(Our regular analysis of the wild world of cryptocurrencies)

By Medha Singh and Lisa Pauline Mattackal

March 19 (Reuters) - The artificial intelligence boom

has hit the crypto market with a bang.

Coins linked to AI-focused crypto projects have jumped

alongside tech stocks like Nvidia ( NVDA ), driven by insatiable

investor appetite for applications like machine-learning.

The rise of many AI crypto tokens has outpaced even that of

bitcoin over the past year as the world's biggest cryptocurrency

has surged to record levels.

Their combined market value has ballooned to $26.4 billion,

from just $2.7 billion last April, according to CoinGecko data.

Tokens linked to these projects are up between 145% and 297% in

the past 30 days.

If the more optimistic industry predictions come to pass,

there could be more room to run, as some market watchers say

crypto and blockchain technology could help solve some of the AI

industry's teething problems such as privacy and a need for

computing power.

"As both AI systems and blockchain networks continue to

grow, we will see more and more use cases fusing together the

two industries," said Markus Levin, co-founder of blockchain

data storage firm XYO Network.

The CoinDesk Indices Computing Index, which includes

AI-linked tokens, has leapt over 165% over the past 12 months,

outpacing even bitcoin's 151% rise to record levels.

Trading volumes in AI tokens have also risen sharply this

year, Kaiko Research data showed, hitting an all-time high of

$3.8 billion in late February.

"There is a significant chance that ... AI applications will

be crypto's raison d'être," fund manager VanEck's Matthew Sigel

and Patrick Bush said in a note.

Some of the top blockchain projects at the moment include

the Render Network, a blockchain platform for peer-to-peer

sharing of AI-generated graphics, Fetch.AI, a platform to build

AI apps and SingularityNET, an AI services marketplace.

"Investors are starting to realize that if you want real

value, you need products that are uncorrelated to the crypto

market," said Ahmad Shadid, founder of AI-focused blockchain

startup io.net.

WINNERS AND LOSERS

AI-linked blockchain products include a wide variety of

services including payments, trading models, machine-generated

non-fungible tokens and blockchain-based marketplaces for AI

applications where users pay developers in cryptocurrency.

Investment manager VanEck has predicted that revenue from AI

crypto projects could reach $10.2 billion by 2030 in their base

case, and over $51 billion in their bullish scenario.

VanEck pointed to the use of crypto tokens as rewards,

developing physical computation infrastructure, data

verification, and transparency in proving digital ownership as

primary areas where blockchain technology lends real-world value

to AI development.

Offering crypto tokens as incentives allows quick

scalability, said io's Shadid. His company plans to launch a

token later this year.

"The reason we can scale fast is because of the token we

have coming out," he added. "The token incentivizes owners of

physical infrastructure to bring their computers on to our

network," Shadid added.

Yet, just as with the AI boom itself, picking winners and

losers could be fraught with peril.

"We're still in the very early stages of AI networks

integrating with blockchain-based networks, and the utility of a

lot of tokens is still very much uncertain," cautioned Levin.