The co-creator of the Ethereum network, Vitalik Buterin, has been speaking quite negatively about artificial intelligence in recent months. He published a lot of entries on his blog about the dangers posed not so much by artificial intelligence itself, but by the vector of its development. However, on Tuesday, January 30, 2024, Buterin's entry appeared showing positive applications of AI, such as the synergy of artificial intelligence and cryptocurrencies.
Why the sudden change of heart and what potential does Buterin see in artificial intelligence?
Synergy of artificial intelligence and cryptocurrencies – four main application categories
Vitalik Buterin is known for his blog, where he often publishes entries with his thoughts on the cryptocurrency industry and the broadly understood world of technology. The entry from January 30, 2024 is about artificial intelligence, but it is not written in the style of previous publications about AI. This time, Buterin decided to present artificial intelligence in a much more positive light than usual. The co-creator of Ethereum has identified four main application categories in which the synergy of artificial intelligence and cryptocurrencies will play a key role – these are:
- AI as a “player” in the cryptocurrency market,
- AI as an interface for the cryptocurrency market,
- AI, as rules for the cryptocurrency market,
- AI as an object on the cryptocurrency market.
Although it all sounds extremely complicated, I, dear reader, will try to present it in an easy and understandable way.
AI as a “player” in the cryptocurrency market
This synergy of artificial intelligence and cryptocurrencies has existed for almost a decade and is actively used by DEXs (Decentralized Exchages). It is about using machine learning and algorithms to predict the movement of the cryptocurrency market. An interesting example of use are, for example, MEV bots, which are becoming more and more popular among traders. An example from recent weeks – MEV bot operated by 2Fast earned USD 1.9 million in just 20 seconds.
All thanks to the fact that algorithms constantly combing transactions on the blockchain (in this case, the Solana network) detected the trader's mistake, thanks to which it was possible to purchase memecoin at a significantly reduced price. MEV bots have enormous potential, but the cryptocurrency community warns against entrusting your funds to algorithms too hastily. Nevertheless, such synergy of artificial intelligence and cryptocurrencies has the greatest chance of being accepted on the market, according to Vitalik Buterin.
AI as an interface for the cryptocurrency market
The second way to synergize artificial intelligence and cryptocurrencies is to use AI as an interface for the market and users. While this sounds a bit complicated, it is simply a matter of integrating AI software into the interfaces of cryptocurrency wallets and exchanges. Such software would aim to provide appropriate prompts to the user so that he or she is not exposed to scams or phishing. In this version of synergy, artificial intelligence would act as an AI investment assistant that would help in the most critical and potentially dangerous processes.
Buterin admits that this synergy of artificial intelligence and cryptocurrencies has great potential, but at the same time it carries even greater risk. All because of an obvious fact. If you use an AI assistant inside an open-source wallet, hackers will also have access to this assistant. Thanks to this, they will be able to create scams that will easily bypass all wallet security measures. Moreover, the assistant may even suggest that the user make a phishing transaction that will drain his wallet. The key to such use of AI would be to create sufficiently strong security.
AI as rules for the cryptocurrency market
The subsequent scenarios drawn by Vitalik Buterin are more of a fantasy than a real use of AI in the cryptocurrency industry in the coming years. The synergy of artificial intelligence and cryptocurrencies, as a validator creating rules for the digital asset market, is extremely risky. In this concept, generative artificial intelligence would be behind the creation of blockchain network infrastructure or DAO (Decentralized Autonomous Organizations).
Vitalik emphasizes that this would be as risky as introducing AI judges to the judiciary. According to the creator of Ethereum, the power over such a constructed market and ecosystem of digital assets would be vested in the person who would provide training data for the learning algorithms. There would also be a significant risk of unauthorized access to training opportunities for such LLMs, which would give cybercriminals almost divine opportunities. Nevertheless, appropriate security of such a process would provide an opportunity for rapid development of the cryptocurrency sector.
AI as an object on the cryptocurrency market
The last scenario outlined by Buterin is the long-term integration of cryptocurrencies and artificial intelligence. This synergy of artificial intelligence and cryptocurrencies assumes a gradual and sustainable development of digital assets, with the support of artificial intelligence. This is the most optimistic application, but it looks far into the future and assumes the development of AI with a specific vector, which is, of course, impossible at the moment.
To sum up, Vitalik Buterin's change in perception of artificial intelligence is clearly noticeable. The programmer sees the strengths of AI technology. Its four-vector synergy of artificial intelligence and cryptocurrencies is clear and logical. Will the digital assets industry use AI in the way Buterin proposes? I don't know that, because the AI sector is developing at a very dynamic pace. For this reason, it is good to follow the latest information about the development of further AI projects, especially in the decentralized finance and Web3 industries.
