At the end of 2022, ChatGPT became a major sensation for its innovative use of artificial intelligence (AI). By simply entering a brief text prompt, you can ask this AI chatbot to write just about anything, and it can do it in seconds.
Revolutionary technology is so powerful that Microsoft (MSFT 0.07%) is now investing billions of dollars in it.
While many people are trying to figure out how to harness the power of ChatGPT, is it any wonder that crypto industry innovators are also experimenting with it? There could be many more examples in the months to come, but the one that really stands out right now involves Polygon (MATIC -5.27%) and its experimentation with AI technology for the non-fungible token (NFT) market.
NFTs and the AI revolution
What Polygon has in mind is the launch of AI-powered avatars using a new technology called CharacterGPT. Once these avatars are created, they can be transformed into NFTs that live on the Polygon blockchain.
That’s a lot to unpack, but the gist can be boiled down to this: you type in a text prompt for the type of avatar you want to interact with online, and the AI system that powers CharacterGPT will create that avatar for you. you on the fly.
In an example scenario from CharacterGPT that you can find on YouTube, you can type “an old man as a grizzled prospector who wants to retire”, and the AI immediately creates a digital representation of an 1850s man dressed in of western equipment. This avatar would then be able to answer your questions from the perspective of a Californian prospector looking to retire.
Image source: Getty Images.
Where things get interesting is when you consider how this technology could completely reshape the NFT market. Since the launch of CryptoPunks in 2017, the NFT market has gone through two main phases.
Phase 1 was NFT as digital art. You were basically buying a very expensive JPEG file. Phase 2 was the rise of the NFT utility, in which buyers received some added value from NFT, such as entry into an online VIP club.
Phase 3 of the NFT market could be the introduction of the AI-powered avatar. The added value here would be the ability of this intelligent avatar to answer any question, from any source, from a particular point of view. Imagine a character from your favorite sci-fi movie that you could customize to your specifications and interact with in the metaverse.
There are a lot more creative people than me, so this is probably just scratching the surface of what’s possible. It could dramatically change the game here for NFTs and turn Polygon into the undisputed market leader in NFTs.
People often ask why they would want to buy an expensive digital image of a bored monkey. They might be more interested in a smart NFT that could answer questions on a favorite topic.
What investors need to know
This Polygon project is so interesting because this crypto has already partnered with a number of very creative brands including Starbucks (SBUX 0.24%) and Nike (NKE)who can probably think of many interesting applications.
Another Polygon partner is waltz disney (SAY -0.15%). Imagine what Disney could do with this kind of AI technology, the kinds of immersive experiences it could create for families, and the new digital experiences it could create for people around the world.
Additionally, the company behind CharacterGPT – Alethea AI – is backed by billionaire investor Mark Cuban. In the past, Mark Cuban has invested in Polygon, and he’s exactly the kind of person who could build grassroots support for AI-powered NFTs.
ChatGPT was just the beginning. Based on its initial fame and success, it is easy to see many other applications of AI technology. For Polygon, it’s not so much about overtaking ChatGPT; it’s about creating new uses for generative AI technology.
AI and cryptography can be a very powerful combination. I’m bullish on any crypto looking for ways to do this, and in particular Polygon, which has the partnerships and the technology to do this in a very big way.
Dominic Basulto holds positions in Polygon. The Motley Fool holds positions and recommends Microsoft, Nike, Polygon, Starbucks and Walt Disney. The Motley Fool recommends the following options: January 2024 Long Calls at $145 on Walt Disney, January 2025 Long Calls at $47.50 on Nike, January 2023 Short Calls at $92.50 on Starbucks, and January Short Calls 2024 at $155 on Walt Disney. The Motley Fool has a disclosure policy.