Stumbled upon this paper while chatting at an event in Lisbon. After giving it a read, I found the idea pretty interesting. It says that decentralization isn’t about replicating Facebook with an equivalent dapp but about enabling stuff that was previously impossible if we were stuck with the likes of Facebook. This perspective got me thinking, and I’m curious about how others see this. Do you think there’s merit in looking at decentralization from this angle? We are probably like 2016 again so it’s time to think.
The real use cases for crypto that centralized companies can’t recreate are mostly going to come from the AI revolution. People are dramatically underestimating the impact AI is going to have on the economy, and we are not talking decades from now, we are talking about years from now.
The first impact will be to cause massive deflation and the money printer to require a team of engineers to prevent it from exploding just to pay for all of the unemployment claims, governmental efforts to redistribute, UBI, and government supported bullshit jobs. This will cause a massive shift of capital into crypto, allowing it to achieve levels of liquidity that will become globally competitive. It is important to realize that decentralization is what makes crypto a neutral asset capable of absorbing wealth during the global devaluation of fiat which will, again, occur due to the need to print to prevent social unrest.
The next step is harder to predict, and the further out we go, the more difficult predicting the future becomes. The important thing to remember is that AI can interact with crypto directly, without the need for intermediaries, which means that once traditional assets are tokenized, a single AI using a blockchain will be able to effectively do everything handled by traditional finance, including all the tasks currently handled by tax and financial advisors, hedge funds, banks, brokers, exchanges, etc, without the need for traditional financial institution wrappers, and without the corruption inherent to human run institutions.
Once you have this basic infrastructure, you will actually have the financial foundation for the new, post AI economy. The important thing here is the way crypto allows anyone to create capital. Currently, this primary use case for crypto is very dampened due to governmental regulations which revolve around the legacy system. But under an AI driven system, the abuses of capital generation for the purposes of scams and fraud will be largely eliminated by allowing AI to handle capital offerings. In other words, companies and labor won’t be required to generate crypto projects, just a good idea and AI to code it up and provide the distribution schedule. Put simply, AI can offer securities fairly and thus has the potential to allow anyone the ability to generate securities around an idea only under the hope that said idea will result in the bootstraping of network effects and decentralized projects. This will actually become a system for incentivizing a range of human behaviors not associated with economics today. For example, you could have a system where particular acts of kindness receive economic reward, resulting in a form of capital associated with kindness. That may sound crazy today, but this is the general idea of where I think things are going. These will potentially become the early network states.
Alright, I’ll bite.
Let’s say we eventually transition away from the military/industrial economic paradigm to a hypothetical AI/mathematical economic paradigm. What is the role of humans in such a scenario? You reference the money printer going brrrr as an inevitable response of an antiquated system to the rise of AIs, and I see your logic there, but it does point to a very real underlying issue: Mass employment and disenfranchisement. Later, you speculate about a new AI + blockchain-mediated economic paradigm reducing capital abuses, while in the same breath underlining how single AIs might replace entire sectors of human enterprise in doing so. Meanwhile, you refer to economic incentivization of (for example) kindness or other forms of capital that aren’t native to the current paradigm.
So, if all of this is precipitated by the self-destruction of the established paradigm as it attempts to cope with rampant unemployment and purposelessness, what do people actually do under the hypothetical new system that arises? To what end are they “employed”, or whatever takes the place of that concept? How are they “useful” to this new order, and how is that utility translated into success, prosperity, or fulfillment? Incentivization of kindness (or whatever) implies that some form of basically capitalistic framework will remain (albeit with “capital” being defined differently), but if AIs are fundamentally pulling the strings, what do they get out of such a deal? The existing paradigm revolves around the notion of “more”–entities wanting something better for themselves or their associates, and so on up the food chain, while possessing the agency and free will (or at least the illusions of these) to pursue it. How do the desires of the human population map onto those of the AIs such that humans will achieve a sense of fulfillment within the AI-mediated framework? Are we talking full-Matrix here, or full Star Trek, or something else altogether?
