Grok appears to be driving a new wave of crypto speculation as over 400 inspired tokens appear.
Hype and narratives have a significant impact on market dynamics, and the cryptocurrency markets are no exception. The novelty and intricacy of this space render it particularly vulnerable to these influences. This susceptibility, combined with the rapid pace at which niche traders in the sector seek to exploit emerging trends, results in dramatic price fluctuations and the proliferation of fraudulent schemes.
In the most recent case, data from DEXTools reveals that over the weekend, 460 new cryptocurrency tokens emerged, drawing inspiration from Grok, a novel artificial intelligence (AI) chatbot. Despite lacking any direct affiliation with the AI project, these tokens have already amassed millions in market capitalization.
In this article, we delve into what Grok represents and elucidate the reasons behind the proliferation of tokens inspired by it.
What is grok ?
Grok is an artificial intelligence program designed to engage in human-like conversations. It’s the brainchild of xAI, a newly established company led by Elon Musk. This technology serves as Musk’s response to OpenAI’s ChatGPT, which has generated significant interest in the field of AI technology in 2023. The announcement of Grok took place on Sunday, November 5.
xAI boasts that Grok, inspired by “Hitchhiker’s Guide to the Galaxy,” is capable of providing answers to a wide range of questions, even those considered “spicy” and often declined by other chatbots, all while infusing a touch of humor. In their product announcement, xAI humorously cautioned users, “Don’t use it if you hate humor!”
At the time of writing, the AI model is only available via an early-access program restricted to a limited number of persons in the United States. However, at launch, it will be available to premium users of the Elon Musk-owned social media platform X for $16 monthly.
So why has a barely launched AI chatbot inspired 460 tokens in about 24 hours? Let’s dive in!
What’s Driving the Explosion of GROK Tokens?
The developers behind GROK tokens seem to be capitalizing on the significant interest in AI throughout 2023 and the influential presence of Elon Musk. Their goal is likely to encourage speculation and boost the value of these tokens, which don’t serve any other distinct purpose.
In 2023, AI has become a prominent narrative in the investment landscape, with startups securing substantial funding at billion-dollar valuations. Well-known entities like OpenAI and Anthropic have been at the forefront. For instance, in September 2023, Reuters reported that OpenAI sought a valuation of $90 billion, while Anthropic was valued at $5 billion in May 2023.
Simultaneously, Elon Musk has garnered attention for his ability to influence cryptocurrency prices through his social media mentions. The most notable instance is Musk’s impact on the price of Dogecoin, which he propelled to an all-time high of $0.73 in May 2021 through a series of supportive tweets.
However, it’s essential to approach the origins and underpinnings of the newly released GROK tokens with caution and skepticism.
Why Investors Should Be Wary of Grok-Inspired Tokens
GROK tokens are in no way associated with the eponymous AI project. The lack of utility means that any hype surrounding the tokens will likely burn out rapidly.
Furthermore, the lack of development effort and a roadmap, as well as the anonymity of developers, increase the risk of scams and rug-pull projects. You can read this article by my colleague David Marsanic to learn how to stay safe when investing in hype tokens.
Despite the obvious red flags, at the time of writing, the earliest GROK token launched as an ERC-20 token on the Ethereum blockchain has amassed a market capitalization of $7.8 million, according to DEXTools data, as traders speculate on rapid, short-term gains.
