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Crypto, once hailed as the shining star of the tech realm, has unfortunately faced a series of setbacks. It has been entangled in legal battles with the SEC, endured a cold and unyielding bear market, and now, to add insult to injury, finds itself playing second fiddle to the unstoppable force of AI.
Jeremiah Owyang, a prominent entrepreneur deeply involved in the Web3 sector, resides in San Francisco. According to him, his community hosts an impressive number of three to five AI events every day. However, he mentioned that there is currently a scarcity of Web3 events. Owyang has shifted his focus and is now extensively exploring the field of AI.
"Jeff Wilser, a distinguished feature writer for CoinDesk, has an impressive portfolio of literary accomplishments. He has authored seven books, which include titles such as "Alexander Hamilton's Guide to Life," "The Book of Joe: The Life, Wit, and (Sometimes Accidental) Wisdom of Joe Biden." Additionally, one of his books achieved the esteemed status of being named an Amazon Best Book of the Month in both Non-Fiction and Humor genres."
Sheraz Ahmed, the Managing Partner at Storm, a prominent blockchain consultancy, was taken aback by his experience at a crypto event in Dubai. He shared his astonishment, saying, “it was a bit shocking that in every blockchain keynote panel, AI was included. It was a blockchain conference, but only AI was being spoken.”
Without a doubt, the initial capital for start-ups is currently captivated by AI. As humorously stated by Meltem Demirors, Chief Strategy Officer at CoinShares, on Twitter, the progression has been as follows: “2019: we are a crypto fund. 2020: we are a DeFi fund. 2021: we are a blockchain gaming fund. 2022: we are a web3 fund. 2023: we are an AI fund.”
However, perhaps framing Crypto vs. AI as a rivalry is not the right approach. Although Web3 might be going through a slow phase, it is far from fading away. Projects are still being developed behind the scenes. Moreover, considering that AI is expected to revolutionize every industry, it is evident that Web3 will be included in that transformation. As Michael Casey from CoinDesk aptly expressed, “AI will need Web3, and vice versa. Why not build both?”
Projects such as SingularityNET, Ocean Protocol, and Cortex have already been actively developing diverse decentralized AI solutions, and many more are expected to emerge in the future. Nathaniel Whittemore, who currently hosts a daily AI podcast alongside his daily Web3 podcast, believes that the crypto space provides valuable training for those venturing into the field of AI. He emphasizes that this training encompasses navigating regulatory challenges, educating others about a novel and peculiar technology, and becoming accustomed to facing criticism from certain segments of the population.
Regarding the interaction and intersection of AI and crypto, there is a multitude of possibilities, according to Whittemore. These possibilities vary from the obvious to the outlandish, from the hopeful to the nightmarish. In order to bring some organization to this chaotic landscape, we will explore ten potential areas of overlap, encompassing everything from increased productivity to scenarios resembling Armageddon.
1. AI will make Web3 projects more productive and efficient.
This is less about the unique properties of crypto and more about how AI will change everything, Web3 included. “I think AI will impact [Web3] in all the normal ways it does for other industries,” says Haseeb Qureshi, Managing Partner of Dragonfly. “Productivity will increase dramatically. Smaller startups will be able to do more.” He expects that Web3 projects will need to spend less on things like marketing, copywriting and other elements of operations.
Whittemore agrees. “AI will almost certainly radically increase the number of people who are capable of building blockchain and Web3 applications,” says Whittemore. And there could be a knock-on effect. He thinks that because it will become easier for non-tech people to learn things like how to code, that could potentially help “reduce the power gap” that’s ingrained in the community.
2. Blockchain could bring decentralized values, governance, and guardrails to AI.
This is the chocolate-meets-peanut-butter solution that many in the space have craved. “Blockchain platforms can support the creation of decentralized AI models,” says Ahmed, who adds that this solution would -- in theory -- keep data private, reduce biases in the models, and curb the growth of centralized monopolies.
