Technology moves in cycles, and while AI might have superseded blockchain and cryptoassets in some circles and market discussions, the reality is that these field are increasingly inter-related. An example of this that has come to market recently is the paper by the Coinbase Institute, laying out the case for how blockchain and AI applications are incredibly well suited for working together. Yet another example, although one that has been controversial since launch – and more recently due to the drama surrounding Sam Altman – is the Worldcoin
; a token powered and governed by AI. Headlines only tell part of the story, and the connections run deeper than just a few headlines.
As AI becomes integrated within the corporate planning and capital allocation process, with 84% of executives stating plans to leverage AI for competitive advantages, how will these products and services be compensated? It is one thing to develop AI within a larger corporate structure, but for AI firms, how will stand-alone services make money? Especially for transactions and processes that are either 1) bot-to-bot, 2) happen instantaneously or outside of banking hours, or 3) only require fractional or micro payments due to volume, relying on traditional fiat systems might not always make sense.
In addition to these challenges, there are several unique characteristics that both AI and blockchain-based tokens (crypto) possess that make them a good fit for each other.
Crypto Is Money For LLM’s
At this point in time the large language models that form the foundation of the chatbots that have taken the business and wider world by storm are not able to obtain bank accounts nor use traditional payment rails on their own. Conversely, these AI programs can easily access funded wallets that are governed by smart contacts, or utilize the functionality embedded in DeFi protocols. The individuals or firms setting the strategy that the LLM is going to execute or otherwise work with can then be reviewed thanks to the transparency inherent in blockchain transactions.
Given the fact that crypto, especially bitcoin, remains a decentralized global medium of digital exchange, and that AI protocols remain global and operable 24/7, the utilization of crypto by AI actors also makes sense. Lastly, when ChatGPT was prompted to respond as to what type of currency an AI agent would use it responded that it would use digital or crypto currency, and cited the programmability, traceability, and decentralization of cryptocurrencies as positive attributes.
Crypto Can Help Decentralize AI
For all of the benefits that AI is situated to bring to multiple economic areas there are definitive concerns that are already threatening to throttle the continued development and expansion of these tools. While the drama at OpenAI continues to dominate the headlines the reality is that the policy conversation around has shifted toward more regulation and control. The over 100-page Executive Order issued by the White House about AI seemed to focus on the risk and perils of AI as a new and disruptive technology, including creating entirely regulatory agencies to oversee the sector.
The second largest economy in the world, China, has also attempted to draft regulations for AI that balance state oversight and control with private sector innovation. With the government, under the leadership of President Xi, having established a track record of enhancing state control of business and business policy, this balance might prove difficult to achieve. As American policymakers seek insights from Chinese policies on AI the result could be that two largest economies in the world prioritize government oversight versus private sector innovation in the AI space.
As a globally decentralized medium of exchange, crypto can provide a much-needed dose of decentralization in what is increasingly a policy conversation centered around centralized control and oversight.
Web3 Can Use AI To Improve
While the Web3 hype seems to have subsided as the AI market has gained momentum the fact remains that in order to succeed with mainstream adoption, the tokenized transactions and related approvals will need to be smoother and faster. Tokenization and blockchain underpinnings are well understood as fundamental to the success of Web3 applications, and AI can make use of both tools to improve the process. AI is not set to drive nor control the development of Web3, but can rather seek out and deploy efficiency solutions to help improve some of the clunkier parts of using crypto for every transactions that currently exist.
AI might be making most of the headlines now, but by leveraging crypto as well as advances in blockchain functionality, mainstream adoption for all of these tools can accelerate rapidly.