The Problem

Artificial Intelligence has been at the forefront of the financial markets in 2023 and 2024. Both in global equities, as well as in Crypto, have AI-related companies and projects outperformed other sectors. The renewed hype surrounding AI has primarily been driven by the popularity of 'generative' AI. Tools such as Midjourney and ChatGPT help users generate text or 'fake' images from text or speech prompts, potentially saving users time by outsourcing simple tasks. First launched in 2022, ChatGPT's development has significantly accelerated since, and text and images created by ChatGPT and other AI platforms have drastically improved in quality. The advantages of generative AI are obvious - the time needed to write texts can be decreased and people can use tools such as Midjourney to speed up design processes by generating images. At the same time, generative AI poses threats. It can be very hard to distinguish 'real' / hand-written text from AI-generated text and 'fake' images and videos from real images and videos. This can be a problem, as fake images are now often used to deceive the public in believing things that did not happen. AI-generated content is widely used to spread misinformation, misleading people to act or think in a certain way. In Crypto, and especially DeFi, generative AI is often used by inexperienced teams to generate fake images and write technical documentation. These images and texts are subsequently used to ensure investors of the legitimacy of a project, deceiving them to believe a project is more advanced than it actually is. Teams may also use AI-generated images to present fake 'Work in Progress' pictures, or ChatGPT to write fake technical details. As such, generative AI poses a risk for investors looking to pick genuine cryptocurrency projects. Through AI-generated content, unexperienced project owners mislead investors into thinking they are investing in 'the next big thing'.