In the comments section of the article a few days ago, a reader asked about my attitude and viewpoint regarding the various applications of the recent hot trend of AI combined with blockchain.
The outbreak of AI is definitely a technological revolution comparable to, or even surpassing, the level of the industrial revolution. This revolution will definitely sweep through all aspects of our lives and, combined with various existing technologies, will give rise to unimaginable scenarios and applications.
Any investor who is passionate about technology investment and hopes to participate in it cannot ignore AI.
I am no exception.
As someone exploring the crypto world, my primary focus is, of course, the combination of AI and blockchain applications. I have not only maintained close attention to this for a long time, but I am also continuously pondering some questions.
However, up to now, I have maintained a very cautious attitude towards this field and have not been very involved.
Because a reader asked, I took this opportunity to share my thoughts on some issues with everyone.
It should be noted that many of the questions I will raise next do not have good answers for myself at the moment, so I hope readers will see these ideas as a starting point for discussion rather than a summary of experience.
According to my usual habit, my first reaction before making any investment is always: anticipate failure before success - in other words, think about the worst-case scenario first, not how much money can be made, but try to avoid detours as much as possible.
Specifically for investments in AI combined with blockchain, the first thing that comes to my mind is: what pitfalls should I be extremely careful of and try to avoid?
- The vast majority of existing projects are cannon fodder
I have written in previous articles: for a newly emerging thing, if everyone knows it's good from the beginning, it probably won't be too good in the future, or if it is good in the future, the good aspects are probably completely unimaginable beforehand.
AI is the same.
Once an AI application goes online, everyone knows it's good, and I also think it's good. But I think the good aspects of it are probably in places we can't even imagine right now.
Note that when I say "good" here, I am referring to killer-level applications, meaning projects that could potentially increase in value by hundreds, thousands, or even tens of thousands of times, not just some minor improvements or slight innovations that have a little impact on our lives.
Applications like translation, Q&A, and writing essays are just appetizers in my opinion and not worth much attention.
Evaluating the AI combined with blockchain projects we see in various exchanges and promotions by influencers from this perspective, what does it mean?
It means that probably 99% of the AI projects and AI coins we see in various exchanges and promotions are cannon fodder on the road of AI combined with blockchain.
I want to explain here: when I say these projects are cannon fodder, I'm not saying they don't make money. Under the manipulation of hype, chasing trends, and market value management, they are very likely to make some or even a lot of money for the holders in the upcoming bull market. However, most of these projects, at first glance, can be understood by readers in a minute, and it's easy to see what they are doing and what problems they are "solving," and where their "narrative" is.
For me, these projects do not spark further thoughts and curiosity, and my interest in these projects is fading more and more.
- Learning from others' experiences
If the vast majority of AI combined with blockchain projects are likely to be cannon fodder, where are the killer-level applications of AI combined with blockchain?
I don't know either.
But similar ways of thinking and historical evolution can be used as a reference.
The development of the crypto world is our best reference.
2.1 Technologies have their own characteristics
I increasingly believe that any new technology has its inherent characteristics. The so-called characteristics are fundamental features or advantages that other technologies do not possess.
A killer-level application of a new technology must fully leverage its characteristics.
Therefore, the application of AI combined with blockchain must combine the characteristics of both technologies.
The characteristic of blockchain technology is extreme decentralization.
This characteristic has given rise to a neutral platform that can avoid being monopolized and controlled by any centralized force. Because it needs to avoid being monopolized and controlled by a centralized force, this platform must attract global participants to maintain network security without any barriers to participation. Since it needs to attract global participants to maintain network security, it must reward participants who maintain network security by issuing encrypted assets.
It is based on this logic that we have Bitcoin and Ethereum today, and it has given rise to countless teams' amazing creativity and inventions in areas such as smart contracts, DeFi, NFTs, blockchain games, layer-two scaling solutions, and more.
A platform controlled by a centralized organization will not allow us to experiment and innovate freely, without any constraints.
Therefore, the entire logic derived from the characteristics of blockchain technology is interconnected and inseparable. If any part of it is cut off or compromised, the blockchain loses its soul and characteristics, and regresses into a traditional distributed system.
So what are the characteristics of AI? What has AI created that other existing technologies cannot or cannot create?
This is a question I have been thinking about, but I don't have an answer.
2.2 The arduous exploration in the crypto world
It seems relatively easy for us to understand the characteristics of blockchain now, but in reality, it has been an arduous exploration process.
In the early days, most people suffered heavy losses and setbacks on the investment road because they did not grasp this characteristic.
Within the crypto world, the most typical example is EOS and a host of Ethereum killers. Regardless of what they were dressed up as, their fundamental characteristics can be summarized as sacrificing decentralization or security to pursue efficiency in blockchain transactions.
Some may say, didn't those projects create hundreds of times of returns at their peak?
