AI makes everything fake crypto makes it real again AI is probalistic and cryptography and crypto is deterministic people have talked about how AI is killing the open web but Crypt is bring you back first is a lot of the old Web 2.0 companies are making it harder and harder to spider and scrape their website because people want to index it for models the second is sites like stack Overflow or Reddit people are just trying to game the site by having AI Bots post answers and get upvotes which sort of corrupts the training data or what have the third is AI is very good at generating very human-like spam Google indexes are not set up for that and so what you go to is I think the crypto web which adds essentially fixes for all those things a you have an nft gate that gets you into a site if you need it B you have a signed web where you can tell whether their people are human C you have open blockchains and open backends where people can index them and in many ways it just sort of compensates for the kinds of things that AI is doing to the old web yeah it BRS scarcity to abundance hey bology thanks for joining today it's great to be here amazing well thanks for joining so as everyone knows bologi is former CTO of coinbase you know author of the network State and to me the first person who made me aware of the implications of Co before the mainstream media um kind of was willing to admit that this was real and uh since then I've been a huge fan of kind of your thinkology and it feels like you're always two to three years ahead of kind of the current thing and also just a very independent thinker in terms of Technology's implication on the world I think it's uh midnight in whatever Network State you're operating in yes uh I'm in the Asia time zone so it's uh late over here uh but uh always always happy to talk Tech so let's do it so very excited about this conversation and I think a big part of it will be exploring some of the edges around this intersection of AI and crypto which is you know two buzzword that creates a third but I think there's a lot of actually interesting edges here to explore um so I guess to start it off um like I I've heard one of your quotes which is you know that and I'm maybe butchering this but that AI especially gener of AI is great at making things up and crypto is amazing at you know verifying what's real and so I'm curious like thinking about crypto as kind of a balancing Force to some of the kind of Unsolved issues with proliferation of der of AI I'm curious to explore that as maybe as we get started totally yeah and so you know the thing is my uh so the quote by the way is AI makes everything fake crypto makes it real again Y and uh you know just so people don't feel oh oh biology's just inventing himself AI guy I actually taught you know uh stats and machine learning and neural networks at Sanford uh in the mid 2000s and in fact I did by informatics and um you know machine learning on large genomic data sets in the 2000s and early 2010s before I got into crypto so I was a machine learning guy before I was a crypto guy that was before the era of you know deep neural networks and you know the transformer in the modern era um and uh you know there's certainly a bunch of new tricks obviously that have come out since then but I was at one point very you know very much uh into the space as a practitioner um I probably should do I want to actually go and I kind of wanted train a model myself but it's so expensive to do it so you know I'm just messing around mistl and other types of stuff right now but for fun anyway so um AI makes everything fake crypto makes it real again uh what I mean by that is these are even though they you can talk about this in a very buzzwordy way they actually are sort of dual Technologies where for example AI is probabilistic and cryptography and crypto is deterministic right um AI is at least currently generative AI uh is largely perceived as a front-end technology and crypto is really uh something where the it doesn't produce Aesthetics it doesn't produce you know um amazing visuals like you know diffusion algorithms or you know fancy text like llms uh it's really a backend thing um a is also something which can bust any capture and it can you know uh convincingly fake a lot of the things that humans do and so what crypto gives you is proof of human it gives you actual digital scarcity when AI gives you abundance and in some ways overabundance right and so these are new tools where any of them uh you know AI on its own will just flood the web with Spam but crypto can allow for the signed web like on farcaster for example every post is effectively cryptographically signed with um your your crypto wallet and uh what that does it gives digital signature and you can map that back to a proof of human and you can see oh this human actually published this as opposed to a bot and how's how do you know it's per human will any individual per human signal can be corrupted but then you can actually use machine learning once again to kind of reunify that so there's kind of a dance between these two technologies and um so they complement each other in really deep ways and so I I don't think you know it's uh it's one vers other only they also complement each other um the other thing is that when you talk about what can AI do um I am currently and I may be wrong about this so I'll put an asterisk on it but I'm currently of the belief that um where at least the Breakthrough that we would need for AI is for it to operate in highly time varying demands okay so for example the other day somebody had trained an AI on some uh game I think it was some multi-user dungeon game or something like that and they suddenly found that the score dropped dramatically on some days and then rose on others and eventually they found that on that day it was a full moon so like every two weeks or four weeks because this game when a full moon was there um the rules changed and and the uh policies that the AI had learned for the last you know 13 days were no longer applicable on the 14th or whenever the full moon came right right and that's a small but very quantitative example of where time varying rules are something that it's it's out of out of training set it's it's something the AI can't learn now the thing is that with generative AI if you take and you'll see my point in a second if you take a Text corpus well English doesn't change that much over time so you can learn rules on it right take an image Corpus the labels don't change that much over time so you can you know learn rules on them um or if you take a game like chess uh and this is you know the whole Deep Mind School of things you take a game like chess or go again the rules don't change in a sense even if they can have very complicated outcomes the rules are fixed right so in a deep sense there's sort of static environments right and once you get even the laws of physics are you know uh their time invariant right that say f equals ma um but that law doesn't change with time right Max's equations the equ equations themselves don't change the time even if the the waves will wiggle and have time derivatives right so um so you can still train for example a drone to fly because the laws of physics don't change with time right now where what's it what's a domain where the laws changed with time it's markets the same input does not give the same output in fact it's an adversarial context where people are constantly trying to change the rules on you so that the same trade will not result in the same profit each time maybe there's like micro you know Market things like technical analysis type things like Renaissance famously did very well for a long time Jim Sim just passed away maybe there's something there that you can learn that's some Universal rule but if it was disclosed it would no longer even be a universal rule right but is it the rules that are changing with markets over time or is it just that they're very Dynamic I don't know I don't know how to express it you but I would say um I put it like this is they are time varying in a fundamental or I believe okay and I could be proven wrong on this I believe they are time varying in a fundamental way uh that is different from the laws of physics or from the um from from the laws of English that you're that that LM is learning right iess another way to think about it is past performance is not indicative of future results in the sense that the game changes over time exactly that's right it's there's this game called nomic you know what that