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Balaji Srinivasan argues that in the era of AI, money will become cryptocurrency, providing digital scarcity to complement AI’s digital abundance. “AI is digital abundance but it doesn’t make everything abundant. Crypto is digital scarcity and complements AI’s abundance. So money after AI is crypto,” he detailed.
Balaji Srinivasan, a prominent figure in the technology and cryptocurrency sectors, shared his thoughts on cryptocurrency and artificial intelligence (AI) in a lengthy post on social media platform X on Saturday. Srinivasan is recognized for his extensive contributions as an entrepreneur, investor, and writer. He co-founded Counsyl, served as the chief technology officer of crypto exchange Coinbase, and was a general partner at the venture capital firm Andreessen Horowitz (a16z).
“Money after AI is crypto,” Srinivasan began, elaborating:
What is money after generative AI and robotics? This is essentially crypto. Money itself becomes cryptocurrency, just as much intelligence becomes electricity.
He proceeded to share his reasoning, outlining five key points. Firstly, he argued that cryptocurrency holds provable scarcity in an era of AI abundance. This scarcity is beneficial, as scarce crypto assets can be used to verify human identity amidst prevalent AI tools capable of mimicking human behavior. Secondly, he detailed that money acts as a bridge between economically distinct actors. While internal actions, such as moving your hand or a robot you own, do not require payment, interactions with robots owned by others will still necessitate financial transactions, he emphasized, adding that for example, one would need to send a coin to unlock a drone owned by another party.
Thirdly, Srinivasan contended that high-level scarcity persists, ensuring the continued relevance of money. While certain forms of scarcity, such as stationary household robots like washing machines, might disappear and be replaced by mobile robots, the overall concept of scarcity remains, he noted. Furthermore, he highlighted that the supply chains necessary for building robots and the nuclear power plants required for running AI data centers will continue to be scarce. These supply chains are primarily located in China and Asia, making money valuable in these regions.
“The most important form of scarcity in the AI age are the private keys to control the robots. Those too will be crypto, because web3 backends like Bitcoin and Ethereum have far higher levels of security than any web2 system,” the former Coinbase CTO stressed, concluding:
In short: AI is digital abundance but it doesn’t make everything abundant. Crypto is digital scarcity and complements AI’s abundance. So money after AI is crypto.
