Bankless co-founder: The AI x Crypto cycle has begun
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Bankless co-founder: The AI x Crypto cycle has begun
The intersection of artificial intelligence and cryptocurrency is real.
Navigating Web3 tides with focused insightsAuthor: David Hoffman
Translation: TechFlow
Introduction
2024 is the AI x Crypto cycle.
AI x Crypto is real. The infrastructure is there, and so are the hype-driven degens.
The 2024 AI x Crypto cycle marks the convergence of two parallel industries, each brimming with immense potential, signaling the formation of an epic bubble. This article delves into the internal logic of this cycle and explores how cryptocurrency and artificial intelligence (AI) interact to jointly drive this surge.
Main Content
This is the AI x Crypto cycle. Every bull market cycle is defined by the narrative it spawns.
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2013 was the era of "Proof-of-Work forks and fair launches"
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2017 was ICO mania
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2021 was the NFT bubble
I can now say with certainty: the 2024 cycle will be defined as the AI x Crypto cycle.
Two parallel industries, each harboring enormous latent energy, are colliding and generating a massive bubble.
The dollar inflows into BTC ETFs are like jet fuel injected into a rocket ship—soon, capital will flow downstream into higher-risk cryptocurrencies. Soon, possibly in May or November, ETH ETFs will be approved, further channeling liquidity into blue-chip crypto assets. People begin hunting for 100x gains in low-market-cap altcoins—this is tradition in every bull market.
Meanwhile, Nvidia’s $2.2 trillion market cap has almost single-handedly captured this narrative-driven growth in traditional stock markets. Tech giants like Google and Microsoft are pushing Web2 to capture the zeitgeist of the AI era and reshape the future of the tech industry. Beyond that, Silicon Valley continues to pour the vast majority of startup funding into AI.
The age of AI has arrived.
There's just one problem. AI without crypto is a highly centralized phenomenon, where Web2 companies and their leaders control all the wealth and power generated by AI. This is an issue long preached by AI thinkers and philosophers before AI entered public consciousness—and now, the centralization of wealth and power by AI is becoming evident.
As Peter Thiel said: “Crypto is decentralized, AI is centralized. Or if you want to frame it more ideologically, crypto is libertarian, and AI is communist.”
Cryptocurrency and artificial intelligence stand on opposite ends—but they are not opposing forces. They complement each other better together, and combined, they create a 1+1>2 synergy. AI needs crypto to avoid creating a centralized, utopian oligarchy, while crypto needs AI to unlock its full utility and power!
Decentralized Artificial Intelligence
I believe we’ll hear the term “decentralized AI” frequently in 2024. This simple meme carries deep meaning—a concise way of saying “AI for the people.”
Centralized Web2 AI holds massive monopolies over data and computing. They will funnel all resources into developing AI models aiming to be as general-purpose and powerful as possible. They will stifle competition and restrict innovation. They will seek regulatory capture and consolidate their dominance. They will make a tiny few extremely wealthy and powerful—becoming our new overlords.
Data monopolies limit AI development
I listened to Casey Caruso's talk at the ETH Denver AGI Summit: “We all want open-source AI with a wide variety of models tailored for different uses, but the economies of scale behind AI model development are extremely powerful. Data and compute monopolies restrict the development of open AI models.”
The idea here is that we’re interested in a broad range of AI models—for everything: music, film, art, personal assistants, trading algorithms, recommendations, curation, and more.
We, as humans, want to have as many AI models as we once had blogs. By democratizing access to AI models, human creativity, expression, and value creation will flourish.
But because of centralized AI, we cannot have these. We need decentralized AI.
Twitter users demand decentralized AI
Decentralized Computing
The foundation of the AI x Crypto narrative begins at the decentralized computing layer—the base of the AI x Crypto tech stack.
Decentralized computing has long been part of the crypto space—there’s nothing new about the concept itself. What’s new is the massive price movements these projects have experienced since the start of the AI investment cycle. As Nvidia adds tens of billions to its market cap and OpenAI rolls out new AI products that redefine society, prices behind decentralized computing platforms keep rising.
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Filecoin: up 100% in 30 days
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Arweave: up 200% in 30 days
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Render: up 300% in 3 months
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Bittensor: up 1250% in 5 months
These are just four projects I’ve picked from hundreds. Dozens of others, varying in quality, have also made significant progress over recent months.
Some of these projects have real fundamentals. Some are genuinely growing due to the rise of the AI sector.
But overall, their price movements are entirely speculative—either based on anticipated future adoption by the AI industry or on even greater speculation. In my view, it’s the latter.
AI Meme Coins
Worldcoin is a very real project with a real founder, a real team, and a real vision, yet it currently carries an unrealistically high valuation of $63 billion—only explainable by people trying to gain exposure to AI, using WLD to do so.
This is what crypto offers the AI industry: Tokens and liquidity.
Our industry consists of fast-moving radical innovators who push the boundaries of technology.
We ask, “Why not?” and then seek forgiveness.
The pace of regulation and bureaucratic public markets is unsatisfactory and restrictive. As Crypto x AI, we won’t wait for conservatives and incumbents to catch up—we’ll leap ahead and build a better future.
But before all AI builders learn to use crypto, and before all crypto builders learn to use AI, we will first be hit by a wave of AI meme coins—tokens that will outpace both.
The intersection of AI and crypto is real—it will just be front-run by completely vaporware projects and low-quality tokens.
This is simply the expected order of events.
Launching and promoting an AI meme coin is far easier than building a real project. Real Crypto x AI projects take years to build—time we don’t have within a crypto bull market that lasts at most 12–18 months.
AI tokens are the shiny new thing.
New retail investors simply find a token related to AI, watch a YouTube video, and press buy.
That’s why CorgiAI skyrocketed.
Meanwhile, check out what I found browsing Crypto Twitter: actual, real innovation using Crypto x AI!
What Happens Next
AI x Crypto is real. The infrastructure exists. And the signals around this infrastructure will be completely drowned out by the next wave of speculative degens in crypto.
Crypto projects will find ways to rebrand themselves as Crypto x AI projects, and their tokens will pump as a result.
Then everything will collapse, and the bubble will burst.
Then we’ll rebuild everything again—on a stronger foundation than we had before.
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