is yeah right you want tell the audience what that is well I feel like you'll be better at it yeah all right well it's it's a it's a game where the the name of the game is to change the rules it's kind of like Congress right the name of the game of getting if you think about it it's a meta game where an election is a game that elects you to Congress and uh then now the game is to change the rules of the game including you can change you can Jerry Mander and change how you're elected in the first place right so that's like an extreme metag game um where uh you're not just you know operating by the rules on the ground but you're getting elected to change those rules and so on right so these kinds of things like politics and markets the same input doesn't give the same output they the the whole point is also that they're adversarial and people are trying to change the rules on you and my view is um you know I'm not saying it's impossible for an algorithm too it AI is actually very very impressive but I do think some new Concepts are needed maybe it's qar or something like that I I think that the current the two or three major paradigms you know for for AI right now diffusion to algorithms I don't put in here because it's more on the image side but the LM style and the uh the reinforcement learning style you know of Deep Mind of uh and the the LM style of of open the eye and others they don't work in highly time varying domains like markets and politics and because of that that means at a high level what are you doing doing as a Founder you are sensing markets and also nowadays politics right right so at that high level you will have to sense those domains and then you give directions to your robot army your AI Army right so to speak so that is at least I may be wrong about it again you know maybe I'll look back in five or 10 years say oh that was so stupid but I think there's something potentially fundamental there which is because people might ask why won't it replace the top level as well right why why wouldn't it be able to goal set right and I think there's a top level set of things where you're perceiving very highly time varying domains that we don't yet have a good algorithm for learning yeah pause there and one thing that's interesting about that thread is you know one thing that's enabled AI is just the digitization of information over the last 20 years right and I feel like crypto is actually enabling the digitization of markets in a more accessible and fundamental way that creates a a a training set that is you could say analogous to you know the last 10 years of the internet is the next 10 years as we move to a kind of a more cryptographic financial system creates a whole new data set for these AI algorithms as well as yeah go ahead true except the thing is that when you have um an AI doing uh if you've got an AI trading bot you also have another AI trading bot on the other side and now you probably get back to some level of unpredict ability because if they're both playing to win right it's like playing you know AI chess versus AI chess now it's back to becoming hard again right so um I don't know it is is it possible is it basically the test of this the Turing test would be the earning test like can your trading bot just make money you know and maybe the answer is yes maybe maybe that's happening and maybe people are running them and not disclosing it the cool thing about crypto is you can literally take an AI and have it earn crypto for you right you know if you want to be the next Jim Simons there's a lot of Arbitrage that's true cryp markets are programmatic yes I think that's the that's the other interesting lay is not only does crypto create a new data set a more digitized and accessible data set for financial markets but also creates the execution layer right oh yeah which I think is really interesting I mean it's so like the thing is from from somebody in like 20 years or something in the future they'll look back in so okay in some ways they'll understand the controversy over crypto as they'll get to but in other ways they'll say can you imagine that people could only send wires during banking hours right 40 out of 168 hours a week right so you go from less than one nine of uptime 25% uptime or less to 99.9% uptime that alone is the interne ification of financial markets and settlements right that alone would justify the whole thing and then you add the fact that it's uh you know it's got an open backend and that it's programmable and that it works on any device and that you can set up an account in fractions of a second and and and all that kind of stuff it is exactly it's a total backend change and it changes exactly how how you do things so I mean it's really just if you think about the internet itself is taking all forms of information and putting them online right movies and music and books and newspapers what the blockchain does it takes every form of scarcity and puts it on chain which is currency of course but it's also stocks and bonds and so on and so forth and now that we finally have some of the political breakthroughs right that's you know I think going to be uh a very important moment where we finally start to get true crypto equities and all the efficiencies you can get out of it when the old system just concedes and somebody said something very good which was the anti- crypto movement is disproportionately concentrate among older Representatives older Senators older congressmen that just don't get it right they're just not internet first enough you know um anyway let me pause there go ahead yeah it does feel like um you know in this world of AI agents that are autonomously executing tasks you need an open protocol for Finance in order for it to actually do things like you have an open protocol for email for example so agents can you know read documents and send emails but I think to actually move to the next level where these agents can actually execute more real world tasks it feels like there's almost no alternative to crypto being the back end yeah that's right because the fundamental thing is with crypto a program can hold money and here's an analogy before the internet was in widespread use you had to have a human assigned to a telephone number to first order right you had a phone book and every telephone number had a human name next to it in the white pages right or you had a business name but basically there was a human who owned that business afterwards you could get machine that had an IP address and for example you could have a shared computer at an Apple store that many people used and it wasn't just like assigned to one person it wasn't you know um and that concept of an IP address that a machine could just have we take it for granted but imagine if every single server in a server Farm had to have like one human you know associated with it in order to send or receive messages it couldn't just be handed as a machine from one party to another right um that's the same as going from a human Associated Bank account where there must be a human name on the account to a crypto address that a machine can send and receive money to autonomously or an algorithm can send and receive money to autonomously you've actually unhooked it in a very fundamental way right and that enables new things for example you can have a program spin up a 100 different addresses in in a fraction of second whereas to open 100 bank accounts would take take you know weeks months if they even let you do it right and so just that alone is a complete transformation of what's possible on the scale of going from um you know going from like physical mail to email just to give you a small example why would it be useful to open up a bank account quickly well think about how helpful it is to be able to just quickly set up a website to test an idea right small example I saw something you know you saw a phantom wallet the other day is now above square cash even persective right but that's that's consumer crypto right that is the number one free app financially in the app store right and uh fand is just very wellb built app I have no stake in or anything like that it's great great company uh I probably should have invested I had yeah um but uh the the thing about Phantom wallet is um it's so easy to use that uh there was a bake sale not exactly a bake sale let say a bake sale equivalent like a kids thing that was at the other day and um all the kids could just boom like this on their iPad set up Phantom wallet or their iPhone you know set up Phantom wallet