crucial price information. These innovative signals, driven by predictive algorithms, include the particular coin to be traded along with the suitable entry and exit prices. After receiving this advice, traders can then perform the recommended trades on a cryptocurrency exchange platform.

yPredict goes beyond providing trading signals, offering sentiment analysis as another critical feature. This tool allows traders to identify which coins are currently trending. To further assist traders, yPredict also offers automatic technical analysis generated by AI.

This platform proves particularly beneficial for technical traders as it points out important indicators to consider, providing a useful shortcut. The yPredict dashboard also automatically identifies potentially lucrative chart patterns, thus supplying traders with additional insights. According to a tweet from yPredict’s official Twitter account, their initial model is available for free for a limited period.

The yPredict ecosystem is powered by its native AI coin, YRED. All transactions within yPredict are conducted using YRED, marking its function as a utility coin. It covers expenses related to acquiring predictive tools like trade signals and market sentiment data. You can find a guide on how to purchase YRED tokens here.

Currently, yPredict is running a presale campaign for YRED, which has already raised $2.3 million. Early investors can buy each YRED token for $0.09. However, this price will increase to $0.01 once the current presale stage ends. Post-presale, YRED will be listed on exchanges with a price tag of $0.12 per token.

You can purchase YRED tokens here.

For more AI crypto project with high potential, check out our guide here.

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