Coin of the Month - Bittensor

What is Bittensor?

Bittensor is a decentralized network and open-source machine learning platform based on blockchain technology. It is designed to provide an open, secure, and scalable machine learning infrastructure involving miners for processing data.

Consensus mechanism

The underlying consensus mechanism for the Bittensor network, is the proven Proof of Work (PoW). This mechanism, operated by numerous miners, ensures the longevity of the Bittensor network. Similar to Bitcoin, miners are rewarded with block rewards that go through the same halving cycles (halvening).

Miner

In addition to generating blocks and securing the blockchain, miners are also responsible for providing computing power to the neural network.

Validators

As a central component of Bittensor's AI infrastructure, validators are responsible for training the artificial intelligence. They decide which data to feed into the neural network and in which direction the system should evolve. The weighting of a validator depends on the number of Tao delegated to it, and thus determines its influence on the training data with which the AI is learned later on.

What makes Bittensor special?

ChatGPT has been around for 4 months now and has had a phenomenal start. There has never been a product that has cracked the 1 million user mark faster than the aforementioned ChatBot, which now already has a market capitalization of 30 billion dollars. Artificial intelligence has been on everyone's lips ever since, because what was offered in the beta was almost uncanny. Text generation in all forms and languages. Whether it was program code, poems or diet plans, everything was possible and thus a real use case for the masses, which of course met with an incredible response.

If you want to try out ChatGpt, you can do so for free on the following website: chat.openai.com. All that is required is registration with an e-mail address and password.

One might ask: If a product like ChatGPT is already well established and has a considerable number of fans and users, why should a decentralized project that competes with it have a future? The key is decentralization.

Why is decentralization superior?

Centrally operated artificial intelligence learning is limited in its scalability after a certain point due to the immense computing power it requires.

In contrast, decentralized networks have proven to be more advantageous. The best example of this is the Bitcoin network. It is already the largest computing network in the world. Bittensor, like Bitcoin, wants to establish a global network, with the difference that the use case covered by Bittensor focuses on the field of artificial intelligence.

An additional advantage of a decentralized architecture is that it avoids a "single point of failure" and is particularly important in the context of machine learning to prevent censorship, as well as biased data provision in terms of content and weighting of the data used to train the AI.

Bittensor and the future of decentralized machine learning.

Bittensor represents a groundbreaking alternative to the centralized machine learning models that have dominated the market to date. Decentralization not only offers increased scalability, but also better security and robustness of the network. Blockchain technology enables a transparent and trusted environment where everyone can participate and contribute to the growth of the ecosystem.

In the Bittensor world, miners and developers are equally rewarded. Miners provide their computing power to train complex algorithms and models, while developers create innovative applications and services on the platform. Using cryptocurrencies as an incentive mechanism creates a competitive environment that encourages continuous improvement and optimization of models.

The future of Bittensor

As the Bittensor platform continues to evolve, new use cases are emerging that have the potential to revolutionize a variety of industries. Some examples include:

Medical: Bittensor can help improve the accuracy of diagnoses and develop personalized treatment plans by accessing a wealth of medical data and leveraging the latest advances in machine learning.
Finance: Bittensor can be used to develop advanced trading algorithms and risk modeling techniques that could revolutionize the financial sector.
Environmental: Bittensor can help environmental organizations make better-informed decisions by modeling and predicting the impact of human activities on the planet.
Future partnerships with established technology companies and academic institutions could help expand Bittensor's reach and provide access to new data sources and applications.

Bittensor's roadmap

Bittensor's roadmap envisions a series of milestones to help bring the project to fruition. These include:

1. Building a strong community of developers and miners involved in the growth of the platform.
2. The implementation of governance structures that allow users to vote on key decisions and democratize the network.
3. The development of user-friendly tools and applications that allow everyone to take advantage of Bittensor.
4. Listing the native Coin Tao on popular exchanges to generate awareness and thus increase the number of users for applications that will be created later.
5. Creating text-to-video and text-to-music programs.

Tokenomics

The stock of Tao (the native coin of the Bittensor network), is modeled on the tokenomics of Bitcoin. Inflation, as well as the initial holdings and maximum amount of coins, have been applied one-to-one to Tao. Only the block rewards, and thus the creation of new coins, were reduced by a factor of 100. However, since the block rewards are distributed equally to validators and miners, the block time is not reduced by a factor of 100, but only by a factor of 50. This means that the miners generate a block every 12 seconds on average.

As of now, about 4.2 million of the 21 million Tao have been mined. The next and also first halvening in the network is dated August 2025. It is also worth mentioning that about 80% of the Tao already in circulation are staked and therefore not immediately available to the market. However, with staking rewards around 30% percent, this should not be surprising. 

Outlook

Bittensor recently completed its move to its own chain, taking the next step in collaborative artificial intelligence learning. With the update to Finney, it is now also possible for holders of Tao to delegate them to a validator and thus, generate staking rewards. Right now, annual returns are about 32% (note that the rewards are accumulating). The APY will decrease over time, which is due to the fact that with each halving, which occurs approximately every 4 years, the inflation in the network is halved. At the same time, however, it should be noted that it can be assumed that the market shares, of AI systems will increase significantly in the next few years and thus investing and delegating could continue to be lucrative.

The Bittensor vision

Bittensor aims to become the decentralized marketplace for AI. This means that Bittensor will strive to equip its AI with the best training data and the world's largest data pool, so that companies that are currently at the forefront of AI will feel compelled to build their applications using Bittensor.

Conclusion

Bittensor has the potential to fundamentally change the way we do machine learning. By taking advantage of blockchain technology and decentralization, Bittensor enables us to build an open, secure, and scalable machine learning infrastructure. By supporting an engaged community and incentivizing miners and developers, Bittensor provides a democratic and competitive environment in which artificial intelligence innovation can thrive.

The future of Bittensor promises a world where machine learning is accessible to everyone, and where everyone can benefit from the advances and insights that come from decentralized collaboration. The platform has the potential to have far-reaching impact on diverse industries, from medicine to finance.

The challenges Bittensor faces include building a broad and engaged community, ensuring privacy and security, and developing user-friendly tools and applications. If the project successfully overcomes these hurdles, Bittensor could lead the next wave of artificial intelligence and machine learning based on decentralization, collaboration and democratic control.

In a world where more and more companies and individuals are looking to take advantage of AI and machine learning, Bittensor could play a critical role in making these technologies accessible to all while providing the security and transparency essential to trusting such systems.

To ensure Bittensor's success, it is important that the project addresses both the technical and societal challenges associated with creating a decentralized machine learning platform. However, by bringing together researchers, developers, miners, and users from around the world, Bittensor could usher in a new era of AI development characterized by openness, democracy, and collaborative innovation.