The Powerful combination of AI and Blockchain
How users can monetize their data in a decentralized fashion.
Yesterday was Bitcoin's 15th anniversary. Notably, in a few weeks it'll also be the 30th anniversary of the first widely successful internet browser (Mosaic). So, Bitcoin is about half as old as the browser, which kind of blows the mind.
This milestone marks not just the passage of time but the profound evolution of digital landscapes. Delving into the forefront of these advancements, A16z crypto, a notable venture capital fund, stands as a beacon of expertise, shaping the future by recognizing the synergies between decentralized web3 applications and artificial intelligence.
Bullish on AI + Crypto
If anyone know anything about crypto technology, it's A16z crypto. They recently published their 2024 outlook and highlighted the powerful combination between decentralized web3 applications and AI, stating…
"Decentralized blockchains are a counterbalancing force to centralized AI. AI models (like in ChatGPT) can currently only be trained and operated by a handful of tech giants, since the required compute and training data are prohibitive for smaller players. But with crypto, it becomes possible to create multi-sided, global, permissionless markets where anyone can contribute — and be compensated — for contributing compute or a new dataset to the network for someone who needs it. Tapping into this long tail of resources will allow these markets to drive down the costs of AI, making it more accessible."
Also they stated,
"But as AI revolutionizes the way we produce information — changing society, culture, politics, the economy — it also creates a world of abundant AI-generated content, including deep fakes. Crypto technology can be used here as well to open the black box; track the origin of things we see online; and much more. We also need to figure out ways to decentralize generative AI and govern it democratically, so that no one actor ends up with the power to decide for all others; web3 is the laboratory for figuring out how. Decentralized, open-source crypto networks will democratize (vs. concentrate) AI innovation, ultimately making it safer for consumers."
See the full a16z outlook for 2024 here: https://a16zcrypto.com/posts/article/a-few-of-the-things-were-excited-about-in-crypto-2024/#section--6
My personal take is that startups which utilize AI and blockchain tech will provide a powerful combination of emerging technologies that offer value across multiple industries. This includes online businesses like gaming, cloud services, content service providers, and FinTech businesses. Whether it's an online business or a brick-and-mortar the value provided by AI and blockchain unlocks high value targets for investment capital, mergers and acquisitions. Basically, by casting a wider net and offering AI + Blockchain products and services adds a company will add exponentially more value to more users.
Hivemapper combines AI and Crypto
A good example of an AI company that utilizes blockchain to help people monetize their personal user data is Hivermapper.
Hivemapper is building an AI mapmaking engine that produces fresh, high-quality map data. It begins with dashcams collecting images but that's far from where it ends. Map AI, together with human AI Trainers, work together to turn images into valuable map data customers need.
HONEY tokens are used to create economic incentives across the Hivemapper Network, while balancing the needs of two groups within our ecosystem:
Map Data Contributors who contribute to the Hivemapper Network. They receive HONEY as a reward for submitting imagery, completing AI Trainer tasks, and editing map data.
Enterprises and Developers who consume map data to support their products and services. HONEY is burned whenever they consume data from the Hivemapper Network.
HONEY was built on top of the Solana blockchain. The first HONEY was minted on November 1, 2022 as part of block 158569587.
There is a fixed maximum supply of 10 billion HONEY tokens.
See that the price chart below which has gone up exponentially in 2023.
VCs are looking at the Crypto and AI space wholistically.
A synopsis from Fred Wilson, a legendary VC. He was one of the earliest investors in Coinbase and has been buying Bitcoin since 2013. Here are his predictions for 2024 provided by X user Mild Road:
The golden conclusion.
I conclude with two things.
The golden era we are entering is influenced by crypto and AI.
I asked Chat GPT to see what it thinks about blockchain and AI. Here's what it thinks…
"Explain why there is significant opportunity to build companies that combine the powerful combination of decentralized blockchain technology and Artificial Intelligence."
"The combination of decentralized blockchain technology and Artificial Intelligence (AI) presents a significant opportunity for building innovative and impactful companies. Several key factors contribute to the potential success of ventures that leverage this powerful synergy:
Decentralization and Transparency:
Trust and Security: Blockchain technology provides a decentralized and transparent ledger, ensuring trust and security in transactions and data sharing. This is particularly crucial in the context of AI, where trust in the sources of data and the decision-making process is paramount.
Immutable Records: The immutability of blockchain records enhances the reliability of AI systems by ensuring the integrity of data. This feature is especially valuable in applications such as AI-driven decision-making, where maintaining an unalterable record of data is critical.
Data Ownership and Privacy:
User Empowerment: Blockchain enables individuals to have ownership and control over their data through cryptographic principles. This aligns with growing concerns about data privacy, giving users the ability to selectively share their data for AI training or other purposes.
Smart Contracts: Smart contracts on blockchain platforms facilitate transparent and automated agreements, ensuring that data usage is governed by predefined rules. This enhances privacy and reduces the risk of unauthorized data access.
Tokenization and Incentive Mechanisms:
Economic Incentives: The use of blockchain tokens allows for the creation of economic incentives within ecosystems. In the context of AI, this means rewarding contributors for providing quality data or computational resources. Tokenization can motivate active participation and collaboration in AI-related projects.
Fair Compensation: Through tokenization, participants in the AI ecosystem, such as data contributors or computational resource providers, can receive fair compensation for their contributions. This democratizes access to AI-related opportunities and ensures a more equitable distribution of benefits.
Democratization of AI Innovation:
Reduced Barriers to Entry: Blockchain's decentralized nature reduces the barriers to entry for smaller players in the AI space. This is particularly significant as traditional AI development has been dominated by large tech giants due to the high computational and data costs. Blockchain enables a more inclusive environment, fostering innovation from a broader range of contributors.
Global Collaboration: Decentralized blockchain networks facilitate global, permissionless collaboration. This opens up avenues for diverse expertise and perspectives to contribute to AI development, potentially leading to more comprehensive and robust solutions.
Governance and Ethical AI:
Decentralized Decision-Making: Blockchain-based governance models can be applied to ensure democratic decision-making in AI development. This mitigates the risk of concentration of power in the hands of a few entities, promoting fairness and ethical practices.
Transparency in AI Systems: Blockchain's transparency can be leveraged to trace the origin and decision-making processes of AI systems, addressing concerns related to bias, accountability, and explainability in AI applications.
The response was spot on! The combination of decentralized blockchain technology and AI not only addresses existing challenges in trust, data ownership, and innovation but also opens up new possibilities for creating more transparent, and ethical AI ecosystems. Companies that navigate and harness these synergies effectively have the potential to drive transformative change in various industries.
Combining blockchain technology with AI has the potential to significantly amplify a startup's business idea, provided the founder possesses the right expertise and can strategically navigate the dynamic landscape of these technologies.
The compelling and strategic move to AI and Blockchain unlocks numerous advantages, ushering in a new era of ownership of one's data.
This strategic alignment of two transformative forces amplifies the positive impact of each.
Here's to finding and building great companies. Thanks for taking the time to read this. I hope you've enjoyed and please let me know if you have any feedback.
Kind Regards,
Jeff Tiefenthaler
Jeff Tiefenthaler is the founder of Trading Tech and Consulting LLC.
Jeff is an experienced FinTech entrepreneur, accredited investor, and brand ambassador with two decades of experience trading in US stock and options markets, 15 years consulting for Microsoft brands such as Xbox, Windows and Office. He’s been featured in CoinMarketCap and awarded number one for articles with the highest views, top 10 for projects by Engagement Growth, top 10 for projects by community followers gained.
Please contact Tief for a free consultation today!