Crypto could solve some of AI’s most pressing challenges – a16z

As AI faces issues such as centralization, shrinking trust, and IP protection, blockchain infrastructures present potential solutions.

Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.

The crypto industry is playing a critical role in addressing the growing challenges in artificial intelligence (AI), according to a16z’s “State of Crypto 2024” report.

As AI development becomes increasingly expensive and centralized, the report highlights how blockchain technology offers decentralized solutions that could make AI more accessible and equitable.

The report highlighted that 34% of crypto projects now incorporate AI, a significant jump from 27% in 2023, with many focused on making AI more accessible through decentralized networks.

Challenging AI centralization

According to the report, the cost of developing and training advanced AI models has surged, leading to a concentration of resources among a few major tech companies.

This centralization limits innovation and restricts access to the computational power needed for AI breakthroughs. However, crypto projects are beginning to change this dynamic by decentralizing access to AI resources.

The report pointed to projects like Gensyn, which are working to democratize AI compute power. Gensyn’s decentralized network allows smaller developers and startups to access the computing resources required to train AI models, removing the financial barriers traditionally associated with AI development.

By decentralizing AI infrastructure, these projects provide more participants with the opportunity to innovate in the AI space rather than leaving it in the hands of a few dominant players.

Tackling more issues

Beyond decentralizing resources, blockchain technology also enhances transparency in AI processes, particularly around intellectual property (IP) and content verification.

Projects like Near and Story use blockchain to track and verify the origins of digital content, ensuring that creators are properly credited and compensated. This verification system addresses a growing concern in AI, where training datasets often include uncredited and uncompensated material from creators.

The report also argued that blockchain technology’s transparent nature could help restore the public’s faith in the AI sector. Public trust in AI companies in the US has fallen significantly over the last five years, from 50% to 35% as of 2024.

Growing adoption

Crypto developers are increasingly integrating AI into their projects, with blockchain infrastructure remaining the top category for AI adoption.

According to a16z’s Builder Energy dashboard, builders are using AI to optimize smart contracts, enhance decentralized autonomous organizations (DAOs), and improve algorithmic trading systems.

The report noted that as blockchain infrastructure continues to improve, the potential for AI-driven applications within the crypto ecosystem expands. Significant advancements in blockchain technology have drastically lowered transaction costs, making it easier to build scalable AI-powered applications.

This reduction in costs allows for more experimentation and innovation in combining AI with decentralized technologies, leading to the development of new applications in areas such as identity verification, prediction markets, and content authentication. These use cases represent the potential for AI to unlock new functionalities on blockchain platforms.

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