Will AI agents and authentication be the next breakout crypto narrative?
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Will AI agents and authentication be the next breakout crypto narrative?
AI is at its highest level in history, while cryptocurrencies are at their lowest level ever.
Navigating Web3 tides with focused insightsWritten by KERMAN KOHLI, Founder of ARCx
Translated by TechFlow
If there's one thing I've learned from years in the crypto industry, it's that this market is highly narrative-driven. I break down its driving units as follows:
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Stories people can understand;
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Beliefs formed around those stories;
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Memes that encapsulate those beliefs.
Let’s look back and apply this framework:
2022
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There was a massive yield market only banks could access—if:
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Banks were evil, and crypto represented an alternative, better system;
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Crypto was a way to earn high interest on USD.
2017
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Governments prevented ordinary people from investing in great companies;
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Wealth creation shouldn’t be limited to accredited investors;
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ICOs were the new get-rich-quick scheme.
The format is identical—only the roles, narratives, and characters change. Each cycle also brings new heroes and villains. Just make sure you don’t become the protagonist. The more attention you attract, the lower your chances of survival.
We’ve now had over a decade of cryptocurrency, and the question on everyone’s mind is: what comes next? You can’t reuse the same narratives because those stories ended poorly (Terra/Luna/FTX, ICO scams, etc.). That’s not to say they weren’t valuable! Each cycle brought more talent, resources, and scale to the crypto economy. But ordinary people won’t return to crypto unless there’s a meme that resonates with them and aligns with their belief system.
In the past, I regretted not tying my convictions to my reputation and then feeling remorse. Recently, I’ve become more committed to my views, believing this time is different—I will stand by them. At least when I look back in the future, I won’t regret having done nothing.
Enough preamble. Let me introduce to you the bull market narrative for 2024–2026—remember, this is 2023.
Crypto + AI
Over the past few months, what has surprised me most is how quickly the entire world has embraced AI—especially large enterprises. I probably don’t need to provide extensive evidence for these events, as you can easily find information via Google or Twitter. I have two strong arguments about what this will entail, so let me explain them one by one.
Internet Money
Now that we know global consciousness has been influenced by AI, what comes next? Right now, you’re just integrating AI into your tools.
The next stage of this progression is the rise of AI agents—trained by you, using your data, operating across your tools. Projects like AutoGPT, BabyAGI, and many others are already moving in this direction. While the technology is still rudimentary, based on what we know today, reaching this stage is inevitable—and desired. AI agents will enable you to automate larger portions of your workflows. ChatGPT plugins are already simplified versions of agents, allowing you to:
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Express your intent to the LLM;
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It finds the right course of action for you;
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It executes the action.
If you disagree, please correct me—but this logical progression seems fairly sound and unlikely to fail. So then, what is the most powerful form of energy that people want to express intent around? Money—the universal energy adapter. People will want to express monetary intent. Here are some simple examples:
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“Bet $100 that the LA Lakers win their next game”
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“Find the best article about Trump’s election and pay any paywall encountered, up to $20 per month”
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“Buy my usual grocery list and deliver it Friday night, paying up to $30 for delivery”
All of these intents are impossible under the current banking system. Why? Think through the small details again:
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The entity actually executing the purchase isn’t you—it’s an AI agent;
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If the agent buys on your behalf, that means you didn’t directly authorize the transaction (your AI did);
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If someone purchases on your behalf, your fraud/refund risk skyrockets;
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No one wants to bear that risk.
The only solution would be a clunky checkout process within your chatbot, forcing you to manually enter credit card details in the chat window. Or, people could simply say:
“I didn’t buy that! My AI went rogue and bought it for me! I demand a refund since I didn’t authorize this transaction!”
What will the bank do? Refund. What will the merchant do? Ensure AI-driven transactions are blocked, because they can’t verify whether it was truly you who initiated them. I recall a similar analogy: a child secretly using your credit card.
LLMs are essentially the same. As the above illustrates, even a child using your card is already a gray area. When the App Store launched, Apple invested heavily in infrastructure. In such cases, the bottom line seemed to be: the consumer always wins. The merchant ultimately pays.
This is a regulatory and banking problem. To prevent this, banks and payment processors will block LLMs from acting on your behalf—resulting in a far clunkier user experience!
So what’s the alternative? Well, if you’re reading this article, you probably already know—cryptocurrency: internet-native money without intermediaries, accessible via APIs.
Also, think about this: how do you verify transactions you’ve authorized when using a credit card? By entering the right numbers on a plastic card? That’s a joke. It should be by signing the correct data with your private key. Everything else can be forged. Especially when money is involved, LLMs need cryptographic guarantees.
Suddenly, there will emerge two entirely new categories of LLMs: one using cryptocurrency-based payment systems, and another using traditional banking systems. Guess which will offer a superior user experience? Yes—the one using crypto. Code requires guarantees, callbacks, and completion. Credit cards can’t provide that. Cryptocurrency can.
An entire industry will emerge around AI agents using cryptocurrency and crypto companies supporting AI agents. Autonomous computation will intertwine.
This is my view—and perhaps the strongest case. Now let’s examine the other side.
Internet Identity
For some, this point may be less obvious, but problems with existing systems are beginning to surface. Let’s start with this premise: online identity verification is broken.
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Phishing emails are becoming increasingly difficult to detect—even for highly sophisticated users;
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Deepfakes are becoming harder to distinguish from real images;
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Most digital content representing sensory input (visual/audio) is hard to authenticate;
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In the world of large data models, attribution of ideas is becoming increasingly difficult.
All these issues fundamentally boil down to one problem: proving your identity on the internet in an unbreakable way is extremely difficult. Email addresses are flawed (phishing), phone numbers aren’t ideal (SIM swapping), and soon audio/video will be even harder. If there’s a reliable method, it’s one we already know:
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A public key representing your identity;
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A private key ensuring you control that identity.
Supported by cryptography and mathematics underlying these structures, no other method compares.
So how does this work? Essentially, by using private and public keys for authentication across the internet, everything becomes “web3-ified.” Hardware, software, and users will all require keys to create a chain of provable identifiers for verification during communication. This will be harder to implement, as it must originate from the underlying hardware, but the narrative may generate enough momentum. iOS and Android already support PassKeys, so big tech is clearly thinking about this. Here’s the future I envision:
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Your phone has a public key verifying its identity;
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You have your own public key verifying your identity;
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Every app you use has its own identity when transmitting photos/videos;
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Everything on your phone will carry a set of public keys to cryptographically verify its origin.
I could expand further in this direction, but the path and timeline aren’t entirely clear to me—though I believe this will be a powerful story people can rally behind. Autonomous internet identity.
Conclusion
Before the recent emergence of AI over the past few months, this was impossible to foresee. It represents a unique new pathway, opening doors to future possibilities. AI is at an all-time high, while crypto is at an all-time low. Imagine that in the next 12–18 months, these two curves intersect—crypto rising as AI cools down. I might be off on timing, but I’m confident the logic chain I’ve described above is strong enough to withstand the test of time.
We’ve long known that buying coffee or anything in the physical world with crypto doesn’t make sense. But for an internet-native economy? It does. And AI has made the entire world realize this—because AI agents live on the internet.
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@kermankohli