and just like a bake sale just start receiving payments right then and there now to send the money out you need some so okay fine that's still like kind of a pain but to receive it you don't and if you think about how much ceremony is involved with setting up an account to receive the Legacy Financial system does not make it easy to just quickly receive payments right you have to have an entity and you have to get a bank account and go to the bank and then you can receive things through like a stripe thing and so on and so forth that Fiat system is just so slow here this is like Back to the Future this is like put out a box except cash right it's it's that simple except it can also now be done from the other side of the world right or from the other side of the room and an arbitrary amount of money and and and all the digital benefits right so just like instantly being able to set up a bank account um that alone is another you know it's like the uptime thing we just talked about going from less than 25% uptime to to 49 uptime right going from days or weeks except a bank account to fractions of a second there's many different ways in which the crypto system is not just like 10x but but multiple or of magnitude better than leg almost finary like these agents almost can't operate in the financial system which unlocks so many real world use cases without crypto as the back end and I think a third thing which is similar to many areas of is just beyond the technology but just the coordination and incentive system right like theoretically if every Bank like there's no technical limitation for a bank not to accept money 247 or not to have open a apis etc but it's an incentive issue which I think likely won't be broken unless there's a parallel system that's built yeah you know this was something people used to say back in the day they used to say oh the banks will just adopt all the crypto Innovations and I'm like say that's like saying uh I mean to oversimplify but it's also true it's like saying Blockbuster will will adopt all of Netflix's Innovations right first of all as you said exactly yeah they should have right but it's like saying I mean every incumbent will adopt what the disruptor is coming up with there's I mean you know Christensen talked about that with the innovator shalma you know the the late great you know Clayton Christenson there's a reason that the incumbent doesn't do it one and number two is one of the reasons that incumbents especially in financial space can't do it is that they are hamstrung by all these rules and regulations and also they don't have the upside for doing it right like when you take a risk on on on doing something it upsets somebody's apple cart you know somebody often doesn't want that level of real time or that level of transparency or you know that level of uptime it means or breaking the Monopoly one of the yeah exactly like when you custody your equities at a certain bank or brokerage they a monopoly you know practically speaking on the financial services that they they can give you because no one else can collateralize those assets exactly that's right so why would they want you to even be able to withdraw it why would they want any of this right so it's actually I mean cryptocurrency and what it really represents is so amazing in terms of a genuinely bottom up Grassroots reform of the financial system globally right it's actually amazing when you really Zoom back I mean Ju Just to contrast it like you know obviously mob mobile is amazing I'm a fan of everything that Google and apple did with IOS and Android um but the thing about mobile or even AI is they came to some extent top down right in the sense of you know mobile with IOS and Android came from Google and apple which had huge name brands by that point um and AI came top down from you know at first the research Labs at at major universities and then the big tech companies although open AI was a was a good startup I I know they had a lot of Insider support but true true but but I I would say that's not it wasn't as Grassroots as I I would say social and crypto were more Grassroots in terms of how they started right um of course Facebook eventually became a big company but in the early 2000s social was not something that was pushed top down by Microsoft right so social and crypto I think came bottom up and mobile and AI came more top down which is is fine just different emerence BS go ahead yeah so I'm curious to go back to like I think this is an interesting thread of kind of crypto as an accelerant to AI as we were just talking about right kind of new data sets and uh enablement on the execution layer for you know anything financially you know Financial or asset related but then cryp crypto also has a balancing Force to AI right and to going back to like proof of human and identity forecaster as an example what's preventing like just focusing on kind of crypto as a proof of human mechanism what's preventing that from being rolled out more broadly right because obviously like fishing attacks is one of the one of the risk vectors that AI um kind of enables right where you know I I call you I pretend to be your father asking for $100,000 wire for an emergency medical bill it turns out I'm actually not your father you know maybe cryptography can become cheap and accessible enough on that phone call that it can actually verify that I actually am your dad but so what's preventing us from that from that world so a few things first is one thing I'd say is I'm not a shoe Horner like that is to say if a technology doesn't work in an area I wouldn't do crypto plus AI for the sake of it you know right so with with that Proviso um two two or three things first is there are several hundred million people who have crypto wallets right I would say we would have even more if literally the government hadn't been fighting it continuously for the last three or four years right but it's an amazing achievement to have as many as we do you know um and um so I think first of all post legalization when I say legalization of course legalization is gradual right in many ways this is like a replay of the crypto Wars of the 90s where the question was could strong encryption be in the hands of individuals and that was a hard-fought battle in the 90s before you know you or I like you know that's old enough that like andrewson lived through that right of course we live through it but you know he's conscious you know yeah exactly right so um the the point being that basically uh now with greater legal support with now both presidential candidates falling over themselves to be Pro crypto we're going to see a lot of things change very quickly and I think you're going to see a lot more companies step in with the water being warm I mean now that black rock and every major Wall Street hedge fund is announcing they've got Stakes this whole thing about oh it's illegal or it's quasi illegal or whatever you know it's funny like a few months ago when the Bitcoin ETF came out one of one of my friends not friends colle whatever just a just guy I know from overseas whatever was like oh hey B do you see Bitcoin is legal now and I was like okay LOL you know that's that's the level at which well yeah yeah but basically it's like you know this kind of person who's like what kind of Bitcoin should I buy you know and you have to remember anybody who's outside of space it's funny to us or whatever who are within Tech but it's kind of like I don't know okay I don't care about watches and if somebody said uh you know what kind of watch should I buy I mean you know can you could probably name a Rolex right can you name all there's all these fancy watch brands or whatever rest okay there you go fine right so there's all these fancy watch brands and if you couldn't name all of the if you said what kind of roic should I buy the the watch aish in AO would say oh my God you're such a Philistine you're so ignorant so you know of course they cut people slack you know they're if they're not interested in the space point being though uh it the spa entire space have been held back in many ways especially in terms of distribution and Integrations with the Legacy system by its perceived you know risk or legality or whatever that's all going to change quickly uh over the next well you know knock on would over the next few years if if if all goes well but it looks like the momentum is good right now and if so then you start getting I mean the PRS have been put in place there's ENT encryption on many many devices right Apple has