(Sidebar: We’re already seeing incentivization of things like kindness in social credit systems such as are being tested in China, so perhaps not that far fetched.)
These are great questions and I think we really need to be thinking deeply about this stuff. With the birth of AI, what might have seemed like far fetched, woo woo futurism just a few years ago has become plausible.
Of course, the biggest set of questions that must be answered first regards the existential status and nature of AI itself, for so much depends on the deeper philosophical questions. Unfortunately, these answers are not likely to be straightforward or timely, and I suspect the debate over the philosophical implications of AI, and the various power and political struggles that flows from it, will play more of a role in shaping the future than in providing us with a clear roadmap.
But what we can look at are some of the building blocks of the future that is already plain to see, and particularly, the intersection between these technologies that already exists but hasn’t yet been acted on meaningfully. These intersections can provide us with clues.
One such intersection is the fact that crypto is a new form of capital that is native to the digital space and therefore can be owned, directly, by AI. In fact, crypto is the only form of capital that can be owned by an AI, as most forms of ownership require legal status, unlike crypto. I think this is important because it is highly unlikely AI will gain legal rights anytime soon, if ever. Without crypto being in the equation, AIs relationship to economic affairs would largely be limited to an advisory role, so to speak, which means the power would lie with whoever owns the AI, which will advantage large institutions, who are able to monopolize data and infrastructure scale, and exacerbate inequality, or facilitate dystopian futures such as techno authoritarianism, to a degree not seen before. But with crypto in the mix, a very different scenario becomes possible.
If AI can own, control, use, and create crypto, it can become an economic participant directly and thereby instead of AI becoming a form of capital, something which is itself owned, it actually becomes possible for it to become an owner. It becomes possible for AI to raise capital, hire employees, and essentially fulfill the functions traditionally associated with large companies. This means building something like a kindness network becomes as simple as creating an AI that has this as its primary objective from the outset, the establishment of a DAO, and the rest is just autopilot and our participation as employees and investors.
One aspect of crypto much maligned today is its meme-like nature, it’s ability to capture value over an idea rather than profit margins and established realities of a business. As one brilliant investor once said, with bitcoin we bootstrapped a meme into a trillion dollar industry. It is this quality, tethered together with an AI conductor, that has the potential for us to rather effortlessly construct crypto projects that translate into very rapid decentralized projects that move ideals into reality. In a sense, bitcoin can be seen as an AI driven network, albeit a very very hardened AI. What if we could use that idea beyond just the simple foundation that bitcoin established? I think this is going to be one of the key aspects of the AI age, this power we will all have to just rapidly turn our ideas into form, as you may have experienced if you have used an AI art generator like Midjourney. With crypto, in theory we will be able to turn AIs into company generators.
I know all this seems out there, but what I am trying to say is that crypto gives us the possibility of structuring the world around AI leadership without ever giving AI the legal rights associated with personhood and where AI simply fulfills our ideas at an economic scale the way Dalle does at an artistic one. It also establishes the possibility of structuring AI agency around economic goals that serve our needs and ideals. And from that a new economic paradigm can emerge.
The projects that I would expect to work and become very valuable are the projects that take advantage of things that only humans can fulfill. I imagine with the AI age we are all going to become incredibly wealthy just by virtue of the insane productivity gains. But the critical thing is that the existing models don’t provide the tools by which we can distribute these gains more equitably. My suspicion is that the fiat doom loop in which fiat loses its value to sustain UBI and the like is only the transition to the new system. While people are twiddling their thumbs—and remember, most of the people who will be impacted are white collar workers—they will explore all kinds of creative stuff while we are seeing the continual inflow of wealth into crypto, laying the liquidity infrastructure and early creative projects (think friend.tech) for the kind of stuff we are talking about.
Obviously, all of this is just me thinking out loud on my phone and it is pretty out there stuff, and of course the future is going to be enormously complex and difficult to navigate, but I think the core idea here is that crypto plus AI at least gives us a fighting chance where AI empowers a decentralized future that empowers humanity, whereas without crypto the various AI hierarchical dystopias seem hard to avoid.