Crypto & Artificial Intelligence (AI)- Friends, Enemies, or Both?
13 Sep 2023 by Rory Kejzerko 4 min read
Crypto & Artificial Intelligence (AI)- Friends, Enemies, or Both?

When it comes to anthropological, philosophical, and technological points of discourse, both crypto and artificial intelligence (AI) have a lot to say. 

Respectively, both domains of technology have experienced almighty come-ups- with crypto’s coming amid the 2021 bull run (along with smaller pumps from previous market cycles), and AI’s coming in wake of platforms such as ChatGPT launching last year.

In an honest reflection on things, AI’s potential influence on the way in which we live - or at least in the future - has meant that it’s garnered the same (or if not more) mainstream attention as crypto has done. 

With this in mind- and given that they both serve as a means for redefining how we own, communicate, and live- a discussion surrounding the intersection of the two technologies is deserved. 

Artificial Intelligence (AI) in Web3 

As of today, AI’s influence across the Web3 space predominantly falls in the realm of NFTs. 

Made famous through collections such as Tyler Hobbs’ Fidenza and QQL, ‘generative art’ appears to be a proficient playground for AI and blockchain technology. 

Such art ‘kind’ is underpinned by Generative Adversarial Networks (GANs), which involve computers generating content that has similar characteristics to the image-based datasets it’s been fed (think DALL-E). 

However, there are also some AI-crypto use cases floating about, with these mainly involving business operations of companies. 

For example, AI can be used for automating workflows, idea prompts, and smart contract generation and audits (meaning it can essentially be deployed across all types of crypto, NFT, and Web3 projects).

More practically, AI’s automotive powers have the ability to free-up time for developers to tackle the infinite array of other issues involved with running a tech firm. This includes offering more time for tapping into something that (hopefully) won’t ever be replicated… human creativity. 

AI’s Taking of Crypto’s VC Market Share 

AI serves a double-edged sword when it comes to crypto, as whilst it’s certainly here to assist developers, its unparalleled hype over the past year or so has attracted venture capital (VC) funds that would’ve otherwise flowed into DeFi.  

Once the world’s hottest new ‘democratisable’ tech, crypto has had a turbulent past 18-months to say the least. In turn - and with the coincidental arrival of AI in-and-around the time of the FTX blow-up - it’s fair to say that crypto has passed the VC ‘golden goose’ torch to AI. 

Of course, FTX is by no means alone when it comes to deterring interest from VC firms, as the collapses of Celsius, Voyager, Three Arrows Capital (3AC), and Luna/UST have also contributed.

Consequently, this has led to previous years’ outlandish investments in quirky crypto start-ups drying up.

The stats happen to back this consensus up, as when it comes to crypto alone, the industry forged deals worth a net total of $2.34 billion in Q2 2023 (Crunchbase) - which is a sharp fall from the $12.24 billion that changed hands during the bullish times of Q1 2022. 

Further, when it comes to comparing this figure to that of AI, it pales relative to the $28 billion garnered by the industry throughout 2023 so far (which is a 28% share of VC’s ongoing $100 billion spending spree). Here, statements suggest that investment flows are being used to secure highly-promising computation tools, as opposed to graphics processing units (GPU) that are currently in a shortage. 

That being said, crypto’s numbers don’t look ‘too bad’ when taking them out of isolation (as well as comparison with tech’s new ‘golden goose’). This is because with interest rates having their own (unfortunate) pump, worldwide VC investments in Q2 2023 were said to have fallen 49% compared to Q2 2022’s figures. 

Artificial Intelligence (AI) in Crypto- Final Thoughts 

Although competitors on many (money-driven) levels, it’s evident that the two domains of tech can serve as compliments to one another. 

In fact, this emergence is something that we’ve already begun observing, as crypto projects such as Jada are pivoting towards AI whilst maintaining their decentralised roots. 

Ultimately, the augmentation of AI into crypto proceedings bodes well for start-ups seeking VC funds. More poignantly, this also infers that projects and their duel-tech innovations are more likely to be successful (therefore meaning more utility on offer for us all). 

Another point to consider is the relative difference in lifespan between crypto and AI, as whilst the former has been around for almost a decade, the latter has only been on the mind of VCs for a matter of months (or perhaps a few years). 

Further, with the cyclical nature of crypto economies- which can also become massively sensitive to other macroeconomic factors such as Europe’s sky-high inflation- many analysts predict that the DeFi space will eventually make an almighty turn around. 

Although these bullish conditions may seem a million miles away right now, crypto-centric developments such as Bitcoin ETF approvals will most certainly help proceedings, whilst ‘eventual’ decreases in global crypto regulations and interest rates will also make the space a more appetising proposition for investors.

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This article is intended for educational purposes and is not financial advice.