The crypto communities now is facing a critical challenge from a younger and more sexy competitor - AI.

If you haven’t heard about ‘ChatGPT’ in the past couple of months, either you are living in the stone age, or you are too rich and bored, having no interest in anything other than beaches and sunshine. ChatGPT, an AI powered chat-bot that was developed by the OpenAI team, reached 100M monthly active users, which makes it become the fastest growth application in the history of the internet.

Elon Musk recently posted a tweet saying, “I used to be in crypto, but now I got interested in AI”.

https://twitter.com/elonmusk/status/1631720134636367872

Considering that he actually used a quotation mark in this tweet. It is not quite clear whether this is just a quote from someone else, or he is again acting as this…

Whatever. He is one of the world's richest men, and maybe even become the most powerful man after 2024. He can almost do anything he wants.

I sent what Musk has said above to ChatGPT and asked for their comments, and here is the reply.

As an AI language model, I do not have the ability to read beyond the lines or interpret the intended meaning behind someone's statement. However, based on the quote you provided, it seems that Elon Musk has shifted his focus from cryptocurrency to AI. This could be due to a variety of reasons, such as his belief that AI has more potential for societal impact and innovation, or that he sees AI as a better investment opportunity than crypto. Ultimately, the exact reason for his statement would require further context or clarification from Elon Musk himself.

Considering that the monthly active users in crypto is roughly a couple of millions, the potential social impact of AI is truly more foreseeable.

Actually, you can’t argue that Elon Musk pivoted to his new sweetheart. Even some of the builders in the crypto communities showed their anger at the ugly behavior that happened in the industry last year.

Here is a video recorded at the opening ceremony of ETHDenver 2023, one of the most important gathering events among the Ethereum dev community. They even placed the F-word on the founders of centralized entities that brought enormous damage to the crypto industry.

https://twitter.com/lebed2045/status/1631474168922517505

If you have placed an eye on how the U.S. regulators treated the crypto industry in the past year, then you might have better understanding on Elon Musk’s betrayal.

In the last month, Kraken, a crypto exchange, shut down its Ethereum staking services and paid a $30M fine due to a lawsuit by the SEC. Further more, Brian Armstrong, the founder of Coinbase, also raised his concern about the potential of regulators closing the path of crypto staking services for U.S. retail customers.

https://twitter.com/brian_armstrong/status/1623459203150131201

At almost the same period of time, the SEC issued a Wells Notice to Paxos, the entity behind the Binance USD($BUSD), alleging that $BUSD was an unregistered security.

While I asked ChatGPT the reason why U.S. regulators played tough on crypto, here is the reply.

There are several reasons why U.S. regulators have taken a tough stance on the crypto industry:

1. Lack of regulation: The crypto industry is relatively new and largely unregulated, which has created an environment that is ripe for fraudulent activity, market manipulation, and other abuses. In the absence of clear regulations, U.S. regulators have taken a more aggressive approach to protect investors and the financial system.

2. Money laundering and terrorism financing: The decentralized nature of cryptocurrencies makes it easy for criminals to use them for money laundering and financing terrorism. U.S. regulators have been concerned about the potential for cryptocurrencies to be used for illicit purposes and have been cracking down on exchanges and other service providers that facilitate these activities.

3. Investor protection: Many cryptocurrencies are highly speculative and volatile, which puts investors at risk of losing their money. U.S. regulators have taken a tough stance on the crypto industry to protect investors and ensure that they are not taken advantage of.

4. Tax evasion: Cryptocurrencies can be used to evade taxes, which is a major concern for U.S. regulators. The IRS has been ramping up its efforts to track and tax crypto transactions, and has been pressuring exchanges to provide information about their users.

Overall, the U.S. regulators' tough stance on the crypto industry is driven by a desire to protect investors, prevent criminal activity, and ensure that the financial system remains stable and secure.

It seems that they have built up alignment with each other. Correct me if I am wrong.

Facing all these challenges, do we, the crypto/web3 community, have other choices than surrender? Sure, we can try to make good relationships and collaborate with each of them.

Actually, there already have some use cases in web3 on adopting AI technology. Since AI has its power on creating various type of contents, some web3 builders have somehow started to embedded AIGC(AI generative content) in their projects.

In the past two years, NFT is one of the fastest growth sectors in the web3 space. Some NFT projects, especially art collections like Fidenza and Lost Poets, use AI in the process of generative content. Chromie Squiggle is an AI generated art collection launched in Oct 2021, and reached 62K $ETH trading volume in less than one and a half years.

