Smart or AI NFTs are the Next Generation of NFTs

In a blockchain world where the possibilities are almost endless, NFTs or non-fungible tokens can take all sorts of shapes. Thanks to even more advanced artificial intelligence (AI) technology, NFTs can even be born out of AI.

Advanced AI capabilities could change how we think about NFTs and their capabilities. These AI-created or AI-embedded NFTs can hold a conversation, change the background based on the weather or execute dynamic functions like unlock bonus content.

Building on the capabilities of regular NFTs, smart NFTs or AI NFTs are a growing trend with exciting potential beyond just the crypto industry. As a result, interest in smart NFTs is on the rise. Google searches for “smart NFT” have been up to over 2100-percent since March 2020, and smart NFTs are regarded as the future of NFTs because of their capability for creating complex tokens.

What are Smart NFTs?

Smart or AI NFTs refers to any tokens that use AI technology to power the token. With artificial intelligence tech built into the code of the NFT, a smart NFT can adapt over time and carry out more complex tasks to benefit the owner.

One kind of AI NFT is relatively common and comprises big names like Bored Ape Yacht Club and CryptoPunks. Rather than having a human select each characteristic by hand, these NFTs use algorithms to generate the unique combination of traits for each NFT.

These computer algorithms, or step-by-step computational procedures, are crucial to computer science, AI, and multifunctional products. In this emerging NFT industry, the sky is the limit in finding ways to use algorithms and machine learning technology to add to what NFTs can do and be.

Take Phantasma’s smart NFTs, for example. Phantasma claims to have released the world’s first smart NFT in November 2020. Debuted at the PAX online gaming conference, Phantasma’s NFT was the first to offer a time-based dimension to NFTs.

This time-limited quality means that an owner might buy an NFT for a set time, at which point it returns to the original owner. Time-based restriction of these NFTs can be a popular choice for “Event NFTs,” where holding an NFT could act like having a digital ticket that gets you into conferences or music festivals.

Additionally, Phantasma’s smart NFTs allow users to create multi-layered tokens, which are NFTs inside of other NFTs. This means that Phantasma’s 22 Racing Series game players can virtually build cars made up of over 30 individual NFT car parts.

Examples of AI NFTs

One example of smart NFTs is AI-generative NFTs. These tokens are created using AI technology. Typically, AI-generative NFTs can be created using Generative Adversarial Networks or GANs, which are algorithms that use data to inform models that produce computer-made art.

Algorithmically-generated NFTs primarily took off during the summer of 2021, sometimes known by crypto fans as “JPEG summer.” This kind of NFT is often created by feeding various design characteristics into a computer algorithm that spits out thousands of unique combinations.

Other kinds of algorithmic art are generated with more complex algorithms, like on the platform Art Blocks. Using Art Blocks, buyers can “roll their own dice” and generate a unique digital asset.

Projects like Art Blocks fall under “generative art,” which has been around since the 1960s. In a generative art process, artists create their work using an autonomous system that uses elements out of the artist’s control, like chance, to make aesthetic decisions and produce the piece.

Other names in the NFT-art-AI space include, Artificial Nightmares, and MetaScapes.

AI galleries have sprung up in response to the growing AI art demand. For example, Art AI is one of the largest AI art galleries in the world. Art AI also launched a text-to-art software called Eponym that allows users to create their art using AI and sell it on the OpenSea marketplace. Its unique selling point is that it helps artists produce AI art with a human touch.

To help you take your steps into the world of smart NFT art, platforms like and NightCafe allow you to create your own tokens by giving their algorithms a text or photo prompt.

Growth in the AI-Powered NFT Space

Big names are pioneering the AI NFT space and driving interest, including billionaire entrepreneur Mark Cuban’s startup Alethea AI.

Alethea AI is working to build a metaverse populated with AI-powered NFTs to communicate and interact with other NFTs within the metaverse. Alethea AI’s metaverse is a train-to-earn model where users can train their smart NFTs to compete in battles.

However, unlike games like Pokémon or Axie Infinity, these battles don’t occur in a melee or gym setting. Fittingly, your intelligent NFTs instead compete in debate battles.

Even AI influencer Sophie, a particularly visible face to AI and the Smart NFT trend, has created her own NFT collections. Sophie is a human-like robot developed by Hanson Robotics in 2016. Sophie’s AI-generated works have included her “Evolving Herstory” collection of 6 original artworks to her self portrait, which sold for over $700K in March 2021.

The Future of Smart NFTs

Lovers of blockchain and artificial intelligence alike both are excited about the latest developments in smart or AI NFTs. Dr. Alex Alter, the principal AI scientist for metaverse AI company Altered State Machine, spoke about the future.

“In the future, people will be able to create AI artwork through DAOs and chatbot technology. This is far more than what other NFTs can do today.”

As this future takes shape, more and more innovative projects are launching each week. Furthermore, there are regulations on the table around the globe working to establish standards around the responsible use of AI.

As the worlds of AI and crypto develop, the possibilities, and complexities, are endless.

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Amanda Lawson

Amanda is a professional writer who is passionate about helping people share their vision with more audiences using SEO, data, and storytelling. She often writes about cryptocurrency, fintech, politics, and the law. Her background is in policy and research, with a degree from NYU and certifications from Harvard, Google, and more. When not writing, Amanda enjoys painting, dancing, and playing chess.