- The convergence of AI and cryptocurrency could bring out each other’s strengths and drive the next generation of the internet
- This is a dynamic, rapidly evolving field with enormous potential for growth and innovation for investors and entrepreneurs
Generative AI has been making headlines in the past few months with impressive breakthroughs and applications, such as AI-powered chatbot ChatGPT and image generators Stable Diffusion and Midjourney. While generative AI is attracting much attention from the public and investment from the tech industry, cryptocurrency is losing its momentum and appeal. Some venture capital investors have changed their profile taglines from “all in on crypto” to “all in on AI”.
However, the potential convergence of artificial intelligence and cryptocurrency is being underestimated. They should not be seen as competing forces in the digital economy.
Instead, we should be excited about potential synergies and the impacts they can have on the next generation of the internet. For regulators, investors and entrepreneurs committed to building a global hub for Web3 in Asia, it is important to recognise the next generation of the internet could well result from the coming together of AI and cryptocurrency.
ChatGPT reached 100 million monthly active users just two months after its launch, making it the fastest-growing consumer application in history, according to a recent UBS study. Mass adoption happens to be the major challenge for blockchain technology. AI could accelerate the mass adoption of cryptocurrency by reducing the complexity and security concerns that can be an entry barrier to potential users.
First, AI can provide more user-friendly interfaces and tools for interacting with blockchain networks and smart contracts. Chatbots can guide users throughout their journey in the blockchain world, assisting in the process of creating and managing on-chain transactions, answering questions and providing assistance in real time.
Binance, a cryptocurrency exchange which got its start in China, recently introduced an AI-powered chatbot called Sensei. The chatbot is designed to enhance the learning experience for Web3, blockchain and cryptocurrencies. Chatbots could soon be capable of more than just educating users. They should create a more personalised experience for users as they navigate the blockchain world by offering tailor-made tutorials, recommendations and support.
One advantage of blockchain is the transparency of all on-chain transaction data. However, accessing and comprehending this data can be challenging. AI-driven analytic tools can help users make sense of the data by identifying patterns, trends and anomalies, as well as providing actionable insights and recommendations.
Dune, a blockchain data analytics platform, has launched a new feature called “explain query”. This feature uses AI to simplify complex Structured Query Language (SQL) queries and enables users to obtain a natural language explanation of any SQL query with just one click. Eventually, users should be able to use natural language to get the information they need from databases.
Smart contracts are a fundamental aspect of blockchain technology, enabling self-executing agreements without intermediaries or trusted third parties. However, smart contract codes are currently difficult for the average user to understand and verify. Creating, deploying or evaluating smart contracts requires professional developers.
Fortunately, AI can provide intelligent code generation tools that automatically generate smart contract code based on user inputs. These tools can also analyse existing smart contracts for potential vulnerabilities and suggest improvements, ensuring the security and efficiency of the contracts. It is exciting to envision a future where smart contracts are democratised, enabling anyone to write and use them to facilitate collaboration with others.
One of the biggest challenges in AI is ensuring data integrity and privacy. Blockchain technology provides a solution to this challenge by enabling secure data sharing between parties while maintaining data privacy. By leveraging the transparency of the blockchain, businesses can create a trusted and secure data-sharing network for AI.
What is more, it seems highly likely that AI agents will become the norm soon and take over all sorts of online activities, from managing finances to booking travel and entertainment. AI agents cannot establish social media or financial accounts like humans do, but in this new world, cryptocurrency wallets might become the primary means for AI agents to establish online identity and conduct transactions under their owners’ delegation.
This might sound strange, but AI agents actually need cryptocurrency finance more than humans do. The code-driven blockchain world is the perfect environment for AI agents to automatically operate and transact under the rules set by code while leaving a transparent record for humans to oversee.
What I have discussed so far only scratches the surface of the promising synergy between AI and cryptocurrency. I have always felt that the previous narrative of Web3 was a bit empty – tokens alone will not bring about the next generation of the internet.
However, the promise of Web3 might finally be realised thanks to the combined transformative power of AI and cryptocurrency, which will empower users and builders in unprecedented ways. The intersection of AI and cryptocurrency is a dynamic, rapidly evolving field with enormous potential for growth and innovation.
This offers investors and entrepreneurs a wealth of opportunities. It is an exciting time to be at the forefront of these cutting-edge technologies.
Lily Z. King is chief operating officer of Cobo, a leading global cryptocurrency custodian service provider and blockchain infrastructure developer. She is licensed to practice law in both the US and China.