Exploring transformation of value in the digital age
By Michael J. Casey, Chief Content Officer
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Investment by buzzword. That’s what triggered me this week, in a rant, I mean column, about this industry’s failed taxonomies. As I see it, a failure to recognize crypto’s role as an information solution – rather than just a money tool for payments and speculation – means people lose sight of how the technology could help tackle the challenges of artificial intelligence.
This week’s Money Reimagined podcast takes a very different tack as my co-host Sheila Warren and I talk to Ricardo Ricchi, head of Policy & Government Relations and the U.K.-based Payments Association, on the future of central bank digital currencies.
Why Web3 and the AI-Internet Belong Together
(CSA Images/GettyImages)
A tweet this week from Chris Frantz, the founder of email platform Loops, irked me.
Frantz said “90% of the people I know in web3 have pivoted their company to AI.”
What got to me was not that founders are so obsessed with securing venture capital that they’ll glob onto the next “in” thing. (Let’s save that problem of Silicon Valley fickleness for another time.) It was that people see the various elements of the complex new digital economy forming around us – artificial intelligence, blockchain, the metaverse, programmable money, digital identity, cryptographic proofs, quantum computing, IoT and so forth – as unrelated, exchangeable pieces, when they’re really intertwined and complementary.
AI will need Web3, and vice versa. Why not build both?
I see this harmful, reductionist simplification of “Web3,” “blockchain” and “crypto” stemming from a fundamental failure to identify the core, unifying feature of all projects that end up under those labels. To me, the commonality is that they all use a novel system of distributed record-keeping and incentives to deal with the basic problem of human trust around information. These technologies help communities of mistrusting strangers collectively maintain open data records that allow them to distribute and share valuable (or sensitive) information among themselves without the intermediation of middlemen.
In addressing how to keep valuable information secure in a decentralized environment, Web3, crypto and blockchain address a societal challenge that has been with us since the start of the internet. But, now, in the age of AI, when uncertainty over information is going to go stratospheric, it’s an even more urgent matter.
Original misconceptions
Overemphasizing crypto and blockchain’s place in finance and money and failing to understand its core value as an information-sharing solution has set us back, perpetuating a Web2 structure of harmful data manipulation by giant internet platforms that have sown mistrust in our information systems and democracy.
And now? Now, in the age of artificial intelligence, this misunderstanding gets downright dangerous.
Please don’t accuse me of naive “blockchain fixes this” hand-waving. The challenges of the AI moment are daunting, from protecting copyright in the inputs of large language models (LLMs), to avoiding racial bias in their outputs, to the “liar’s dividend” fostered by our current inability to distinguish between real content and AI-created fabrications. There is no easy way to save humanity from the machines. Whatever solution arises will inevitably draw on a wide range of technologies and policies.
Here’s what I do know: we are not going to resolve these matters with an outdated 20th-century regulation-technology stack. We need a decentralized governance system for how we produce, verify, and share information in this new era.
How it can help
Whether or not, as currently designed, they can deliver what’s needed, blockchains do have qualities that can help.
Immutable ledgers allow us to track the provenance of images and other content and so could protect against deep fakes. The same might apply to testing the integrity of the datasets on which machine learning AI products are trained. Cryptocurrencies could be used to pay people worldwide, in a borderless digital manner, for their contributions to AI training. Projects such Bittensor are building tokenized, blockchain-government communities that incentivize AI developers to build human-friendly models (addressing the concern that AI systems owned by private corporations are incentivized to put the profits of shareholders over the rights of users.)
There’s a long way to go before these ideas can deliver on this promise at the scale that’s needed, if they ever will. Also, success will require the integration of a range of other technologies – zero-knowledge proofs, homomorphic encryption, secure computing, digital identities and decentralized credentials, IoT – as well as smart, multi-stakeholder legislation that protects privacy, punishes bad behavior and encourages human-centric innovation.
But to position Web3, blockchain, crypto, or whatever you want to call it, as a has-been with no place in the emerging digital future is to severely miscomprehend the problem at hand.
One way to gauge the extent of the phenomenon of flipping from Web3 to AI that I described at the top of this week’s column is to ask Google to run a comparison of the search terms “Crypto” and “ChatGPT.” So, I went to Google Trends and plugged in a comparison since the beginning of 2022.
Not a huge surprise in the worldwide comparison of “interest over time,” with searches about OpenAI’s bombshell AI chatbot (“ChatGPT” – the red line) recently surging and interest in “crypto” (the blue line) tapering off.
Ashmore argues this is a direct outcome of Crypto Winter. As the price of bitcoin fell, it became more accessible to more people.
Silver lining.
The Conversation: Balaji’s Latest
You can say this about Balaji Srinivasan. He knows how to be provocative. Fresh off his $1 million bitcoin bet, the controversial crypto entrepreneur, investor, author and outside-the-box thinker dropped this warning on a government-Big Tech maneuver to come. (Read the follow-up tweet):
Relevant Reads: Tethered to Bitcoin
Following news last week that it had recorded a $1.48 billion profit in the first quarter, reserve-backed USDT stablecoin issuer Tether announced that it would start buying bitcoin in an effort to diversify its reserves.
Krisztian Sandor reported that Tether said it would allocate 15% of the realized profits from investments to purchase BTC and will add the tokens to the reserve surplus, using its own self-custody mechanisms to store it.
The team from The Hash on CoinDesk TV weighed in, with columnist David Z. Morris warning about the “compounding risk” of Tether’s exposure to potential volatility, because USDT is so important to the wider crypto market.
And Daniel Kuhn asked a question that was likely on other people’s minds: Should we be worried? Is this Terra/Luna all over again?
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