- Over 400 Grok-inspired tokens have emerged in a little over 24 hours.
- Despite having no ties to the project, these tokens have generated millions of dollars in market capitalization.
- This article explains what Grok is and the speculative crypto craze surrounding it.
Hype and narratives are notorious for driving markets, and the crypto markets are no different. However, the relative newness and complexity of the space make it particularly susceptible to these forces. This susceptibility, combined with the feverish pace at which niche traders within the sector attempt to capitalize on emerging trends, leads to violent price fluctuations and the proliferation of scams.
In the latest instance, DEXTools data shows that 460 new crypto tokens emerged over the weekend inspired by Grok, a new artificial intelligence (AI) chatbot. Despite having no ties to the AI project, these tokens have already generated millions in market capitalization.
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In this article, we explain what Grok is and why inspired tokens are springing up.
What Is Grok?
Grok is a program that imitates human conversation using artificial intelligence. Developed by xAI, a newly launched company led by Elon Musk, it represents the Tesla chief’s answer to OpenAI’s ChatGPT, which has sparked a flurry of interest in the potential of AI technology in 2023. The firm announced Grok on Sunday, November 5.
xAI claims that Grok, modeled after “Hitchhiker’s Guide to the Galaxy,” would answer “almost anything,” including “spicy questions” rebuffed by other chatbots, all with a bit of humor. “Don’t use it if you hate humor!” xAi cautioned in the product announcement.
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?
Developers of GROK tokens are likely hoping to capitalize on the interest AI has received this year, as well as Elon Musk’s influence to get people to speculate on and drive the value of these tokens, which otherwise serve no other purpose.
In 2023, AI has emerged as the dominant investment narrative, with startups raising millions of dollars at billion-dollar valuations. The prominent names include OpenAI and Anthropic. In September 2023, Reuters reported that OpenAI was seeking a valuation of $90 billion. On the other hand, Anthropic was valued at $5 billion in May 2023.
At the same time, Elon Musk has gained some notoriety for his ability to drive up the prices of crypto assets through social media mentions. The foremost example is Musk’s influence on the price of Dogecoin, which he helped drive to an all-time high of $0.73 in May 2021 through a series of supportive tweets.
The origins and basis of the newly released GROK tokens, however, raise red flags.
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.
On the Flipside
- Grok has yet to launch to the public.
- A Grok token launched on the BNB network has recorded an over 15,000% price gain in the past 24 hours.
Why This Matters
With the recent hype surrounding Grok, it is necessary to understand what it is and why it is creating a buzz in some crypto circles.
Read this to learn how to stay safe when investing in hype tokens like GROK:
Investor Alert: GROK Tokens Are Unrelated to Musk’s xAI
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