What Are AI NFTs: The Beginner's Guide

NFTs have been all the rage for the past year as the popularity of these digital tokens, along with cryptocurrencies, saw buyers across the world shelling out millions in a burgeoning crypto market. The trend has become part of a large shift in technology that has seen the emergence of the initial iterations of the metaverse and the Web 3.0, where non-fungible tokens play a crucial role.

The first generation of NFTs, and the one the majority of us will be the most familiar with, has focused on key properties such as ownership, authenticity, uniqueness and transfer. However, rapid developments in the field of artificial intelligence are now opening the doors for applications to be extended to areas like blockchain technology and unlocking new layers of potential in the form of AI NFTs.

That’s thanks to AI models like GAN’s (Generative Adversarial Networks), which are able to generate new content on its own once they have been trained with the right data set, making it an attractive technology to be paired with NFTs.

And with non-fungible tokens taking by storm industries like entertainment, sports, and luxury goods, the expectation is that the latest generation of NFTs will only set the bar even higher.

What is an AI NFT?

Let’s start from the beginning, with AI.

Artificial intelligence refers to a non-human model that is capable of solving sophisticated tasks and performing cognitive functions like learning, problem solving, reasoning and perceiving. In other words, AI makes use of computer technologies to try and mimic human intelligence. This technology has seen massive leaps forward in the last decade, becoming critically intertwined with many aspects of our daily lives. And although NFTs can be generated using artificial intelligence, the most promising trend right now is the integration of artificial intelligence within non-fungible tokens. They’re called AI NFTs.

An AI NFT is a non-fungible token embedded with a Generative Pre-trained Transformer 3 (GPT-3) language model prompt as part of its smart contract. This type of intelligent NFT is not only intelligent but comes with other properties like animation, interactivity and many other generative capabilities still emerging.

How are AI NFTs different from traditional non-fungible tokens?

First-generation NFTs have basic properties; they’re unique, indivisible, immutable and digitally scarce. Another feature is that NFTs act as a certificate of digital ownership over the underlying asset they represent, allowing its authenticity and provenance to be proven at all times.

But for all its great benefits, traditional NFTs are still largely associated with static assets, that is virtual items that cannot evolve, such as images and GIFs. Think of some of the best-known NFTs like the CryptoPunks or the Bored Ape Yacht Club series. They’re wildly popular (and extremely expensive), but at the end of the day we can safely say that these NFTs don’t do much.

AI NFTs, on the other hand, bring generative evolution into play. An intelligent NFT can, for example, create new content on its own and integrate dynamic experiences into its smart contact as a result of its self-learning abilities. The more an NFT is in contact with a given environment or user, the more it can pull data and build knowledge. As such, these types of tokens are not only intelligent, but also upgradable, dynamic and scalable. Imagine an NFT that can adapt to your conversations and react to your moods, evolving alongside you to create increasingly more complex tokens.

That’s the technology behind some up and coming projects (we will get into it in just a second) that aim to marry AI with the promise of blockchain technology to enable the perpetual upgrading of underlying technological structures.

How Can An AI NFT be used?

As we just saw, injecting artificial intelligence capabilities into NFTs can open the doors for unique and personalized experiences in a way that other technology has not been able so far. This is an experiment that is starting to see some big names getting involved.

The first mover in this field has been Alethea AI, a Mark Cuban funded project, which allows users to embed AI animation, interaction, and voice synthesis capabilities into NFTs. Alethea refers to its intelligent NFTs as iNFTs and explains that its unique AI protocol “gives creators around the world a mechanism to create interactive and intelligent NFTs, build communities and intellectual property around their favorite characters, and democratize access to powerful Synthetic Media tools.”

And look no further than the project’s own slogan “Give your NFT superpowers” for a full picture of what can be done with this new range of non-fungible tokens. In fact, Alethea has managed to sell its first iNFT, an AI-powered avatar called “Alice,” for a staggering almost $478,00 via a Sotheby’s auction held last year.

Alice is different from not just a regular NFT but also from traditional virtual influencers, which are typically created and managed by humans, as this NFT is capable of autonomously simulating human speech and interaction in real-time. Alice is even able to lip sync to perfectly match the speed of the conversation. As explained by Virtual Humans, a platform dedicated to news about virtual influencers, “while she may not be an influencer, this type of virtual being breaks the boundaries of what we previously considered to be an AI, NFT, or virtual human—she’s all three”.

As with many other forms of emerging technology, the number of use cases for intelligent NFTs is unimaginable. Brands might be interested in dipping their toes and experimenting with these tokens to seize other benefits of artificial intelligence for the purposes of:

  • having novel ways producing and delivering content
  • reaching new audiences
  • detecting new trends
  • enable real-time reaction and adjustments to market factors like stock levels and prices

Injecting AI capabilities into NFTs represents a new technological frontier that extends to many capabilities.

Soon, this type of NFTs could become a more familiar sight to users who will find themselves interacting with tokens infused with language skills, meaning they can strike up conversations and interact with people no matter the setting.

A newly-released NFT project promises to do just that. Built on the Ethereum blockchain, Fuzzle is an AI-powered NFT that has the capability to carry on conversations about politics, dating, religion, or even crypto. These AI NFTs, also referred to as “living NFTs”, are the brainchild of blockchain gaming company Gala Games in partnership with Endless AI and while still far from perfect, they are the first examples of what, when combined, blockchain technology, artificial intelligence and gaming can bring to the table.

Despite the novelty of intelligent NFTs, the use of artificial intelligence is not new in the blockchain space.

AI is already being used to generate original music, art and virtual wearables, to name just a few use cases. In fact, AI art NFTs have been dubbed ‘the next big thing’ in crypto and the last few years has seen the emergence of successful AI based art galleries and AI artists, including Eponym and Botto. If you’re interested in knowing, check out our Guide to Generative Art.

Some of these projects are attempting at making a transition into the metaverse by using AI to turn users’ portraits into interactive 3D avatars in virtual worlds.

Sensorium Galaxy, for example, relies on artificial intelligence to power its virtual DJs in the metaverse, opening the doors for limited experiences that users can have when it comes to listening and co-creating music.

Benefits of AI NFTs

To think of why AI NFTs can be a gamer changer, we have to imagine what the future might look like. A tall order, we know, but let’s assume that the evolution of the online world will lead us all into more interactive and richer experiences. Right now, we spend on average seven hours online, but much of the information flow can feel one-sided since the majority of us won’t be content creators but rather mere consumers of content.

This is set to change as more blockchain-based platforms, like the metaverse, emerge and bring interactivity changes to the content creation dynamic. Users in these settings will find new ways to connect with what is important to them, enabling a more participatory way of living digitally.

One of the key attractions of an AI NFT is that these types of tokens is that they leverage deep learning methods in areas such as computer vision, speech analysis and language to unlock an entirely new level of experience for users where they are increasingly involved as AI NFTs can react and respond to any form of human input.

AI capabilities can be further incorporated into the building blocks of digital infrastructures, for example, like NFT marketplaces, which leads to artificial intelligence being part of the whole NFT life cycle.

Apart from some of the aspects mentioned, the merging of non-fungible tokens and AI offers a platform for experimentation and many more outcomes can be expected as the technology evolves.

Bottom Line

AI NFTs (also known as Intelligent NFTs) are, for now, more an experimentation vehicle than a fully realized digital product. But they're already providing a glimpse into what the future of blockchain technology can achieve together with the capabilities of artificial intelligence. And, if anything, that future sure looks promising.

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