Bittensor (TAO)

Bittensor, in Simple Terms

You've heard of the large A.I. models such as ChatGPT and Gemini.

These models are centralized meaning that only the companies (Google, OpenAI, etc.) have access to the models and the information they gather.

In addition, the companies have to use their own resources to develop their models.

This development has become extremely costly.

For example, research suggest that Google potentially will consume the same amount of electricity on developing A.I. models as Ireland by 2027!

So, wouldn't it be better if we could collaborate?

That we could benefit from each others models and even share the electricity bill?

Bittensor solves these problems because the power needed to train models is distributed amongst participants in a decentralized network.

In addition, knowledge are shared between models, facilitating collaboration and more effective use of power.

Think of it like this:

Centralized models are just as good as its developers.

Decentralized models grow together and the whole becomes better than its parts:

The collaborative sharing of knowledge is how Bittensor aim to create a better marketplace for artificial intelligence.

This is their vision:

How Does it Work?

The decentralized Bittensor network consists of three main roles:

1. Miners
2. Validators
3. Users

Miners contribute with machine-learning models to the network. They compete with each other in "subnets" where the one that gives the best answer to a request "wins".

Compare it to going to the market.

The network is the market as a whole and miners are people who try to give the costumers the best products. 

Users are the people who need a problem solved by A.I. It could for example be that someone needed an A.I. to generate a text for them. 

The user then must go to the section that is specialized in solving their exact problem.

Comparing to a market again: if I want fish, I have to go to the area where people sell fish and seafood. 

In the case of Bittensor, the specialized area is called a subnet.

A subnet is just a specific topic or domain within the Bittensor network just like the seafood area at the market is "specialized" in seafood.

So the user has made his way to the domain of interest and then makes a request.

The request in this case is a text generation request. 

The miners in that area then use their data models to come up with the best answer.

All answers are reviewed by validators.

Validators are computers that review responses from different miners in the network and choose which to send to the user.

After validation, the best answer is sent to the user.

So, to sum up:

If you (the user) want a problem solved, you must first find which subnet that's the right fit. Here are some examples of subnets:

Text Prompting: This Subnet defines an incentive mechanism to create a distributed conversational AI

Metasearch: Designed for effective and simplified analysis of Twitter data.

SocialTensor: Is a decentralized network that utilizes the Bittensor protocol to enable distributed image generation.

The list goes on as there are more than 40 subnets in total.

When you find the right one, you just ask your question and the people in the network (miners) will try to come up with the best answer.

A validator evaluates the answers and decides what's the best.

The best answer is sent to you.

The TAO token is essential for the process above to work:

1. Users pay a fee in TAO to ask questions.
2. The miner with the best answer is rewarded with TAO.
3. The validator receive a piece of this payment. 

Adoption of Bittensor

Bittensor has some pretty large partners as shown on their website:

Digital Currency Group (DCG) is a venture capital firm that mainly invests in digital currencies.

They are well established with a valuation in 2023 of $4.4 billion.

DCG has reportedly bought $100 million worth of the local Bittensor token TAO.

Polychain Capital is one of the most prominent venture capital firms in the crypto space.

The company holds around $200 million TAO.

In addition to the companies mentioned, other large corporations have joined the network by acting as validators.

This includes Foundry, Neural Internet, and Tao Bridge.

My Thesis On TAO:

In line with my thesis on ASI, I believe Artificial Intelligence is emerging as the next "metaverse." (which was the main hype-driven sector in 2021).

The A.I. narrative outside of the crypto space is gaining significant momentum, which is spilling over into the crypto market, particularly in sectors like A.I.-focused projects and DePIN (Decentralized Physical Infrastructure Networks).

If Nvidia and OpenAI and all the other A.I.-related innovators keep it up, projects like ASI and TAO are bound to go up, given a general bullish trend in the crypto market.

Given TAO’s growing adoption, it might be one of the standout performers in this bull cycle. If the A.I. hype outside of crypto remains strong, as seems probable, TAO is poised to outperform.

I see TAO potentially pulling an 8x to 15x move from current levels, given the continued excitement around A.I. and if Bitcoin reaches $150K - $200K.

However, if the A.I. enthusiasm wanes, TAO may struggle to outpace Bitcoin.

Additionally, if Bitcoin peaks at a lower level—say $100K—TAO might achieve more conservative gains, perhaps in the 5x range.

I'll leave you with this chart:

If TAO manages to break out of the resistance zone and enter "price discovery", there's no telling how high it might go.

In price discovery, there are no resistance levels. Every "hype-wave", like a new ChatGPT model or Nvidia climbing higher, has the potential to make it go to new highs without much difficulty.