Base Layer
Posts
💡 How to profit from AI

💡 How to profit from AI

PLUS: $BALD token up 3M% in 24 hours

Alex M.
July 31, 2023

GM everyone. This is 2036, the crypto newsletter that pays you.

Here’s what we’re serving up today 🍲: you’ve heard about AI but have no clear way to invest in it. Today we’re changing that: AIs will form companies that are all powered by the same thing.

Let’s dig in.

🥔 Today’s meat and potatoes

Get smarter on crypto in 2 minutes

Private companies (like LLCs) have been some of the biggest drivers of wealth in human history.

Just look at the chart of global GDP. Wealth exploded as limited liability companies became more popular in the 17th century.

That’s no memecoin. That’s global wealth over the last 2000 years

Even governments as ideologically opposed as the US and China can agree on how awesome companies are.

Small bands of individuals coming together to achieve a common goal. We love to see it.

The major difference is that in China, the state owns companies; in the US, companies own the state.

that’s right, shots fired

Most companies worldwide are dependent on the state in which they operate.

To run a company, you need to register, file legal documents, keep accounts, etc.

And if you don’t, the government revokes your right to do business, gives you a fine, or throws you in jail.

i.e the government uses its monopoly on violence to coerce people into playing by its rules.

But these rules don’t apply to artificial intelligence.

AIs are different forms of intelligence that can also band together - just like humans - in the pursuit of a common goal…

… except they can’t be coerced by the government.

The government can shut down a company, but it can’t shut down an AI.

The government loses its monopoly on violence, which means investors lose their recourse to take an AI to court if it breaks the law.

Would you invest in an AI company that’s not bound to follow any laws?

Probably not.

Instead, to make sure the AI upholds its contracts, investors will likely turn to smart contracts.

Smart contracts are like vending machines: “If you pop in $2.5 and press this button, you will get a Diet Coke” - except everyone can see the code that makes this task possible and whether there are enough Diet Cokes in the machine - all on a public blockchain.

This means future AI companies could:

Be written into smart contracts that are automatically executed and publicly auditable
Issue tokens to raise money via decentralized exchanges
Use the public blockchain for accounting

It’s a better, more efficient, and faster way to do business.

The Economist agrees

And it won’t require AI companies to open bank accounts or file paperwork with the government.

You don't need permission from Bitcoin or Ethereum to use crypto.

Ok - so who wins the most from the transition?

1/ Ethereum ($ETH) is the biggest virtual machine for decentralized applications and will probably be the blockchain used by most AI “companies.”

The math that we referred to on Friday puts the gains purely from AI company activity in the 100-1,500% range:

2/ Decentralized exchanges like Uniswap ($UNI). AIs won’t be using centralized exchanges. Remember, they’re not human. And traditional money is reserved for humans.

3/ Protocols that provide services to AI companies (DAOs). Expect DEXes to have minimum requirements for DAOs to list their tokens, including the need for on-chain accounting and auditing services for DAOs.

[This newsletter summarizes Arthur Hayes’ ideas we sent out in Friday’s newsletter. If you want to dig further, you can read the whole thing here]