something that is extremely crypto like in terms of its like Vault feature yeah that's on device right yeah that's something where you get the private keys right one password others have crypto like things with the passphrases right and in a sense if you take all of the stuff for identity I mean API Keys passwords um crypto private Keys your literal keys to your car your passport your driver's license um your log to your email like all of those things your Google login all those things kind of combine into a like Hardware dongle or set of crypto private keys that become your digital password and everything right yeah it's if you look at sing pass if you look at um you know these some of the more advanced countries that have digital passwords you can kind of see where that's going right and uh so then when you have that well that solves a lot of the AI problems that are that are arising where you know with singpass for example or Estonia thing you can sign into a website with your identity if you want right now of course this opens up a new issue which is wait a second okay to beat what happened with AI am I giving up all my privacy right and now you need another crypto tool which called you know zero knowledge and it's actually all in your list of things to talk about and so you could do is just prove you are a human for example without proving anything else about yourself or prove you are an Estonian or a Singaporean without proving anything else if the pro circuit is set up correctly so we can also get privacy back with crypto um anyway go ahead you're gonna yeah and so like I'm trying to think of the different like let's say barriers for like a zero zero knowledge kind of cryptographic identity um Step you know for things as simple as email or TW Twitter or Facebook or Instagram or um you know even the telephone like it's one is distribution you know what are some of the other kind of um barriers before like these more centralized services will reach a point where they actually require this right because even if it exists like the we're still kind of bottlenecked by De centralized Services uh you know requiring yeah but there I mean thing is a lot of them are crypto adjacent like Twitter flirted with you know they put nfts in their thing Instagram had nfts for a while Google cloud and AWS and aour all have crypto support um they they're all aware of it right and it's something where you know the way the crypto kind of works is it surges then people try something and then it crashes they ignore it for a few years and it comes back and we're on our fourth or fifth cycle depending on how you count right and often things that just are barely there at the peak of one cycle they kind of get polished or what have you and then they come back again three or four years later right like cryptokitties with nfts and then that crashed and then it came back with the huge nft boom and that crash and now that's coming way back with the um with micro nfts and you know with salana making it really cheap to send lots of little nfts right so in the same way I think um a bunch of companies that sort of flirted with crypto before will integrate it more right and I think just the the aspect of I mean one reason a long time ago like I don't know this sounds like forever ago crypto years but 2018 2017 when en was first coming out right I I knew that eventually crypto logins would work for one very simple reason you know what that was sorry because when you log into a website with your ens you also have a balance M yeah think it makes you're you're bringing a like it's a it's the combination of a login and connecting your credit card which is obviously valuable for the application yes right if you think about that that you know sometimes you can know that a problem is hard when you realize it hasn't been solved yet right so Google and Facebook like you know they have whatever billion number of people who log into websites every day with Google login Facebook login these are very sophisticated commercial actors and yet it's just the email account that you log in with and that's the only thing you can give to the site they have somehow not managed to be able to link Google pay or Google wallet or Facebook credits to the site on the other side right something is holding that back whether it is regulations whether it is the difficulty of moving money something has made it difficult for them to have a th000 Facebook dollars or whatever in your account around the world right and uh that's like the there's an unobserved gigantic Boulder in the way of these very sophisticated commercial actors not having a balance associated with those accounts right so just that Al I mean apple is the closest to this where they have apple login and Apple pay to pay they're like probably the best version of this but even still it's hiding behind like this credit card thing and it's like the best version of the old world but it's still not like fully integrated it's not like you can load the balance into a site and so on you can do it works well for shops and stuff oneoff payments but it's not like zing zing zing I can pay as quickly as I can tweet or like or something right so you know another thing that's sort of like that by the way of the unobserved observable how many you know this is a point I made like 10 years ago but still relevant how many websites have you gone and put your credit card into a lot a lot okay that's those are websites you're paying okay yeah like 200 at least easily right easily um privacy.com by the way is a really good tool for like uh guarding the zillion credit card billing events or whatever right okay now here's a question second question which is how many websites have you put your bank account into to get paid out very few like Turbo Tax very few yeah yeah exactly so like I don't know five 10 right but that's actually kind of surprising right why is it that there's thousands of you know every website you're paying in but payouts seem to be very hard on the internet yeah well for one reason if you if you put your bank account into a site they can actually debit from it so people which is crazy yeah which is crazy right it's just insecure by Design right because the whole thing was designed for an offline world right so just again that's you know we talked about uptime going from sub 25% a week we talked about uh the speed of opening a bank account how about the security of it like basic basically your account your crypto address is more like your email where people can send to it they can't just debit from it whereas your bank account is insecure by Design right just another example where crypto is just is not 10% but 10,000 x better right okay point being something there's some force unobserved force that is making it difficult to execute payouts on the internet those companies that have managed it have become massive companies that's uh for example Apple and Google with the App Store and Google play right that's uh you know the uh Facebook with the platform to some extent that is uh Amazon with Affiliates that is uh Uber and Airbnb with drivers and hosts and that is now Twitter with its payouts it's using stripe for but in general payouts on the internet are actually pretty challenging to do even still crypto makes that easy because you can instantly set up a new account on a site and get paid out there go ahead yeah that's I mean the other Dynamic obviously is that businesses want my money and they don't want to give me money um oh true but but but crypto means instant jobs yeah you know you could imagine yeah exactly like the thing is like with Uber Airbnb you know you're doing a job for them and they give you a cut of it right why isn't there more of that answer is it's actually really difficult to just quickly pay somebody with low over especially cross borders especially cross borders that's right so now you can go and click and set up a new crypto address as quickly as you can set up a new account on that site so that's why the aspect you know connecting it from before I was like you can set up a 100 accounts programmatically why is that useful when I can set up a custom account for every site with one click automatically on the back end and then you know accumulate funds there and when I want to withdraw it to my main account privately right it's basically you know go ahead no not only does that enable human labor marketplaces but of course it enables like agent to agent payments yeah yes that's right so that's another area where Ai and crypto really love each