📌 MUST READS

AI x Crypto

The team at CoinSnacks are deep believers in the transformative potential of crypto, regardless of what the price on the computer screen shows. However, it’s impossible to deny that AI has stolen some of crypto’s shine over the past ~6 months.

Since the release of ChatGPT last November, AI feels much like crypto did in 2018: an endless train of innovation, hype, and money.

There’s a new tool, invention, or investment into AI seemingly every day. And in 2023, tech news has largely become AI news. So much so that premiere crypto VC firms such as Paradigm (covered in the story below) are expanding their investment horizon to include AI companies.

So the question arises: Is the AI hype going to take the wind out of the sails of crypto-focused startups? Or will AI and crypto actually work hand in hand? Let’s take a look…

The Problems With AI Today
If we take a step back and think about what the current iterations of AI are and what they do, we can conclude that they are taking in large reams of data in order to better perform tasks for humans.

But the current iteration of AI has run into some notable problems around data privacy, authenticity, and more.

While we are only in the early stages of AI, and progress will be made in a positive direction, you can bet on the fact that individuals will be testing the limits in the other direction as well.

Let’s take a look at one of these problems: data authentication.

Two stories from the past few weeks have highlighted the the need for people to be able to quickly authenticate content.

First, was the viral image of an explosion at the Pentagon, causing the stock market to drop. Second, was the proliferation of a fake hit song from AI versions of Drake and The Weekend.

The main problem here is knowing what is real from what is fake. While some traditional “Web 2” startups are attempting to solve this issue, it seems ripe for the taking for “Web 3.” In this example, signing real content with cryptographic keys tied to a real human could play a major role in creating trust of content.

Ok, but that’s crypto solving a problem. But, how could the intersection of crypto and AI be a net benefit?

AI Could Be This Cycle’s Catalyst For Crypto
One of the more exciting AI innovations are autonomous agents such as Auto-GPT and BabyAGI. These autonomous agents generate a sequence of tasks that the AI works on until it’s accomplished a predetermined goal. Put simply, they do work without your help.

Obviously, projects like these unlock a wide-range of use-cases, with people using them for everything from building a website to doing research, to yes, making investments and trades.

However, one key issue these autonomous agents will face is around payment rails. Imagine that a bot needs to pay to access information for research or to devise a solution. If the bot uses fiat, this transaction will take days to close.

Why would a bot choose to go from the physical world to the digital world when they could transact entirely online?

But what if the bot uses crypto? Or, for example, Bitcoin’s Lightning Network? In this situation it would take a few seconds for the transaction to close, not a few days.

The intriguing part is, this concept is not just theory – it's currently under construction.

This situation is a testament to the countless ways in which crypto and AI can overlap in the future.

When you account for all factors, it becomes clear that AI is not going to be the death of crypto, but a potential catalyst for the next bull run.

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🔍 DEEP DIVES

VC Firm Paradigm Is No Longer Crypto-Only

When looking at crypto-focused venture capital firms, it’s hard to find one more successful than Paradigm. The firm raised more than $2.5 billion in November of 2021, deploying money into some notable deals such as:

In addition to their very profitable portfolio, Paradigm is also known for their prolific writings and contributions to the wider crypto ecosystem.

Because of these factors and their sole dedication to crypto, Paradigm is widely regarded as one of the premier VC firms in the space

But this might be changing.

For the first time in their 5-year history, Paradigm is investing in technologies other than crypto. These new investments will center most notably around AI, the current apple of VC’s eyes.

It’s a stunning shift for an investment outlet that made their name in crypto, but it’s not as surprising when you zoom out and take a look at the overall funding atmosphere:

And that is why an investor in “disruptive crypto/web3 companies” is now a “research-driven technology investment firm” looking to throw money into AI.

Ultimately, VC firms are in the business of making money. We will likely continue to see VCs shift their attention elsewhere until crypto can once again prove to be profitable.

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🏛️ REGULATORY FRONT

DeSantis Comes Out In Support Of Bitcoin

Last Thursday, Florida Governor Ron DeSantis took to a Twitter space with Elon Musk and investor/entrepreneur/podcaster David Sacks to announce his campaign for the Presidency. And, although it didn’t break the internet, it definitely did momentarily break Twitter as hundreds of thousands of people streamed into the Space to listen.

Technical issues aside, DeSantis hit on the usuals during the announcement. He talked of Florida’s wins during his reign. He discussed opposing China. He pushed back against the “woke mob”. And, in a welcome move for us, he defended crypto.

Specifically, DeSantis said:

These are all positive statements, but the real story here is the growing importance of crypto in the 2024 election:

Crypto is now mainstream enough that it is a serious talking point in Presidential elections. The fate of crypto in America could very-well be hanging in the balance. As crypto investors and voters, it’s now up to us to take into account a candidates attitude toward our industry.

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