AI, Not Blockchain, Is The Real Path To Decentralization

Centralization isn't about trust, it's about scaling intelligence

Happy Sunday and welcome to Investing in AI. I’m Rob May, CEO at Brandguard. I also run the AI Innovator’s Podcast, so go listen if you are into that.

Today I want to talk about blockchain. I had coffee with a crypto fund manager a few weeks ago who mentioned that, for all the money that’s gone into it, there is still no killer blockchain app. I know him because I spent a lot of time in blockchain in the past. I first bought bitcoin in 2014, and I tried to launch a token in 2017 before getting yelled at by the SEC and deciding not to do it.

My take on blockchain is that the reigning story about why we need a blockchain is flawed. The idea that decentralization is/would be a good thing is pretty pervasive in tech. I don’t know for sure but I believe it comes from how we were raised as Americans to believe so strongly in individual liberty, and America’s disproportionate influence on the tech industry in general. I’m not sure if decentralization really is always a good thing but, for purposes of this post let’s assume it is.

The question to ask then is, why aren’t things more decentralized? Why did centralization arise? The crypto industry’s answer is that it was about trust. As commerce expanded beyond your local geography, you needed large institutions you could trust. And thus, if you can have trust without centralization, we can solve the decentralization problem.

I’m going to make a different assertion. I think centralization was about scaling intelligence. As the world became industrialized, there were economic benefits to scale that ultimately tied back to scaling intelligence. The form of modern corporations enabled knowledge sharing and learning on a scale not possible before, and allowed a limited number of people with expertise in a subject to have a huge impact with what they knew. If intelligence and expertise on most subjects were widely available, I don’t believe we would have seen the economic centralization that ultimately emerged.

Now I realize many of you will dispute the above statement, and that’s fine. But assume for a minute I’m right. It leads to an interesting insight. It means that as intelligence moves from humans to computers because of AI, and thus becomes more scalable, it could lead to decentralization of many areas.

How? If I can have, for example, my own autonomous financial agent that runs locally on my phone that happens to be as smart as all the JP Morgan finance wizards together - well, it can be easily personalized to my needs and I can be in full control of it.

I believe that the mass personalization that AI can bring is going to lay the real groundwork for the decentralized economy that the crypto industry is seeking.

Where will this come from? To me, that auto-GPT movement is the most interesting thing happening in AI right now. Building individual agents that can swallow global knowledge at scale but learn locally from individual interactions has tremendous potential. It’s early, and there are many problems to solve for these agents to materialize. But when they do, it could be very disruptive to existing centralized economic models.

Thanks for reading.