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AI Could Be This Cycle's Catalyst For Crypto

When you account for all factors, it becomes clear that AI is not going to be the death of crypto, but a potential catalyst for the next bull run.

The team at CoinSnacks are deep believers in the transformative potential of crypto, regardless of what the price on the computer screen shows. However, it’s impossible to deny that AI has stolen some of crypto’s shine over the past ~6 months.

Since the release of ChatGPT last November, AI feels much like crypto did in 2018: an endless train of innovation, hype, and money.

There’s a new tool, invention, or investment into AI seemingly every day. And in 2023, tech news has largely become AI news. So much so that premiere crypto VC firms such as Paradigm (covered in the story below) are expanding their investment horizon to include AI companies.

So the question arises: Is the AI hype going to take the wind out of the sails of crypto-focused startups? Or will AI and crypto actually work hand in hand? Let’s take a look…

The Problems With AI Today

If we take a step back and think about what the current iterations of AI are and what they do, we can conclude that they are taking in large reams of data in order to better perform tasks for humans.

But the current iteration of AI has run into some notable problems around data privacy, authenticity, and more.

While we are only in the early stages of AI, and progress will be made in a positive direction, you can bet on the fact that individuals will be testing the limits in the other direction as well.

Let’s take a look at one of these problems: data authentication.

Two stories from the past few weeks have highlighted the the need for people to be able to quickly authenticate content.

First, was the viral image of an explosion at the Pentagon, causing the stock market to drop. Second, was the proliferation of a fake hit song from AI versions of Drake and The Weekend.

The main problem here is knowing what is real from what is fake. While some traditional “Web 2” startups are attempting to solve this issue, it seems ripe for the taking for “Web 3.” In this example, signing real content with cryptographic keys tied to a real human could play a major role in creating trust of content.

Ok, but that’s crypto solving a problem. But, how could the intersection of crypto and AI be a net benefit?

AI Could Be This Cycle’s Catalyst For Crypto

One of the more exciting AI innovations are autonomous agents such as Auto-GPT and BabyAGI. These autonomous agents generate a sequence of tasks that the AI works on until it’s accomplished a predetermined goal. Put simply, they do work without your help.

Obviously, projects like these unlock a wide-range of use-cases, with people using them for everything from building a website to doing research, to yes, making investments and trades.

However, one key issue these autonomous agents will face is around payment rails. Imagine that a bot needs to pay to access information for research or to devise a solution. If the bot uses fiat, this transaction will take days to close.

Why would a bot choose to go from the physical world to the digital world when they could transact entirely online?

But what if the bot uses crypto? Or, for example, Bitcoin’s Lightning Network? In this situation it would take a few seconds for the transaction to close, not a few days.

The intriguing part is, this concept is not just theory – it's currently under construction.

This situation is a testament to the countless ways in which crypto and AI can overlap in the future.

When you account for all factors, it becomes clear that AI is not going to be the death of crypto, but a potential catalyst for the next bull run