DeepSeek and AI-Based Cryptocurrencies: What You Need to Know Right Now

Artificial intelligence (AI) technology continues to reshape the world, and the cryptocurrency market is no exception. Recently, the DeepSeek project has emerged, which experts believe could revolutionise the concept of AI-linked tokens. Let’s explore what this means for investors and why it’s worth paying attention to today, beyond the news about NVIDIA [ticker:NVDA] shares, which dropped after the emergence of a Chinese competitor to OpenAI.

1. DeepSeek is More Than Just an Algorithm. Why Does This Matter?

DeepSeek is an advanced AI platform developed in China. Unlike many open-source projects (such as Bittensor [ticker:TAO], where the code is accessible to everyone), DeepSeek uses proprietary datasets that are not publicly available. This is akin to Google [ticker:GOOGL] or Apple [ticker:AAPL] creating an AI trained on their secret databases.

What Does This Change?

- Tokens that rely on open algorithms (e.g., Fetch.ai [ticker:FET], SingularityNET [ticker:AGIX]) may lose out in terms of prediction accuracy.

- If DeepSeek proves its superiority, investors may start shifting capital into projects compatible with such "closed" AI systems.

2. Energy Efficiency vs Mining: Why Old Models May Become Obsolete

Many AI tokens (e.g., Render Token [ticker:RENDER]) are tied to mining—a process where users rent out their GPU power to train neural networks. The problem is that this requires enormous energy consumption.

DeepSeek claims that its technology reduces energy consumption by 60-70%. If this is true:

- GPU mining will become less profitable, and tokens dependent on it may lose value.

- Projects using alternative methods (e.g., optimised algorithms or specialised chips) will benefit.

3. Regulators: The Hidden Threat to AI Tokens

DeepSeek is a Chinese project, which creates two key risks:

- Conflict with the West. If China starts promoting DeepSeek as a national AI product, regulators like the SEC (US Securities and Exchange Commission) may ban related crypto projects on security grounds.

- Centralization. AI tokens are often marketed as "decentralized," but if DeepSeek becomes a monopolist, their value could turn into a bubble.

A Past Example: In 2021, the SEC banned several projects due to their ties with Chinese companies. This led to a short-term crash in tokens like Tether (USDT).

Who Will Win, and Who Will Lose?

✅ Potential Winners:

- Oracles (e.g., Chainlink [ticker:LINK]). These systems feed real-world data into the blockchain. If DeepSeek starts working with them, demand for tokens like LINK could rise.

- Low-fee blockchains (e.g., Solana [ticker:SOL], Sei [ticker:SEI]). AI transactions require speed and low costs, thus their tokens could soar.

- Privacy networks (e.g., Secret Network [ticker:SCRT]). If DeepSeek uses anonymous data, demand for encryption will increase.

❌ Potential Losers:

- Tokens reliant on outdated mining (e.g., Render, Akash Network [ticker:ACT]).

- Projects without unique data (e.g., older versions of Bittensor).

What Should Investors Do?

- Review your assets. Do your AI tokens have access to exclusive data or technology? If not, it’s worth reconsidering.

- Stay informed. Regulators could intervene at any moment, thus subscribe to channels that track such risks.

Conclusion

DeepSeek is not just another AI. It is a potential catalyst for the redistribution of capital in the crypto world. Those who understand its impact early on can avoid losses and uncover new opportunities.

P.S. DeepSeek is not just a new player in the AI field, it is a technology that will directly impact many AI tokens.

Glossary for Beginners:

Mining is the process of using computational power to support a blockchain.

Oracles are services that feed external data (e.g., currency rates) into the blockchain.

Gas are transaction fees in a network.

SEC stands for the US Securities and Exchange Commission, a regulatory body.

Decentralization is the absence of a central authority (a core principle of cryptocurrencies).