other right where if you're an intelligent agent um something I wrote about somebody actually wrote a paper on this as well you know an after an API application programming interface it'll probably be like um you know whatever we call it an a AI uh API right which is how the AI interfaces with a website as opposed to and the difference is that a normal um client where it's a python script or you're curling that is something where every step is deterministic and it's got a very low error rate and it's meant for bulk operations an AI API is like an inquisitive human that could make errors right so the AI but it's going to be a lot faster than a human right so it's like a third interface it's not your normal web interface because it's headless but it's not your normal API interface because you're going to want to um not allow the AI API to ex bulk deletes or bulk sends right have some guard rails around it because it's not deterministic yeah exactly that's right because probalistic you want to enue all those actions and then bring it back to the human who will click yes I will execute this series of actions for you right so it's like a it's like a golden retriever it's a dog that accumulates a bunch of things a stack of actions brings them back and you click them and now crypto comes in extremely handy here because that's how this thing can execute boom right it it goes and SE is a bunch of sites and the new robots. text is like a a crypto store version of All the items there that the AI API can see those prices and it can spend crypto to buy them once a human gives them the go-ahead yeah exactly um yeah it's super interesting the agent to agent payments and also information disclosure how all that will work is is just is super fascinating even for example if I ask your agent you know what your food preferences are as my agent's planning dinner for us like I'm actually um using compute resources for you and so there's even micro payments like that that may be interesting I mean that's probably too small to matter but um you know I may ask your agent to like do a bunch of research for me that actually may require a smaller micro payment yeah exactly that's right so I mean so just enumerate certain things we talked about we talked about AI makes everything fake crypto makes it real again uh we talked about AI is probabilistic crypto is deterministic we talked about AI agents will want to pay for things and crypto actually allows algorithms to have money and to make those payments um we talked about how and proof of human yes exactly means that it breaks all captas and crypto restores identity with proof of humanity and also AI has lots of spam on the web and so crypto allows for a signed web where like forecaster which is a working example everything is signed basically by your by with your wallet you've got bs. e or vitalic eth um and I should look at the exact details of the latest version of the forecast particle by notes on the road map to have everything having you know effectively digital signature there um and so uh there's there's a few more points one one big one is that um people have talked about how AI is killing the open web but Crypt is bring you back why because blockchains are a gigantic public data structure something like for example a foraster protocol or when you say AI killing the public white you mean because you don't need to actually navigate to an app or website because it will just deliver the information for you well several things first is um a lot of the old Web 2.0 companies are making it harder and harder to spider and scrape their website because um you know like people want to index it for models right for example Twitter famously under Elon made it much harder to just view tweets log out must used to be much easier to do that right now you have to log into view all tweets okay the second is that um sites like stack Overflow or Reddit people are just trying to game the site by having AI Bots post answers and get upvotes which sort of corrupts the training data or what have um the third is AI is very good at generating very humanlike spam and so you know Google indexes are not set up for that you know like um and so what you go to is I think the crypto web which adds um essentially fixes for all those things a you have an nft gate that gets you into a site if you need it B you have a signed web where you can tell whether people are human see you have open blockchains and open backends where people can index them um and in many ways it's just sort of compensates for the kinds of things that um that AI is doing to the old web yeah bring scarcity yeah exactly it's got a new sort of armor plated I mean in many ways you know crypto is all about don't trust verify and AI is about essentially a synthetic human which you need to verify the heck out of yeah what what role do you think crypto will play in um changing the incentive structure for training data sets right like like you you right now it's binary right Elon either allows the the Twitter data to be trained by his competitors or he he locks it all down there's a scenario where you just where he just sets a price using using crypto where any model that wants to train he could somehow detect that it's being used for that purpose and he actually gets compensated do do you think there's a world um where people in a decentralized way like are incentivized to put content high quality content out into the open web that can then be used as part of a training set but they actually get compensated for it yeah I think so I think we're going to see new social media like scaled at AI is a good company that does something like this but people are literally paid to generate training data yeah which is more like work than it is like posting on social media right and so I think that that just becomes the new digital Blue Collar like basically like huge numbers of people in India and other places will just be employed generating training data you know driving around picking things up jumping up and down whatever is needed to train the algorithms that's digital blue collar and there's an enormous number of things that you need that kind of training data for and there's a huge appetite for it and you could have a million people generate a million points of data a day and you still well okay a million people generate 20 million points of data a day and you'd still want more depending on what it is you're doing right so so um so I think that is going to be a huge way in which AI creates jobs and again crypto makes that easier because you can pay all these people the million people in different countries little amounts of money more easily yeah and then going back to Zone all proofs um and kind of I think further extending like the way that crypto enables AI I've heard you talk about how you know zero knowledge can enable AI to trade on more sensitive data sets um can you can you say more about that oh yeah sure so zero knowledge proof it's very technical subject but the fundamental concept is um let's say that I wanted to prove something to you without proving anything else be besides that thing right um you know I want to prove that let's say Seth is in California without giving any idea of where he is in California right that is like a zero knowledge proof for example right um where you're just proving the thing you want to prove and nothing else okay and um it's often used for proving set membership online like for example prove that you are a US citizen um and uh so that you can be kyc right um but not anything else about you for example right so why is not your name not your social like not your name exactly not your Social Security not all that stuff so you don't have to show necessar the full passport you could just show that right so um it's basically it's similar to you know when you go and do Google off some sometimes a site will say here are the permissions you want to Grant right so imagine it's like minimum necessary information you're only checking these fields and granting only that information nothing else right yeah and why is it helpful well if you take medical data for example um Medical Data it's medical so it's private but it's statistical so you want to aggregate it and so that fundamental Paradox is being at the heart of by medicine for many years how do you do privacy preserving aggregations now one answer is you just trust doctors and they just do this you know centrally um but another answer nowadays may be with zero knowledge you could have open public participatory data sets