Crypto is internet money, and the internet is for robots.
We humans barely recognize their gears and sockets — the crypto arbitrage and MEV bots, social media bot armies and algorithmic content feeds, generative code art and AI illustrations, and the various Zapier agents and automations that run in the background of our experience.
Previously, I discussed how there will be only more robots, and that Web3 is the correct economic and financial venue for their emerging machine economy. Of course, many of us are using so much software that we qualify as software cyborgs too.
Lex Sokolin, the founder of Generative Ventures, is the fomer Global Fintech Co-Head at ConsenSys, a blockchain technology company.
Generative Ventures has been investing in frontier companies since mid-2023, focused at the intersection of crypto, AI and fintech. Our macro thesis was compelling enough to get started, but there is reality on the ground and its patterns are starting to become more clear. Today, we want to dive more deeply into how this is already happening and describe the AI and DePIN (decentralized physical infrastructure) trends driving the sector forward.
On-chain/off-chain
The first observation is that some things happen on-chain, and some things happen off-chain. This is obvious, but worth pointing out. In the case of money, dollar bank deposits are off-chain, DAI is on-chain. Tokenized real world assets are off-chain, wrapped tokens or liquid staking are on-chain. National passports and driving licences are off-chain, while POAPs and NFTs are on-chain. The same concepts – money, financial instruments, identity – can be manufactured in different places.
The same is true for artificial intelligence. We can have a world where AI is off-chain, but occasionally crosses over to Web3 to take action. In such a case, we need services that function like oracles or on/off ramps for machine intelligence.
The same logic that drove fintech into creating embedded financial products (e.g., Plaid, Stripe) could give GPTs the API software tentacles they need to float around in crypto markets. Who is the Moonpay for ChatGPT? And, if we do pull AI into our trustless environments, how do we keep it honest and verify its outputs?
We expect that crypto custody and control of AI agents becomes a core value proposition…
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