"There’s a lot training that from the crypto space that’s weirdly useful if you’re starting to think about AI"
“In theory,” of course, is the rub. There are skeptics. “[AI] is not a technology that lends itself to distributed systems,” says Qureshi, because they’re being built by small groups of experts and require a staggering amount of computing power. “They’re not the kind of thing where you can leverage a lot of decentralized resources, like you can with bitcoin mining.” (Many in the Web3 space, of course, disagree and are trying.)
Whittemore admits that he’s “enormously skeptical” every time he sees a new crypto/AI project, but adds that “there are a lot of really smart people thinking about exactly this,” and he imagines we’ll see more “interesting overlaps” in the second half of this year. He’s also encouraged that “open-source approaches [to AI] are outperforming everyone’s expectations,” which gives a jolt of optimism for a decentralized approach.
3. AI will upend crypto trading.
Crypto trading operates non-stop, disregarding geographical boundaries, and encompasses a vast array of assets and markets. Even prior to the advent of artificial intelligence (AI), humans faced difficulties in keeping up with the incessantly active nature of the trading arena. However, this challenge will only intensify as quantitative and algorithm-driven trading bots, which have already been in existence for years, continue to improve exponentially. As a consequence, utilizing these bots could prove highly profitable for those who embrace them, while those who refuse to do so may face dire consequences. The multitude of retail traders may find themselves squeezed as a result. Ahmed asserts, “If a trader does not want to use [AI] and wants to do everything manually, they’re going to get left behind.”
4. Blockchain could save us from AI’s ocean of misinformation.
AI-injected deep fakes have already gone viral and tricked millions, and if the trend continues -- which it almost certainly will -- we could soon be living in a dystopian world that some have called a “post-truth society.” Reality will be up for grabs.
Crypto advocates have long argued that blockchain could be used to authenticate that digital assets -- like photos and videos -- are what they claim to be. “Zero-knowledge proofs do not get enough attention, but they will be extremely important for AI going forward,” says Joseph Raczynski, a technologist and futurist. “They will serve as the technology that helps prove something is something, without divulging anything sensitive.”
5. AI could make crypto compliance and auditing easier.
“Especially after the events of the last year, regulators are becoming more hands-on and demanding more compliance,” says Elbruz Yılmaz, Senior Vice President of Web3 and Crypto at Paysafe, a payments provider. Auditing is a manual and time-consuming process, says Yılmaz, and many Web3 companies aren’t set up to do it. They’re playing catch-up. “AI will help these companies get to a competitive level in compliance faster,” says Yılmaz.
6. AI could make life easier (or harder?) for crypto hackers and scammers.
The large language models of AI make it “easier to attack smart contracts,” says Qureshi. In the same breath, he adds that perhaps AI could also make smart contracts “easier to defend.” He doesn’t yet know which way that will tip -- no one does. The only thing we can say with confidence is that AI will be weaponized by the bad guys and used as a shield by defenders; who wins is an open question.
Then there are the scammers. “Crypto scams are far more sophisticated with an AI involved,” says Pete Howson, a technology researcher and crypto skeptic, who’s also the author of the upcoming book “Let Them Eat Crypto.” “For example, ‘deep fake’ videos of celebrity endorsements are encouraging suckers to invest in the next big shitcoins.” This is not just speculation. It’s already happening. Howson continues: “In November 2022, a verified Twitter account posing as Sam Bankman-Fried posted a deepfake video offering FTX users ‘compensation for their loss’ in a phishing scam designed to drain their crypto wallets. Fraudsters are using AI platforms to build fake trading websites.”
With all due respect to Apple’s Vision Pro, the infrastructure for the metaverse is still a glitchy work-in-process. The space needs a better user interface. Better graphics. Better content. Better community. AI could help with all of that. AI will slash the time it takes to build immersive worlds, and it could even populate these worlds with human-seeming characters. Nvidia recently melted faces in the game developer community, for example, by showing how AI could power real-time dialogue with NPCs (non-player characters), which unlocks all kinds of potential for world-building. “AI can help these games become much more engaging, faster,” says Yilmaz.
