Why Bitcoin Will Be Essential in an AI-Dominated Future, According to Pompliano
The Rise of AI
Artificial intelligence (AI) is the imitation of human cognitive processes by technology, specifically computer systems. It entails creating algorithms and software that can observe their surroundings, learn from data, reason, solve issues, and take actions to accomplish certain objectives. AI has made substantial progress in recent years, because to advances in processing power, data availability, and algorithmic discoveries.
The present status of AI is characterised by fast development in a variety of subfields, including machine learning, natural language processing, computer vision, and robotics. Machine learning algorithms, especially deep learning neural networks, have shown amazing performance in tasks such as picture and voice recognition, language translation, and decision-making.
Artificial intelligence is already having an influence on a wide range of businesses. AI is used in healthcare to diagnose diseases, develop drugs, and design personalised treatments. In finance, AI algorithms are used to identify fraud, manage risks, and trade stocks. Manufacturing and logistics firms are using artificial intelligence (AI) for predictive maintenance, supply chain optimisation, and self-driving cars.
Leading technological research organisations and industry experts predict that the global AI market will develop at an exponential rate in the next years. According to estimates, the AI industry might be worth billions of dollars by the end of the decade, owing to broad adoption across industries and the development of increasingly complex AI systems.
As AI advances, it is set to disrupt and alter almost every sector by automating jobs, boosting human talents, and allowing new business models and breakthroughs. However, the emergence of AI brings ethical problems, such as privacy, prejudice, and the eventual replacement of human labour, which must be addressed as the technology advances.
Centralisation Risks in the AI World
As artificial intelligence systems improve and integrate into more facets of our life, there is rising worry about the hazards of centralised control over these powerful technology. AI algorithms have the capacity to make judgements that have far-reaching consequences for people, communities, and civilisations, prompting challenges about who should oversee these decision-making processes.
Centralised control over AI systems and data may result in the concentration of power in the hands of a few entities, such as governments, businesses, or other organisations. This centralisation of power has various risks:
Bias and Discrimination: AI algorithms are trained on data, and if the data is biassed or incomplete, the resultant models may reinforce and magnify existing prejudices and discrimination. With centralised control, there is a danger that these biases would be systematically incorporated in decision-making processes, resulting in unjust and discriminating consequences.
Lack of Transparency and Accountability: Centralised AI systems often function as black boxes, making it impossible to comprehend how choices are made and hold those in charge responsible. This lack of openness may undermine public confidence and make it difficult to detect and correct systemic faults or mistakes.
Censorship and Manipulation: With centralised control over AI systems and data, persons in power may be able to censor, manipulate, or conceal information or viewpoints that they consider unfavourable or dangerous. This might hinder creativity, free speech, and the free exchange of ideas.
Single Point of Failure: Centralised AI systems have a single point of failure, leaving them susceptible to cyber-attacks, system breakdowns, and other disturbances. A successful assault or failure might have far-reaching implications for essential services and decision-making processes.
Monopolistic Tendencies: Centralised control over AI technology may result in monopolistic tendencies, with a few firms dominating the development and implementation of these systems. This might hamper competition, innovation, and consumer choice, limiting AI's potential advantages to society.
To avoid these dangers, there is a rising acknowledgement of the need of decentralised and distributed AI development and implementation. Decentralisation may increase openness, accountability, and resilience while minimising the likelihood of centralised control and its related hazards.
The Need for Digital Scarcity.
In a society increasingly dominated by artificial intelligence (AI) and digital technology, the idea of scarcity becomes critical. Unlike physical items, digital assets may be indefinitely duplicated and disseminated with ease, raising the possibility of oversupply and devaluation.
As AI systems automate and optimise numerous processes, the creation of digital products and services may become more efficient and plentiful. However, without a method to generate scarcity, these digital assets risk losing their apparent value and economic relevance.
Digital scarcity is critical for preserving the value proposition of digital assets, assuring their worth and usability in an AI-powered economy. Scarcity may be generated by imposing artificial restraints or limitations on the supply of digital assets, which fosters a feeling of exclusivity and desire.
This scarcity theory applies to a wide range of digital assets, including non-fungible tokens (NFTs), digital art, virtual real estate, and even AI-generated content and services. By creating scarcity, these digital assets may retain their worth and become marketable commodities in the digital environment, allowing for new economic models and possibilities.
In an AI-dominated future, when digital goods and services may become more common, the demand for digital scarcity will become even stronger. It will contribute to the integrity of digital economies, encourage innovation, and assure the long-term viability of digital asset markets.
What is bitcoin?
Bitcoin is a decentralised digital currency that works on a peer-to-peer network, eliminating the need for middlemen like banks or governments. It was created in 2009 by an unidentified person or group going by the name Satoshi Nakamoto.
Bitcoin's main characteristics are:
Decentralisation: Bitcoin is not managed by a central authority, government, or financial institution. Instead, it depends on a global network of computers that verify and record transactions on a public ledger known as the blockchain.
Scarcity: Bitcoin's supply is restricted to 21 million coins, which are distributed at a fixed pace via a process known as mining. This scarcity serves to keep Bitcoin's value stable and prevents inflation.
Pseudonymity: Although Bitcoin transactions are recorded on a public ledger, users may maintain anonymity by using Bitcoin addresses, which are random sequences of characters rather than real-world identities.