If we carefully examine the situation at that time, we will find that only a very small number of token holders were able to cash out at the peak of the bull market, and the vast majority still held a large number of chips in their hands, hoping that these projects could revive and shine again.
However, the results of these hopes were all dismal.
The only ones that never mistreated their holders and could withstand the bull and bear markets are Bitcoin and Ethereum. Regardless of when investors held them (even at the peak of the bull market), they eventually reaped rewards, requiring only some patience and steadfast faith.
Why?
In my opinion, it is the characteristic of decentralization that makes them stand forever.
The above example is from within the crypto world, but there are many more examples outside the crypto world.
After 2018, a large number of traditional enterprises developed many consortium chain projects, similarly transforming blockchain into a traditional distributed system by sacrificing decentralization, and then claiming that these systems could transform our lives and even give rise to new industries.
In some places, the concept of "blockchain without tokens" was even proposed.
Now, if we look at these projects again, those that died, died, and those that survived are just gasping for breath. A certain major company directly scrapped the so-called blockchain platform it had once vigorously built last year.
Consortium chains were a particularly popular area for traditional investors to invest in back then. We can imagine what investors who invested in those consortium chain projects back then are getting now.
The above two types of cases - one within the ecosystem and one outside the ecosystem - have completely identical results.
Why?
Because those investors completely got the direction wrong and did not grasp the characteristics of blockchain technology, but were confused by some "pseudo-concepts," "pseudo-tracks," "pseudo-innovations," and "pseudo-narratives."
Therefore, as an investor, you must grasp the characteristics of a technology and invest in the direction of its development, in order to avoid a lot of "pseudo-concepts," "pseudo-tracks," "pseudo-innovations," and "pseudo-narratives."
2.3 The misleading nature of the "celebrity effect" in the investment field
Reading up to this point, some readers may say that it seems quite difficult to judge the characteristics of a new technology.
In my opinion, it is not just quite difficult, but even extremely risky.
Let's use the crypto world as an example again.
When EOS rose, its spiritual leader BM was widely recognized in the industry as a technical guru, and his influence was no less than that of Vitalik at the time.
When these two people spoke at the same time, how could we, as ordinary investors, judge?
Who is right? Who is wrong?
What did they say that was right, and what did they say that was wrong?
This is a huge challenge for ordinary investors.
I was particularly lucky back then. On the one hand, I read the early remarks of Satoshi Nakamoto, and on the other hand, I met a deeply thoughtful mentor, which allowed me to discover the flaws in BM's remarks and the problems with EOS, and I was able to avoid the pitfalls of these "killers" relatively early.
Outside the crypto world?
The situation is equally brutal.
There were many heavyweight tech figures who stood for consortium chains back then.
As an ordinary investor, I heard two voices at the same time: on one side were heavyweight tech figures, and on the other side was a young, college dropout entrepreneur (Vitalik).
Without thinking, most investors would trust the heavyweight tech figures, and the results speak for themselves.
I don't doubt the technical excellence of these tech figures, but I don't believe they truly understand the characteristics of blockchain technology. I even think they are extremely averse to these characteristics.
- The Characteristics of AI
In the crypto world, we have taken many detours and stepped into many pitfalls in order to explore the characteristics of blockchain technology. Now, in the field of AI, I find a similar situation has arisen once again.
We all know that the core technology of OpenAI is Transformer. But this core technology was not proposed by Microsoft, it was by Google.
However, Google abandoned this path for various reasons.
But Otman insisted that this path was not wrong, what was wrong was the lack of computing power. Therefore, he worked towards strengthening computing power in that direction, and that's how we got the results we have today.
Think about it, if investors back then were faced with Google and Otman, how many would have believed that Otman was right? The results speak for themselves.
Interestingly, similar cases have played out again in recent days.
Recently, OpenAI released the world-shocking Sora.
When the whole world was bowing down to Sora, Yann LeCun, the CEO of Meta and also a Turing Award winner, criticized Sora.
This reminds me of the debate between Vitalik and BM back then.
Now, on one side is Otman, and on the other side is an equally top scientist. As ordinary investors, how do we judge who is right and who is wrong?
I don't know either.
For these questions, if we don't have clear answers, it means our understanding of the characteristics of AI is still very shallow. If we don't understand the characteristics of AI, how can we distinguish between what is real and what is fake in a lot of "pseudo-concepts," "pseudo-tracks," "pseudo-innovations," and "pseudo-narratives"?
In this way, how can we possibly grasp projects that truly have long-term significance and deep value?
For AI and the combination of AI and blockchain, I still have many puzzles and unknowns, and I am still learning on this road. I hope that one day I can make some progress and then dare to make substantial and large-scale layouts and participation in this field.
In this field, not to mention investing in projects like Bitcoin and Ethereum, at the very least, we should try to avoid investing in projects like Ethereum killers or consortium chains.
And most of the AI combined with blockchain projects I see now are either short-term trend chasers or probably former "killers" or consortium chain projects.
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