In a recent report, Crypto.com also drew a framework on how AI technology can be used in web3.

Jon Radoff also wrote an article about his frames on how AI would empower the blockchain gaming industry in various ways. Interestingly, he used inspiration from the “5-level schema of autonomous cars” and detailed four types of creators’ evolutionary process.

The most attracting part for me is the ‘Player as Creator’ sector.

Level 0: Limited Creativity. Just the tactics and strategy you use to master the game.

Level 1: Player-as-content. The player alters a game by affecting social systems & economy, but doesn’t meaningfully impact the rest of the built-in content.

Level 2: Worldbuilding. The player impacts the shape of the world itself, such as how maps and structures live in a persistent world.

Level 3: Emergent Narrative. The player’s actions affect persistent content of the world, like living narratives and content — such as we’ve seen in most MMORPGs, and especially Eve Online.

Level 4: Integrated Generativity. Things formerly the domain of modding become part of the game loop, along with in-loop generative AI.

Level 5: Direct-from-Imagination. If players can dream of it, they speak it into existence; game system fits it to rules in an appropriate manner.

Obviously, we are still on the path from ‘Level 3’ to ‘Level 4’. One day, when we reach ‘Level 5’, basically we can act like god in the virtual world, if we are rich enough.

Beyond the AIGC and coding&debugging applications, there are also other ways that can bridge these two cutting-edge technologies together.

DID is one of the most important sub-segments is the web3 landscape. The ENS domain service has reached roughly 2.8M active addresses. DID connecting with an AI platform can generate various use cases. You can train an AI assistant with your ENS address. It can improve its understanding of your demand consistently, and you don’t need to worry about its service being shut down by accidents or internal collapse.

It is obvious that the money will always follow the hottest girl in the room. So we don’t need to worry too much about AI becoming the new sweetheart of venture capitals. Although AI may have more supremacy in attracting main-stream audiences, web3 technology also has its own advantages. Building upon blockchain technology, web3 projects have their unique monetized methods with a highly engaged community. They do not rely on a massive fundraising from a giant, or a heavy-pocketed venture. Not to say that, these two technologies can also be compatible with each other in one product as I have mentioned.

I will leave the fight with regulators part in the next article. It will be much more hard to fight against…

The crypto communities now is facing a critical challenge from a younger and more sexy competitor - AI.

If you haven’t heard about ‘ChatGPT’ in the past couple of months, either you are living in the stone age, or you are too rich and bored, having no interest in anything other than beaches and sunshine. ChatGPT, an AI powered chat-bot that was developed by the OpenAI team, reached 100M monthly active users, which makes it become the fastest growth application in the history of the internet.

Elon Musk recently posted a tweet saying, “I used to be in crypto, but now I got interested in AI”.

https://twitter.com/elonmusk/status/1631720134636367872

Considering that he actually used a quotation mark in this tweet. It is not quite clear whether this is just a quote from someone else, or he is again acting as this…

Whatever. He is one of the world's richest men, and maybe even become the most powerful man after 2024. He can almost do anything he wants.

I sent what Musk has said above to ChatGPT and asked for their comments, and here is the reply.

As an AI language model, I do not have the ability to read beyond the lines or interpret the intended meaning behind someone's statement. However, based on the quote you provided, it seems that Elon Musk has shifted his focus from cryptocurrency to AI. This could be due to a variety of reasons, such as his belief that AI has more potential for societal impact and innovation, or that he sees AI as a better investment opportunity than crypto. Ultimately, the exact reason for his statement would require further context or clarification from Elon Musk himself.

Considering that the monthly active users in crypto is roughly a couple of millions, the potential social impact of AI is truly more foreseeable.

Actually, you can’t argue that Elon Musk pivoted to his new sweetheart. Even some of the builders in the crypto communities showed their anger at the ugly behavior that happened in the industry last year.

Here is a video recorded at the opening ceremony of ETHDenver 2023, one of the most important gathering events among the Ethereum dev community. They even placed the F-word on the founders of centralized entities that brought enormous damage to the crypto industry.

https://twitter.com/lebed2045/status/1631474168922517505

If you have placed an eye on how the U.S. regulators treated the crypto industry in the past year, then you might have better understanding on Elon Musk’s betrayal.

