Understanding TAO: The Bittensor Token Stirring Controversy with Bitcoin Advocates

Overview of TAO

TAO, the native token of the AI-centric blockchain Bittensor, has been the focal point of disputes on X, particularly involving Barry Silbert, the founder of Digital Currency Group, and fervent bitcoin advocates.

Key Points:

Silbert faced backlash after drawing comparisons between TAO and Bitcoin, which evoked strong reactions from bitcoin supporters.
TAO inherits a cap of 21 million tokens and periodic block reward halvings akin to BTC, yet it fundamentally diverges in its application—focusing on AI and machine learning. Its price fluctuations have been notably more pronounced than those of Bitcoin.

Parker Lewis, a bitcoin enthusiast, labeled Silbert and Raoul Pal as “affinity scammers” for their advocacy of TAO in a recent podcast episode.

In response, Silbert remarked, “calling $TAO a scam is such a lazy attack. Do better.”

Grayscale Investments, a subsidiary of Digital Currency Group, manages the Bittensor Trust with approximately $8 million in assets, alongside its prominent bitcoin ETF (GBTC), which has about $16.6 billion.

What Exactly is TAO?

Silbert ignited the controversy by likening Bittensor’s framework to the Bitcoin blockchain, stating: “It’s just like bitcoin; there was a white paper that transformed into code and launched with the same token economics.”

While there are surface similarities—like the token cap and halving structure—the differences are significant. Bittensor aims to merge blockchain technology with artificial intelligence, functioning as a decentralized marketplace where users can share and monetize AI models. In contrast, Bitcoin, founded during the libertarian cypherpunk movement, primarily serves as a decentralized payment solution and has evolved into a store of value.

Since its launch two years ago, TAO has displayed extreme price volatility, soaring above $700 previously before crashing to about $200. Currently, it’s trading around $339. Meanwhile, Bitcoin has increased from around $22,000 at the start of 2023, reaching $109,000 in January, with its current price around $90,000 and a market cap of approximately $1.8 trillion. TAO now holds a market cap of about $2.98 billion, according to CoinMarketCap.