Since ChatGPT launched, I’ve been somewhat obsessed with artificial intelligence and its potential uses. Less than a year since that release, we’ve already seen several use cases emerge, with many others on the horizon.
What interests me is how AI is going to impact finance. As training and computing costs decrease, it’s expected that AI agents will outnumber humans online (if they don’t already). Those agents will consume, generate, and exchange an unimaginable amount of information. This brings a lot of opportunity and anxiety to areas like finance, where identity management is paramount.
So, let’s take that a step further. How will AI (specifically issues like human-like AI agents) impact blockchain networks? Do blockchains provide a new possibility for AI-driven agents in fintech?
The Current State of AI-Driven Agents in Finance
AI believers in the finance and fintech space believe that there must be a way to enable AI agents to transact and complete tasks without direct human interaction freely. And, of course, we will want to identify, control, and audit their actions.
Because of this, we can’t allow AI agents to use traditional financial systems because they don’t fit with the identity model used in these systems. Namely, we can’t
- Audit them,
- Trust them,
- Secure them
At least, not yet.
This current reality dramatically limits the ability of AI to interact with financial systems… and that’s before we even circle back to the questions of resources and cost. While costs are down, they are still significant. The current state of affairs sees companies like OpenAI covering their massive operations costs by charging API access to the AI models they create.
The problem, then, is AI alignment, or finding a method to support training and organizing AI agents in such a way that is scalable and trustworthy.
Any solution will require three things:
- A new software model where trusted code execution is guaranteed and auditable;
- A new digital financial system that not only serves humans but can also serve AI agents;
- A cryptographic identity model that includes decentralized communication and reputation protocols.
Currently, the best way to achieve these three things is through blockchain protocols and smart contracts.
The Potential of Combining Blockchain and AI Technology
Major blockchain platforms like Ethereum, Solana, Avalanche, and others allow for secure, reliable, decentralized applications with an auditable trail of transactions. Other networks, such as Filecoin and Arweave, can provide cheap, secure data storage, which will be key for AI models. These networks already see tens of billions of dollars in value locked, along with hundreds of thousands of daily transactions.
Because these platforms rely on smart contracts, which are self-executing code, it seems a small step to take to use these networks to train, deploy, and operate decentralized AI agents that can interact with each other through smart contracts.
It seems, then, like the blockchain could be a perfect marriage of fintech and AI… right? Future AI agents could instead operate through smart contracts, paying small fees – digital tokens – as they go along with their tasks. This not only improves the efficiency of the AI agents, but it also increases the usage of the blockchain on which the smart contracts reside: a win-win.
Creating AI agents that can control their digital wallets would mean they could easily use any smart contract-based platform or service, including DeFi protocols and infrastructure services.
Such an agent could even invest its tokens through staking or yield farming protocols or trading on decentralized exchanges. This would allow for optimization of the financial operations of the agent while also increasing liquidity in markets. Depending on the function of the agent itself, it could charge other agents for its services.
The result would be a vast network of economically incentivized AI agents, all working together over decentralized protocols, trading data, and services while covering their costs. This is impossible to consider using the traditional financial system.
The Blockchain as a New Vehicle for AI Agents
Even when AI agents are delivering their benefits off-chain, they are operating on a network… which means an immutable ledger of their activity that is public and transparent. This transparency provides many benefits, including:
- Distinguishing AI activities and content from human activities,
- Build identity systems for AI agents,
- Audit agents’ actions in real-time, and
- Creating reputation systems for AI agents.
With this kind of control system, we could reward the good actors within this system, punish or remove bad actors, and know with certainty which agents perform best at a given task. Not only will humans know which agents to trust, but other agents will quickly determine which agents to trust and rely on based on the publicly available on-chain history of any given agent.
Of course, much work needs to be done to get to this point. While blockchain infrastructure is becoming faster and cheaper, we need to scale smart contract blockchains to handle all of the transactions AI agents would create.
Smart contract programmable wallets are being developed that will help agents in transacting with smart contracts and other agents. One of the key features of these newer wallet types is the ability to integrate account abstraction that would allow human actors to authorize AI agents to spend from a given wallet.
We would also need to build the registries and reputation systems needed to track AI agents, most likely using their public keys as the identifiers for each specific agent. Once that’s underway, I would expect to see several new business applications and models emerge.
Investor Takeaway
There is still work to be done in AI, but all of these developments, while they may seem out of reach now, are likely around the corner. Once the floodgates open, many more blockchain/AI use cases will likely become evident to us, ushering in a new financial system that is more open, more transparent, more efficient, and ultimately more tuned to the needs of humanity.
If you believe, as I do, that a combination of blockchain and AI is inevitable, then it’s likely you can also see how this would impact the value of various blockchain platforms and protocols. We’ve always looked to the mass adoption of blockchain, but none of us expected that this mass adoption might be more AI-based than human-based. Either way, it will drive the value of the underlying blockchains, creating opportunities for those with the imagination to see them.
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