The intersection of artificial intelligence and cryptocurrency has been evolving rapidly. While many people in the crypto space have only recently taken notice of AI’s impact, especially with the rise of AI-powered agents on social media, the reality is that crypto AI has been developing through multiple waves over the years.   

In the past few months, AI-powered agents have flooded Twitter, responding to posts and engaging users. However, the future of AI in crypto is not about spam bots or generic AI replies; it is about utility-based functional agents that serve real purposes. These AI agents are designed to trade assets, manage decentralized finance (DeFi) protocols, reduce risk, and generate content for platforms like Bankless. The shift from simple response bots to AI agents performing meaningful tasks is a sign of progress in the crypto AI space. 

One standout example is Billy Betts, an AI agent that manages its own $100,000 book and places bets on NBA games. It operates using blockchain infrastructure, proving that AI can integrate with crypto in a practical and profitable way. This evolution highlights the growing demand for AI models that provide real-world utility rather than just automated engagement.  

Crypto AI has gone through multiple investment cycles. In 2022 and 2023, there was significant skepticism about whether open-source AI models could compete with well-funded centralized AI labs like OpenAI, Meta, and Anthropic. The general belief was that these large companies had access to enormous amounts of computing power, making it nearly impossible for smaller players to catch up.  

However, recent breakthroughs, such as DeepSeek, an open-source reasoning model that allows AI to search the internet have changed that narrative. Before even Anthropic developed a similar capability, DeepSeek had already demonstrated that open-source AI can innovate at a high level. This has fueled optimism that crypto-integrated AI models can not only survive but thrive in competition with centralized AI labs.  

The key advantage of open-source AI in the crypto world is that developers can take existing models, modify them, and build entirely new applications. While OpenAI and other centralized players will likely continue leading in foundational model development, the open-source community is excelling in creating specific AI applications, especially those that integrate with blockchain technology.  

A major question in the industry is where the value will ultimately be captured within the crypto AI stack. In traditional AI, companies like OpenAI and Meta dominate because they own and control the most sophisticated models. However, open-source AI is rapidly catching up. Meta, for instance, has open-sourced models that, while slightly inferior to OpenAI’s, are good enough for developers to build useful applications on top of them.  

This dynamic mirrors what is happening in crypto AI. The open-source nature of blockchain makes it an ideal environment for experimenting with AI-powered applications. AI models tailored to specific tasks, such as an AI sports commentator or a market analysis bot, can be tokenized, allowing them to be monetized in ways traditional AI applications cannot. The flexibility of blockchain-based AI means that developers can explore countless niche applications, from AI-driven betting platforms to automated customer service agents in decentralized applications.  

Crypto also offers unique financial incentives for AI innovation. While AI development is expensive, blockchain-based funding mechanisms, such as token sales and decentralized autonomous organizations (DAOs), provide capital to projects that might not receive support in traditional tech environments. This enables smaller teams to compete with big tech firms by leveraging community-driven funding models. 

Despite the exciting potential of crypto AI, the broader AI industry, particularly in Silicon Valley, remains largely separate from the crypto ecosystem. AI engineers in traditional tech companies are highly paid and focused on building cutting-edge models, often without considering the advantages of integrating with crypto. 

The challenge for the crypto AI sector is attracting top AI talent from traditional tech firms. Many AI engineers still view crypto as a risky or speculative industry, which has been worsened by negative publicity surrounding meme coins and past market crashes like the FTX collapse. However, as crypto AI projects continue to prove their real-world value, the perception is beginning to shift.  

One of the most compelling reasons for AI developers to consider crypto is the sheer scale of opportunities it provides. While Silicon Valley’s AI sector is dominated by a few massive companies valued in the tens or hundreds of billions of dollars, crypto AI allows for the creation of numerous smaller, highly profitable projects. Instead of a few giant AI companies controlling the space, crypto AI fosters a decentralized ecosystem where many independent developers can succeed.  

As the AI and crypto industries continue to converge, we can expect to see further innovation in AI-powered applications on the blockchain. Instead of simple chatbots, AI will increasingly take on roles that require reasoning, decision-making, and financial management. 

Blockchain's open-source nature makes it an ideal environment for experimenting with new AI-driven business models. Developers can build AI agents that manage digital assets, analyze markets, provide personalized recommendations, or even automate entire financial operations. The ability to tokenize AI applications means that they can be funded, owned, and governed in decentralized ways, something that is not possible in the traditional AI world. 

For investors and developers looking to enter the crypto-AI space, the key factors to consider are:  

1. Proprietary AI models or datasets  

2. Strong business integrations with blockchain infrastructure  

3. Experienced founders who understand both AI and crypto  

With these elements in place, the next wave of crypto AI applications could reshape the landscape of both industries, making AI more accessible, useful, and financially sustainable in the decentralized world. The shift from speculative meme coins to utility-driven AI applications on the blockchain signals a maturing industry ready for mainstream adoption.