that are still privacy preserving and so you could put in like an anonymized version of your genomic data and get out an anonymized version and you'd only get the ccal information and nobody would know you know what was in there in the mix right is very very interesting and Powerful where these things people have talked about for while but The cryptographic Primitives are becoming feasible now yeah and have you seen examples of that actually happening today yeah like there's people like uh Dawn song and Oasis working on this I should go and check out the very latest but um I know there's a bunch of people working on this yeah super cool and there's another group called zerox Park like it's a play on the words of Xerox Park so you can look at their work as well yes um and what role do you think crypto will play in the the governance layer of AI like you know the theoretical like kill switch or even decentralized regulation well I think crypto is going to play a role in the governance layer of the world um I mean in a sense you remember the Facebook movie in of course yeah right The Social Network okay so you know what's remarkable by its absence in that movie if you go back and rewatch it remember this came out like 2010 yeah right that was right before I joined joined Facebook yeah okay great so you know what's remarkable by its absence if you go back and rewatch it nothing about politics for sure I mean yeah when I when I joined Facebook it was like a totally different narrative right it was like a fun startup you know empowering individuals to give a voice the Arab Spring EMP powering democracy there was nothing only until you know the media blamed Facebook for electing Trump did the narrative change right but here's the thing it's funny you say that because the the movie I was going to make that exact point in a different Sly different way which is the movie only talked about sort of the party and socializing aspects of Facebook it was almost as if Zuck had founded Universal Studios Florida and people came and had a good time he just made a lot of money doing that or whatever right um it was like almost like a theme park a digital theme park is how it was presented right uh but the the thing is as you mentioned in 2010 the Arab Spring had already happened and that was actually for the people in the Middle East a very political thing but you know we observed it as giving people a voice and so what was the outcome of that there's a lot of chaos you know let's call that you know a messy situation okay but the thing is that what people didn't project forward was if you had said at that time even for somebody who understood 500 million people are using social media it's grown faster than anything we've ever seen it's multiple billions of dollars even people who are in the middle of it would not have believed that in 10 years the number one most important issue in the entire world for a few days would be whether the president of the United States could tweet right whether they could post this right crazy to think right and the reason is I mean you think about what a startup is as a startup you want people to use your product you want like important people to use product Oh my God a sender is using a product wow they logged in once oh my God they posted a tweet you never I prevent that yeah yeah exactly so so when you think about the state interfacing with the network and the network getting so powerful that it decides to deplatform the state that's an important flipping right in many ways 2020 was the year that we became internet first right like everything now happens digitally and then it gets printed out physically if it's really important example you have a meeting online and if it's really important you meet in person right right or you go through 20 things in a in a store and then if it's really important you print it out by clicking enter and that shopping cart comes to your door right you have some CAD cam thing and if it's important you hit enter and you print it out everything is internet first including the governance layer right politics happens Twitter first right um and in this case why do I make this point point is social media is now in a sense like the Agora of the world right like it's it's basically you know it's where um all of the discussion is happening right it is uh you know the um it's like it's like a giant Congress right uh and the the reason that that's important is that um it wasn't really built for that it was built for discussion not decision-making right but uh now we kind of find ourselves in a similar time and here's why you know over the last 10 years it became obvious that all politics became social media I think over the next 10 years all politics becomes Crypt tribalism okay so just like the mainstream media was turned into just one poster on social media dollar holders will be turned into just one crypto tribe right main mainstream money you see what I'm saying right it's already kind of happen right where there's arguably there's more Bitcoin holders than there are of most other major currencies certainly more Bitcoin holders than pound holders or Yen holders for example right and um and probably even more than Euro holders or or or comparable right that's huge actually if you think about that's a massive new thing right and they're probably more passionate about it than most Euro holders right and they're growing right so ethereum is not that far behind it's like 100 million 150 200 depending on how you count right and so the the point is that uh you're already starting to see political um people come to power and hold power in part on the basis of their crypto policies belli of El Salvador is one of the first and my and now of course you're seeing this become a huge issue with Republican Democrat and so on here's my point if in 2010 even after the Arab Spring it was implausible sounding to say in 10 years the president won't be the president unless they can post on social media in 2021 even after a sovereign held Bitcoin in 2023 even after 2024 even after Black Rock holds Bitcoin it still will sound implausible to you perhaps if I say in 10 years the US government will be out of money if it doesn't hold Bitcoin yeah okay and and what that means is when you ask about governance that means crypto like Bitcoin and what crypto represent are a government of governments they're like above governments in the sense of they constrain uh proplate States because the money can't be printed or at least Bitcoin can't be printed right so it goes back to the gold standard where the gold standard used to constrain States because if they didn't have the gold they couldn't fight Wars they there was a constraint on what they could do now that's going to be as big a deal as social media's all the convulsions around social media in the 2010s are just a prequel of the craziness that's going to ensue around actually going to limited what does that mean in terms of actual policy influence oh boy well I think for example you're going to get um Bitcoin is a strong enough force that I think you're going to get a three classes of States what I call Bitcoin atheist Bitcoin monotheist and Bitcoin polytheist okay so a Bitcoin atheist state is a state where possession of Bitcoin and priv hands is outlawed yeah it's like China I believe right it's like China for example right so they they I don't think they've outlawed it in private hands but they made it hard to mess around with right Hong Kong they're allowing it but mainland China it's still not you know right so that's something where in a in a bankrupt State they will also probably want to restrict Bitcoin in private hands it's like cheating the government or something they'll be it'll be called something like that right I don't think that's say you can't buy US dollars in in uh countries with brickway inflation exactly that's right or it'll be it'll be consider you know like like you know you call it guns you call it speech it's similar to a few other things sometimes it's banned right okay those are Bitcoin atheist States then Bitcoin monoe States or Bitcoin maximum States will allow Bitcoin and only Bitcoin no crypto no anything no Fiat well the Fiat would have to be backed by Bitcoin right so gold back or either gold or Bitcoin only really hard but Fiat yeah exactly these will be states that have just recovered or have just gone through an extreme currency crisis and as a reaction to that want extreme Simplicity in everything and are willing to trade off upside of having functional financial