Riding the AI + Blockchain Hype: Genuine Innovation or Another Bubble?
After picking the brains of several VC experts and doing my own digging, I've got some thoughts to share.
Fair warning: this might ruffle some feathers.
Let's start with the numbers, because they're pretty eye-opening. 👇👇
AI investment from VCs has exploded from a modest $3B in 2012 to a whopping $75B in 2020.
Crypto had its moment too, with VC investment peaking at $31.9 billion in 2021.
On the surface, it looks like AI and blockchain could ride this wave of "smart tech" investment together.
But here's where it gets interesting – and a bit concerning.
Since 2022, we've seen the crypto market shrinking, and suddenly, everyone and their dog is pivoting to AI + Blockchain. Projects scrambling to grab onto the next big narrative. Some are doing it to attract new investors, others are desperately trying to extend their project's lifespan.
It all feels a bit... desperate.
Don't get me wrong, there's legitimate potential here. Blockchain could revolutionize AI in areas like high-performance computing, data privacy, federated learning, and AI model certification. i.e.
@zero1_labs
just announced their FHE EVM layer focused on AI data governance.
But for every other project genuinely innovating, there seem to be a dozen just slapping "AI" onto their name and hoping for the best.
This whole situation is giving me déjà vu. Remember the GameFi craze? DeFi? The Metaverse? How many of those hyped-up projects are still relevant today? It feels like we're watching the same movie with different actors.
That said, there are a couple of reasons why this time might be slightly different. Some projects are genuinely trying to break away from the "token dumping" model and create real cash flow. The "On-chain consumer" narrative is interesting, even if we haven't seen sustained success yet.
Plus, both AI and blockchain are still in their infancy. Integrating them now could lead to genuine innovation without the "incompatibility issues" we've seen in other tech mashups.
It's also worth noting that this isn't just a crypto phenomenon.
Governments are going all-in on AI, with the U.S. alone seeing $290 billion in AI VC investment over the past five years. The market is only going to grow larger.
So, what's my take on all this? I'm cautiously optimistic, but heavy on the caution. While there's undeniable potential in combining AI and blockchain, I'm skeptical of the current gold rush mentality. It feels like many projects are just chasing the latest trend rather than building something truly innovative.
That said, I do believe we'll see some high-quality projects emerge from this chaos. The key will be identifying those with actual product-market fit, rather than just fancy whitepapers and token economics. We need to look for projects that are providing real value to the AI sector using blockchain technology, not just riding the hype train.
What do you think? Are we headed for another bubble, or is this the beginning of a genuine technological revolution?
I'm really curious to hear your thoughts!
Lastly, like to thank @nihaovand for his long form article, which given me the inspiration and at the same time I've added some of my thoughts from his original article!
https://x.com/nihaovand/status/1823573814296633818