Bankless: 2024 will be the AI+Crypto cycle

Written by: David Hoffman, Bankless

Compiled by: Kate, MarsBit

AI x Crypto is real. The fundamentals are there, and the speculation is there.

Every bull market cycle is defined by the frenzy it breeds.

• 2013 was the era of "Proof of Work forks and fair launches"
• 2017 was the ICO boom
• 2021 was the NFT bubble

I now call it:

The cycle of 2024 will be known as the AI x Crypto cycle.

Two parallel industries are driven by tremendous potential energy, creating massive bubbles in the process.

The dollars flowing into Bitcoin ETFs are like jet fuel injected into a rocket ship, which will soon propel capital downstream into the higher-risk crypto markets. Soon, possibly in May or November, ETH ETFs will be approved, further capital flows will inject into the blue chips of the crypto market, providing people with the ammunition to start looking for low market cap 100x opportunities, which is a tradition of every bull market.

Meanwhile, Nvidia's $2.2 trillion market cap has almost single-handedly achieved this narrative-driven growth in the stock market. Tech giants like Google and Microsoft are pushing Web2 to seize the zeitgeist of artificial intelligence, changing the future of the tech market. Additionally, Silicon Valley continues to direct the vast majority of venture capital into the AI space.

The age of artificial intelligence has arrived.

There is only one problem. AI without crypto is a massively centralized phenomenon, where Web2 companies and their leaders control all the wealth and power that AI brings. Long before AI entered the public consciousness, AI thinkers and philosophers have been touting this issue, and now, the concentration of wealth and power brought by AI is coming to the forefront.

A famous quote by Peter Thiel:

"Crypto is decentralized, AI is centralized. Or, if you want to frame it more ideologically, cryptocurrency is liberalism, while AI is communism."

Cryptocurrency and AI are at opposite ends of the spectrum, but they are not opposing forces. They are better together; together, they will create a whole that is greater than the sum of its parts. AI needs crypto to avoid creating a centralized dystopian oligarch hell, and crypto needs all the utility and power of AI!

The AI in the crypto space seems poised to break this cycle, but why?

Decentralized AI

I think we will hear the term "decentralized AI" a lot in 2024. This very simple meme contains a wealth of information and meaning in a very simple phrase: "AI, but for the people."

Centralized Web2 AI has a massive monopoly on data and computation. They will pour all resources into developing AI models to produce the most general and powerful models. They will stifle competition and limit innovation. They will engage in regulatory capture and do everything they can to solidify their positions. They will make a very few people extremely wealthy and powerful, becoming our new overlords.

https://x.com/TrustlessState/status/1762318512507208182?s=20

I am listening to Casey Curaso's speech at the ETH Denver AGI Summit:

"We all want open-source AI and a widespread distribution of customized models for various uses, but the forces driving the economies of scale behind AI models are very strong. Data monopolies and computational monopolies limit the development of open AI models."

The idea here is that we are interested in a wide array of AI models— all models: music, movies, art, personal assistance, trading algorithms, recommendation and curation models…

As humans, we want as many AI models as we have blogs and websites. By democratizing AI models, human creativity, expression, and value creation will flourish.

But due to centralized AI, we cannot achieve this.

We need decentralized AI.

https://x.com/anna_kazlauskas/status/1764675698310926459?s=20

Decentralized Computing

The foothold of the AI x Crypto narrative begins with decentralized computing— the foundational layer of the AI x Crypto tech stack.

Decentralized computing has long been a part of the crypto space— there is nothing new here. The only new development is that since the rise of the AI investment cycle, these platforms have experienced massive price fluctuations. As Nvidia's market cap has increased by billions, OpenAI has launched new AI products that redefine society, and the bids behind decentralized computing platforms are getting higher.

• Filecoin - up 100% in 30 days
• Arweave - up 200% in 30 days
• Render - up 300% in 3 months
• Bittensor - up 1250% in 5 months

These are just four platforms I picked from the crowd. In the past few months, hundreds of companies with varying quality levels have taken significant actions.

Some of these platforms have real fundamentals. Due to the rise of the AI industry, some are actually experiencing growth.

But overall, their price actions are entirely speculative, either based on views of future AI industry adoption or on the outlook for greater fools in the future.

In my view, it is the latter.

AI Meme Coins

Worldcoin is a very real project, with a very real founder, a real team, and a real vision, currently valued at an unreal $63 billion, which can only be explained by people's attempts to engage with AI, using WLD to do so.

This is what cryptocurrency offers to the AI industry: tokens and liquidity.

Our industry is made up of rapidly evolving radical innovators pushing the limits of what technology can do.

We ask, "Why not?" and then we seek forgiveness.

The pace of regulation and public market bureaucracy is unsatisfactory and constrained. As Crypto x AI, we will not wait for the traditionalists and power holders to catch up; we will surpass them and create a better future.

However, before all AI builders learn to use cryptocurrency, and before all cryptocurrency builders learn to use AI, we will first be hit by the wave of AI Meme coins that will be able to surpass them.

The overlap of AI and Crypto is real— it will just be preempted by complete vaporware and shitcoinery.

This is the operational order we expect.

It is much easier to issue and sell an AI Meme coin than to build a real project. A genuine Crypto x AI project will take at least a few years to build, and we do not have that much time in a crypto bull market, which lasts at most 12-18 months.

https://x.com/MikeIppolito_/status/1762262716671021465?s=20

AI tokens are the shiny new thing.

The bullish case for AI tokens is that buying them requires no brainpower at all. The incoming retail investors just need to find some stocks related to AI, watch a YouTube video about them, and hit the buy button.

This is what we call the left side of the curve, which is why CorgiAI is investing in the top 100 tokens.

The first page of the CorgiAI "white paper" is everything you need to know.

This is ridiculous. It’s going nowhere. It’s both cute and funny. This is what happens when the masses get a financial asset printing press: ERC20 tokens.

Here’s a quote from Jacob of Zora that I love:

https://x.com/js_horne/status/1764765731797729610?s=20

Meanwhile, check out my findings on the timeline: real innovation using Crypto x AI!

https://x.com/js_horne/status/1765110257359954367?s=20

What Happens Next?

Welcome to the next 18 months of your life.

AI x Crypto is real. The fundamentals are there. And the signals around the fundamentals will be completely drowned out by the next wave of cryptocurrency speculation.

Crypto projects will find ways to position themselves as Crypto x AI projects, and their tokens will rise as a result.

Then everything will come crashing down.

Then we will rebuild it on a better foundation than before.

That is tradition.