How can AI merge with encryption and drive the next wave of innovation and growth for Web3?

Author: Bankless Compiler: Mary Liu, Bitui BitpushNews

Artificial intelligence (AI) fever has swept the tech industry over the past few months, and even cryptocurrency-focused venture capitalists have sniffed an opportunity. Although some AI garbage coins have indeed appeared, is there really a chance for the combination of AI and Crypto? We're always looking for answers.

With just a few lines of text prompting, and with incredible creativity and thought, artificial intelligence is billed as completely "disrupting" many fields. So what does this epoch-making rise mean for crypto? Bullish or Bearish?

Well, keep in mind that while the field of AI is sure to get hotter, AI and cryptocurrencies have already begun to converge in ways never before seen. In this article, let's explore the profound relationship AI can and will have with cryptocurrencies going forward, and how these connections can drive the next wave of innovation and growth in the web3 space.

Public AI Tools with Token Governance

The chatbot service ChatGPT is a marvel of ergonomics, but its codebase is owned by OpenAI, which is a private company.

That's fair. In the crypto space, however, many of us strongly support open source builds and public product software, so it's not an exaggeration to assume that many of us also think we should open source and public complement private AI services.

It is not an exaggeration to assume that we are moving towards Decentralized Autonomous Organizations (DAOs), leveraging their own decentralized computing marketplaces (in the manner of the Golem network for example) and ERC-20 utility/governance tokens to train and govern a public artificial intelligence model.

In other words, **DAO can incentivize the continuous contribution of computing resources to model training and reward contributors with tokens. The complexity of AI training can be managed by attracting skilled contributors with token rewards, while using tokens to vote on key decisions related to training, or to develop ethical and legal guidelines. **

Make no mistake, this “sticking tokens to AI” approach can be fraught with absurdity and danger. However, if executed properly, it could allow a DAO to train and manage a complex AI in an open, decentralized manner. If these AI tokens do emerge, the ensuing trading activity could be huge. This is good for cryptocurrencies.

Very smart smart contracts

Last week, Accelxr published an article outlining the potential to incorporate machine learning (ML), a subfield of artificial intelligence whose core is helping computers understand and make predictions from data, and enable smart contracts through zkSNARKs , which is a zero-knowledge proof.

The idea here is that adding "zkML" capabilities to smart contracts will allow them to evolve into more complex and intelligent systems that can become automated and dynamic, and thus able to make decisions based on real-time on-chain data , instead of making decisions based on the static code they wrote when they were first programmed!

To be sure, the potential use cases here are wide and varied, but let's just focus on the DeFi space as an example. Projects can use zkML solutions to facilitate AI-optimized automated yield strategies, hyper-liquidity mining, if you will. zkML can also be used to automatically update the parameters of DeFi protocols in real time. For example, loan protocols need to deal with sudden liquidation crises. And, there may one day be zkML-powered oracles that sign data off-chain and pass it into DeFi, for example, to an insurance protocol contract. That’s good for DeFi, and it’s good for crypto.

Authenticity verification

“…AI will create an explosion of images, audio, and software. It will be difficult to distinguish what is real from what is not. In this case, preventing deception, deepfakes, people copying works, verifying the creator/creator /Who you talk to will matter. Public/private key cryptography, zk-proofs, etc. can play a big role...” – Hunter Horsley, CEO of Bitwise

The above is from Horsley, who accurately foresees the coming wave of AI-generated media. When it comes to audio, text, video, and other visual content, AI levels the playing field between beginners and experts like never before. This new reality also means that it is easier than ever to fake reality with AI-generated content.

Going forward, as Horsley puts it, **as the need for public verification increases, look for the rise of projects like people signing content from their public ENS name to "notarize authenticity" which is good for cryptocurrencies . **

The Boom of New Content Generated by AI

The flip side of the AI-driven content explosion is that AI is making it easier for anyone, especially non-graduates, to become a content creator, or at least a more effective content creator.

A point to ponder here, in a cinematic context, an "auteur" is a director whose vision and control over a film is so unique that they are considered the authors of that film, not just the lead. AI now moves us all towards the status of auteurs in ordinary creative endeavors, as it empowers us to prepare audio, text, video, and more in a way that we are personally comfortable with.

For example, with just an idea, some time, and determination, you can now use the ChatGPT plugin + Stable Diffusion combo to create and code NFT projects from scratch as a non-technical creator. Removing the friction of creating and launching projects will drive more project activity, just as the internet has evolved over time.

Of course, it's not just independent NFT creators who can greatly benefit from AI here, but any group involved in creative work, such as animation studios or metaverse projects or web3 game companies. For example, the team behind NFT-based sci-fi card game maker Parallel is already exploring potential ways to enhance its gaming ecosystem with AI-based agents.

Expect more such experiments in the coming months and years as new types of content generation emerge. This is bullish for crypto.

Big Ideas

**The fusion of artificial intelligence and cryptocurrency is not only a possibility, but has become a reality of concern and brings great potential to the web3 space. **

Integrating AI into decentralized systems could revolutionize everything from content authentication to smart contracts, and these intersections now point to a more optimistic future for cryptocurrencies. Our ecosystem is going through a major wave of change that will make the magic of internet money even more magical!