Artificial intelligence technology is changing many industries, including the realm of cryptocurrencies. The merging of blockchain and AI has given rise to a unique set of digital assets known as AI crypto tokens. Within this guide for beginners to AI tokens, we will elaborate on their nature, functionalities, and highlight some of the key AI-based cryptocurrencies in the market.

AI tokens are digital currencies that support projects, applications, and services driven by artificial intelligence within the blockchain ecosystem. These tokens serve three primary functions: facilitating transactions, providing governance rights to holders, and incentivizing user contributions towards the growth of AI projects.

The functionality of AI crypto tokens operates through several key mechanisms including token creation, smart contract implementation, token issuance during token sales or genesis blocks, user acquisition through exchanges or staking, integration with AI platforms for services, and promoting decentralization for governance decisions. Various projects utilize tokens to encourage contributions such as computing resources, data, and AI application development in exchange for rewards in tokens.

The landscape of crypto AI is evolving rapidly with numerous projects developing to cater to different facets of the industry. Here are the top five AI tokens based on market capitalization:
- Injective (INJ)
- The Graph (GRT)
- Render (RNDR)
- Theta Token (THETA)
- Oasis Network (ROSE)

These tokens are pivotal for supporting decentralized exchanges, derivatives trading, GPU cloud computing networks, video delivery, privacy-preserving computations on blockchain, and more. As blockchain technology expands, AI innovations are crucial for unlocking new efficiencies. Specialized AI tokens facilitate collaboration and incentives needed for the progression of AI within decentralized platforms, paving the way for ML processes to become increasingly tokenized on-chain.

Despite the potential benefits, the realm of AI tokens remains complex and volatile, mirroring the broader cryptocurrency domain. Hence, thorough investor research and diligence are paramount before engaging with such tokens.