markets and so on for lack of downside by just having everything be really simple and reduced complexity and so on so those will be like Bitcoin monotheist Bitcoin maximal Estates and then finally Bitcoin polytheist States I think will be like the UAE or Singapore or financial capitals that have enough Prosperity that they can tolerate complexity the lot of Bitcoin and other coins alongside but I do think that that sort of tromis will be as much of a factoring of the world as um I don't know I mean like I don't know guns or speech or other kinds of really important things where you have very different legal regimes and very different results as a con consquence yeah correct saying I I wanted to I wanted to get your take on on truth I know you talk a lot about citizen journalism and kind of um it's this interesting dichotomy in some ways where like uh we have more information available to us than ever before and yet um our kind of shared understanding of what's true and what's not is also more Divergent than ever before umh now first of all I actually want to get your take on if that's actually true or if that's just the perception meaning that um in a world with more centralized information there was more cohesion around [ __ ] potentially and so there was just as much um or maybe even less truth but it was just we all believe the same lie yep so do you believe that there's first of all do you believe that there's more truth now or less truth it's a great question I think um I think that there's more upside and more downside right yeah that's to say I think um you know when when the mainstream media for example will look at the internet they will see qanon but they don't see Satoshi andon yeah right say see a downward deviation which has worse evidentiary standards than the mainstream but they don't see an upward deviation that has better evidentiary standards in the mainstream yeah it's like learning about Co on Twitter uh is actually more truth available yeah exactly and for us for like investors VCS people who are essentially for lack of better term professional researchers I think we're reason I mean I'm going to qualify this with many asterisks but I think on balance we get better information by taking in the feed and figuring it out from there and then acting on it um than we do from just having it sort of spoonfed to us right and especially spoonfed To Us by people who are just really insistent stamp foot that they are the institution who have a political bias and are not the ground truth yeah yeah exactly and the thing especially during covid like masks don't work before they do right exactly yeah that was so ridiculous ridiculous right yeah and there's so much C you know standing on The Prestige of science and the problem is and this is a complicated thing to talk about but basically there's at least two failure modes right and then then there's the third success mode you know so failure mode one is to say science says you need to listen because the study just came out last week and so and so forth that's one failure mode the second failure mode is say oh yeah well screw science screw scientists screw all of that I'm just going to go to my crystals or makeup or whatever right and so the third and the Hard Road but I think the road we need to take is the road of decentralized science which says science is not prestigious citation it's independent replication right right example what happened with the super conductor thing was good because there was no political line on that the institutions are actually silent there's no longstanding doctrine that superconductors mean that you on the right or the left or whatever right it was silent was not a political issue unlike a lot of other things everyone just tried to replicate it based on the paper yeah Bingo that's independent replication rather than procedure citation nobody cared about the reputation or the institution of the guy they just care about the algorithm or the the process to like cook the aluminum or whatever was to to make that super conductor and then test it and then their prediction markets going on is that an interesting week yeah exactly and that's awesome that's a glimpse of it another Glimpse more than a glimpse is Satoshi and Bitcoin and crypto show the value of decentralized truth because that's what the blockchain is it literally is something where whether you're Indian or Pakistani whether you're Japanese or Chinese uh even Waring tribes agree on who holds what amount of Bitcoin like the state of the Bitcoin blockchain and that's the kind of thing that people have absolutely killed each other over in the past like you're talking not Millions but billions and billions of dollars right so that's actually really important where Bitcoin shows that you can get centralized truth right and non obviously if you can agree on one bite in a highly adversarial environment you can agree on a string of bites if you can agree on a string of bites you can agree on many other kinds of information you know at least some of the basic like who put this on chain and what did they put on chain and when from the digital signature and the hash and the timestamp right so in general by the way you know with with a lot of these things um I think we just need the version the internet first version right what's the internet first version of science well it's decentralized science what's the internet first version of Journalism well citizen journalism where everybody's participatory journalist and they you know rather than a professional journalist class what's internet version of democracy so I'm writing an article in this crypto democracy right where um what you're what you're doing is you're saying well actually internet voting already exists you have the low stakes voting of Reddit and Twitter where you're uploading things you have the med to high stakes voting of something like snapshot. org where you're voting on Dows for the allocation of hundreds of millions of dollars in funds and you have the ultra high stakes vote of for example in Estonia which actually has cryptographically verifiable Hardware wallet like things and you're making decisions on war in peace and they may even have their former prime minister running NATO so you're talking very highest levels internet voting is already working right so crypto democracy would basically say rather than just yelling you know we're protecting democracy and so on you defend democracy with cryptography the same technology which allows you to send one Bitcoin allows you to send one vote yeah exactly and then you don't have this unfortunately emerging you know uh disillusion of truth even in America exactly that's right now you know every vote counts because you can count all the votes right you can get a zero knowledge receipt of every like all kinds of stuff the whole system can be set up to be audited right to build you know trust in the system and do you know do I do I think we can easily retrofit the existing system no but do I think that we can do it on the outskirts and make it work just like kind of Estonia is on the outskirts of the West and Singapore and the UAE and places like that do I think we can make it work in our Cloud communities in our Network States and startup societies and Dows yes and then it diffuses back in right outside in yeah in some ways we went from like decentralized truth to or sorry centralized truth to decentralized chaos to now decentralize truth um yeah exactly it says like centralization decentralization recentralization yeah because really decentralization is sort of it's like break you know hit the fire alarm and everybody scrambles out of the building but then they need to regroup and then rebuild you can't have decentralization without a share understanding of Truth yeah yeah exactly that's right like decentralization there's a lot that's good to it but in many ways it's sort of a break glass of emergency temporary State and then you need to sort of rebuild build civilization you know I I understand where crypto Anarchy comes from and I'm sympathetic to it in some ways but I prefer crypto civilization yeah and on that note of kind of decentralization what's your take on open source AI whether uh that will win be a you know primary part of how these AI models evolve and how it what its implication is on kind of societal risk and and how uh and regulation so I hope it wins and I think it might turn out to be Android Apple MH where you have sort of Open Source and closed Source kind of neck and neck um but you know open