In the last month, Kraken, a crypto exchange, shut down its Ethereum staking services and paid a $30M fine due to a lawsuit by the SEC. Further more, Brian Armstrong, the founder of Coinbase, also raised his concern about the potential of regulators closing the path of crypto staking services for U.S. retail customers.

https://twitter.com/brian_armstrong/status/1623459203150131201

At almost the same period of time, the SEC issued a Wells Notice to Paxos, the entity behind the Binance USD($BUSD), alleging that $BUSD was an unregistered security.

While I asked ChatGPT the reason why U.S. regulators played tough on crypto, here is the reply.

There are several reasons why U.S. regulators have taken a tough stance on the crypto industry:

1. Lack of regulation: The crypto industry is relatively new and largely unregulated, which has created an environment that is ripe for fraudulent activity, market manipulation, and other abuses. In the absence of clear regulations, U.S. regulators have taken a more aggressive approach to protect investors and the financial system.

2. Money laundering and terrorism financing: The decentralized nature of cryptocurrencies makes it easy for criminals to use them for money laundering and financing terrorism. U.S. regulators have been concerned about the potential for cryptocurrencies to be used for illicit purposes and have been cracking down on exchanges and other service providers that facilitate these activities.

3. Investor protection: Many cryptocurrencies are highly speculative and volatile, which puts investors at risk of losing their money. U.S. regulators have taken a tough stance on the crypto industry to protect investors and ensure that they are not taken advantage of.

4. Tax evasion: Cryptocurrencies can be used to evade taxes, which is a major concern for U.S. regulators. The IRS has been ramping up its efforts to track and tax crypto transactions, and has been pressuring exchanges to provide information about their users.

Overall, the U.S. regulators' tough stance on the crypto industry is driven by a desire to protect investors, prevent criminal activity, and ensure that the financial system remains stable and secure.

It seems that they have built up alignment with each other. Correct me if I am wrong.

Facing all these challenges, do we, the crypto/web3 community, have other choices than surrender? Sure, we can try to make good relationships and collaborate with each of them.

Actually, there already have some use cases in web3 on adopting AI technology. Since AI has its power on creating various type of contents, some web3 builders have somehow started to embedded AIGC(AI generative content) in their projects.

In the past two years, NFT is one of the fastest growth sectors in the web3 space. Some NFT projects, especially art collections like Fidenza and Lost Poets, use AI in the process of generative content. Chromie Squiggle is an AI generated art collection launched in Oct 2021, and reached 62K $ETH trading volume in less than one and a half years.

In a recent report, Crypto.com also drew a framework on how AI technology can be used in web3.

Jon Radoff also wrote an article about his frames on how AI would empower the blockchain gaming industry in various ways. Interestingly, he used inspiration from the “5-level schema of autonomous cars” and detailed four types of creators’ evolutionary process.

The most attracting part for me is the ‘Player as Creator’ sector.

Level 0: Limited Creativity. Just the tactics and strategy you use to master the game.

Level 1: Player-as-content. The player alters a game by affecting social systems & economy, but doesn’t meaningfully impact the rest of the built-in content.

Level 2: Worldbuilding. The player impacts the shape of the world itself, such as how maps and structures live in a persistent world.

Level 3: Emergent Narrative. The player’s actions affect persistent content of the world, like living narratives and content — such as we’ve seen in most MMORPGs, and especially Eve Online.

Level 4: Integrated Generativity. Things formerly the domain of modding become part of the game loop, along with in-loop generative AI.

Level 5: Direct-from-Imagination. If players can dream of it, they speak it into existence; game system fits it to rules in an appropriate manner.

Obviously, we are still on the path from ‘Level 3’ to ‘Level 4’. One day, when we reach ‘Level 5’, basically we can act like god in the virtual world, if we are rich enough.

Beyond the AIGC and coding&debugging applications, there are also other ways that can bridge these two cutting-edge technologies together.

DID is one of the most important sub-segments is the web3 landscape. The ENS domain service has reached roughly 2.8M active addresses. DID connecting with an AI platform can generate various use cases. You can train an AI assistant with your ENS address. It can improve its understanding of your demand consistently, and you don’t need to worry about its service being shut down by accidents or internal collapse.

It is obvious that the money will always follow the hottest girl in the room. So we don’t need to worry too much about AI becoming the new sweetheart of venture capitals. Although AI may have more supremacy in attracting main-stream audiences, web3 technology also has its own advantages. Building upon blockchain technology, web3 projects have their unique monetized methods with a highly engaged community. They do not rely on a massive fundraising from a giant, or a heavy-pocketed venture. Not to say that, these two technologies can also be compatible with each other in one product as I have mentioned.

I will leave the fight with regulators part in the next article. It will be much more hard to fight against…