"Crypto scams are far more sophisticated with an AI involved"
Okay, perhaps this one isn’t about making anything “better,” but we should acknowledge the concerns and risks of environmental impact. “Just like cryptocurrencies, generative AI platforms also use criminally huge amounts of energy,” says Howson. “The training of ChatGPT consumed 1,287 MW of electricity per hour, producing 550 tonnes of carbon dioxide. That’s equal to a person taking 550 roundtrips between New York and San Francisco.”
This is my favorite.
Qureshi imagines that in the future, as bots like ChatGPT get more advanced, they will essentially function as your personal assistant, or agents. They could book you flights, place your Instacart order, or summon your Uber at exactly the right moment. (Three years ago I interviewed a Web3 entrepreneur, Dele Atanda, who described exactly this scenario.)
Sure, some of this might fit in the current financial framework, but what about when my AI agent begins transacting with your AI agent? Or, what if the way AI agents spend money simply becomes too complicated for the laws or banks to catch up?
“They will need money,” says Qureshi, “And the idea that JP Morgan Chase is going to open a bank account for AI is nonsense.” Qureshi suspects that the “laws are not going to catch up in time,” but that crypto is already a functional solution that can be implemented immediately.
Whittemore says something similar. He gives a hypothetical: Imagine that you want to start an online store for band logo keychains, and the AutoGPT (or your AI “agent”) devises a set of tasks, and one of them might be to figure out how it’s going to 3D print the keychains. “Can it just send bitcoin to the 3D printing [AI] agent that runs autonomously in the background?” If the 3D printing agent is located across the globe -- which is often the case -- then bitcoin would be a more elegant solution than dollars.
So, in the end, after years of searching for “adoption,” the first mass-market use of cryptocurrency-for-transactions might come not from humans, but machines.
10. AI could leverage crypto to achieve the Nightmare Scenario.
We’ll zag with one more less optimistic possibility. (And “less optimistic” is putting it lightly.)
If you’ve been at all AI-curious, by now you’ve probably heard the cheerful stat that in a survey of AI researchers, more than half thought there was at least a 10% chance that AI could wipe out the human species. (Sidenote: This stat is slightly exaggerated and has been somewhat misreported, as the survey response rate was only 4% and not truly a representative sample of scientists. But still. Whether it’s a 1% chance or 10% chance, the “nightmare scenario” is still very much a scenario.)
And crypto could play a role in that nightmare.
“With greater dependence and importance on digital assets, an AI agent could alter a financial institution with ease, impact a governing body, or take down a government without anyone even knowing, until it is a bit too late,” says the futurist Raczynski, who also imagines that the AI could wreak havoc in a metaverse. Raczynski fears that the advancement in AI will allow it to soon surpass the abilities of humans, “and blockchain is an enabler.”
So let’s conclude on something a bit less Armageddon-ey. Even though AI is now getting all the hype and the shine from VCs, the experts I spoke with were not concerned about the funding impact to Web3. “This is a silly thing to worry about,” says Qureshi, who acknowledges that an insane amount of money is pouring into AI “with sky-high valuations,” but doesn’t expect this to materially hurt the Web3 ecosystem. “There’s a lot of capital in the U.S.,” says Qureshi, who adds that no one can say with straight-face, “We don’t have enough money,” and that “I haven’t heard that in the last three years.”
And on a more hopeful note, ultimately, Ahmed thinks that AI and crypto needn’t be in competition, but are rather just “tools in a toolbox.” They’re complimentary. “They’re not fighting amongst each other,” says Ahmed. “Ultimately they’re going to be connected, just like electricity is used to power the internet.”
Source Coindesk