source AI really should exist because it's something which um you know at a minimum a bunch of large companies that are big enough to fund something but not big enough to fund a full model should be able to get together on something like the Linux Consortium and and train an open- Source model that they all use or else they'll have to pay huge API call costs to you know whoever has the big closed Source model right so uh plus governments will want to have their own I I do believe that over time we're going to see every sufficiently large community um whether nation state or network or network state or what have you has its own social network cryptocurrency land messaging app you know Ser like a bunch of these things sort of full stack yeah that's kind of what defines like a digital Society so yeah um and I know you're in general obviously very pro- free markets and um but you know is there is there some level of AI regulation that you think should exist or how do we kind of protect against the downside of you know our you know foreign adversaries getting access to Sate of the Rai and even just individuals using it for nefarious purposes so the thing about this is basically like um you know I'm not you know against you know all states I'm just very skeptical of this government right and the reason I say is let's just take the last disaster okay let's take Co it's now coming out which people kind of knew that like the US government and the Chinese government seem funded This research and fouchi has covered up like saak has talked about this a lot of books have been written on it it's now kind of coming out that this is seems real right with the discovery and the emails um and so how like how's the US government going to protect us from existential risk it's causing the existential risk it's funding the gain of function research right number one um number two is when it comes to like killer AI or something like that as I mentioned I I tweeted about this but like the killer AI is coming it's called drones yeah or Bally it's here yeah it's here it's here right so like you know because the question I always ask when people say oh AI is going to kill us all I'm like okay exactly how it's a digital life form right if it's a life form how's it going to kill us it's going to need actuators in the physical world right it's not going to scare you to death through the computer it's going to hit you with something right right what is it going to hit you with either it's going to be so persuasive and this is a big thing for them it's so persuasive that it controls the mind of some and turns them into a bot which I don't actually think is that likely unless that person is themselves kind of like a am shrio type cult member or whatever like if they're Heaven's Gate or something okay right they've they're crazy themselves and the AI is change them into that right they type something into the prompt they're like I can't believe it said this to me and then they go off and run but they're crazy in the first place more plausibly the AI is scripting a drone or a robot or something like that right that's possible I could I could that cphon the Skynet scenario playing out but guess what governments aren't going to stop that from happening they're going to do everything they can to accelerate it because everybody's all in on on drone Warfare right so the the thing is that like yeah there's a national security argument there's an AI argument but they combine I think in different ways in the narrative right the problem is right now we're sort of on track like um I think we can probably fix this but you know with with with with uh Nuclear Physics we ended up getting sort of the tragedy of nuclear weapons but not enough nuclear power right too many nuclear weapons not enough nuclear power so it'd be a tragedy if we got all the killer AI which is say going be funded anyways because nation is gonna get funded anyway to create it yeah exactly that's right so the killer like AI doctors or AI you know therapists or exactly that just accelerate everyone's quality of life exactly exactly so like they are people are spending you know I had this kind of oneliner or whatever on this right but um like once you kind of just remap it as killer AI is drones right like that's you know um it's just something where the state isn't going to stop with regulation it's going to be the number one funer of AI weapons maybe that's a necessary evil but then other AI regulations unnecessarily evil so reject all the compute bands right um and uh you know the uh the thing about this AI safety it's bizarrely focused on the AIS Guided by prompts rather than the AIS that are guiding the bombs yeah right like people want to regulate AI image generators rather than AI Target locators I think it's an interesting point that yeah I think it's an interesting point that you're and I feel like this is a classic kind of um um kind of mental error that people make which is kind of underestimating the status quo because people only detect change meaning that you're not making the argument that open source AI is s is safe you're just making the argument that people underestimate the um the risks of centralized Ai and and centralized relation I I I will say that I do believe I mean to go against open source in the name of safety I don't think is smart um so I I will also make the claim that in general if we're going to get first of all I like a lot of people involved okay but it has to be said the people who are saying let's close down doingit yeah they have large interests in companies that want to close that that you know that think and the thing about this is I think they're wrong even their logic is we have a short-term Advantage with this closed model let's stop all future development so we can get a few more billion dollars out of this company or whatever I mean come on that's like such a Negative sum attack on the commons to try to shut down all of the research so you can eek out a few more billion with one company I mean that's not right right number one number two is it's um it's something where we have such a track record already with Linux and scientific publication and so and so forth all the analogies of oh my God AI is like nuclear weapons and we wouldn't want that to be open sourc and so one push back I would have is that you you could say that you know this was all or a lot lot of this originated from the money printing that happened to offset covid which was kind of a Black Swan event and then you know you could argue that didn't necessarily have to happen you didn't have to but because it meaning the shutdowns but because it did you know there's this Black Swan event which was then corrected and now we're more in equilibrium and these banks are fundamentally uh bankrupt it's more of a duration issue and now that kind of trust has been restored with this back stop if kind of stopped bed it I understand that argument I disagree with that argument because I think for among other things they treated a Corona virus like a financial crisis it should have just literally well they created the financial crisis and then they fixed it yeah I'm not sure they fixed it right I really don't think the general populace appreciates how bad bank balance sheets are right now I don't think most of the banks understand what's on their balance sheets right so um you know the I I basically expect something significant and not I'm not the only person obviously significantly worse in 2008 which was pretty bad and so my view is hold crypto hold it locally things are going to get cray uh and um you know that's my prediction for the next couple of years two three years but we'll see I may be wrong hopefully I'm hoping I'm wrong um awesome well this is I mean the thing is crypto does well out of the way you know uh if the economy rips or if the economy collapses yeah in that sense that's true um okay well this has been fascinating thanks for doing a late night call in asan Asian time zone and this is you know it's always uh super fun to catch up and and debate these issues awesome thanks Seth yeah thanks for listening to product Le AI you can find more information about today's interview and the entire series on the website product Le AIP pod.com you can subscribe to the show on all major podcast platforms and watch the video version of this interview on YouTube and if you want to get all the links and details delivered right to you sign up for my LinkedIn newsletter I'm Seth rosem and this is product Le AI [Music] [Applause] Back To Top