Independence from Third Parties: Bitcoin transactions are conducted directly between users, eliminating the need for middlemen such as banks or payment processors. This removes the need for third-party verification and lowers transaction fees.
Immutability: Once a transaction is recorded on the Bitcoin blockchain, it cannot be changed or reversed, ensuring high levels of transparency and security.
Bitcoin runs on a decentralised network, which means that no one body has control over the system. Bitcoin's design emphasises its independence from third parties and government control, resulting in a genuinely global and borderless money.
Bitcoin’s Decentralised Nature
Bitcoin runs in a completely decentralised fashion, with no central body regulating or overseeing it. This is made feasible by the unique blockchain technology and consensus procedures that power Bitcoin.
The blockchain is a distributed public ledger that tracks all Bitcoin transactions. It is maintained and updated via a massive network of computers known as nodes that span the world. These nodes work together to verify and process transactions, maintaining the system's integrity and transparent operation.
Instead than depending on a central body, Bitcoin obtains agreement via a process known as mining. Miners compete to solve challenging mathematical puzzles, with the first to do so adding a new block of transactions to the blockchain. This procedure not only protects the network but also adds fresh bitcoins to circulation, rewarding miners to contribute computing power.
Bitcoin is decentralised, which implies that no one entity can control or influence the network. Decisions on protocol changes or upgrades are made via a consensus-driven approach in which miners and nodes vote using their processing power. This democratic method assures that no one entity may unilaterally change the rules or restrict transactions.
Bitcoin's decentralisation improves its resilience and censorship resistance. Because the network is scattered among thousands of nodes globally, it is almost hard for any government or authority to shut it down or exercise control over it. The Bitcoin network will continue to operate as long as nodes exist, allowing for safe and permissionless transactions.
Pompliano's AI and Bitcoin Thesis.
According to investor and Bitcoin promoter Anthony Pompliano, Bitcoin will play an important role in a future dominated by artificial intelligence (AI). Pompliano contends that as AI systems get more powerful and centralised, there will be a greater need for a decentralised and censorship-resistant digital asset such as Bitcoin.
Pompliano believes that AI will concentrate power and influence in the hands of a few large technological businesses and governments. These organisations might possibly alter or control the flow of information, data, and digital assets inside their centralised systems. Bitcoin's decentralised and transparent nature serves as a counterpoint to this centralisation of power.
Pompliano argues that Bitcoin's fixed supply and resistance to censorship make it a perfect store of wealth and a hedge against the hazards presented by centralised artificial intelligence systems. As artificial intelligence (AI) grows increasingly popular in fields such as banking, healthcare, and government, having a decentralised and irreversible commodity like Bitcoin might act as a protection against possible system abuse or manipulation.
Furthermore, Pompliano contends that Bitcoin's decentralised network and dependence on processing power rather than trusted third parties are consistent with the ideas of AI and distributed computing. As AI systems grow more powerful and autonomous, they may need a decentralised and trustless digital asset, like as Bitcoin, to conduct transactions and value transfers without the need for centralised middlemen.
Censorship Resistance in AI Systems
As artificial intelligence systems grow more advanced and interwoven into our daily lives, the possibility of centralised control and censorship increases. Large tech corporations or governments might possibly use AI systems to promote their own interests, restrict information, or wield disproportionate power over decision-making processes.
Bitcoin, with its decentralised and censorship-resistant characteristics, provides an appealing alternative for mitigating these dangers. Unlike previous financial systems controlled by central authorities, Bitcoin is based on a distributed network of nodes, making it almost difficult for any one body to censor or manipulate transactions.
The Bitcoin blockchain's immutability and transparency guarantee that all transactions are permanently and publicly recorded, eliminating the possibility of censorship or manipulation. This trait becomes more important in an AI-dominated future where the integrity and trustworthiness of data and decision-making processes are critical.
Furthermore, Bitcoin's decentralised structure is consistent with the ideas of decentralised AI systems, which seek to disperse computing power and decision-making among numerous nodes, lowering the possibility of centralised control or manipulation. By using Bitcoin as a financial layer, these decentralised AI systems may benefit from a censorship-resistant and transparent economic infrastructure.
As AI systems become more independent and prominent, the importance of censorship-resistant financial networks such as Bitcoin grows. It protects against the possible misuse of centralised authority over AI systems, allowing people and organisations to interact and exchange value free of censorship or intervention.
Bitcoin: Digital Gold
Bitcoin has many parallels to gold, making it a suitable digital substitute and store of value. Bitcoin, like gold, is rare, with only 21 million coins ever created. This scarcity is built into the Bitcoin code, guaranteeing that no more coins can be minted beyond the specified limit.
Furthermore, Bitcoin is both durable and divisible, exactly like gold. A single Bitcoin may be broken down to 0.00000001 BTC (known as a Satoshi), allowing for accurate division and transferability. This divisibility guarantees that Bitcoin may be used for both small and big transactions, making it a useful asset.
Bitcoin's decentralised characteristics and absence of a central authority add to its worth as digital gold. Unlike fiat currencies, which may be inflated by central banks, Bitcoin's supply is determined by its underlying protocol, making it impervious to manipulation or devaluation by any one organisation.
Furthermore, Bitcoin's blockchain technology ensures openness and immutability, recording all transactions forever and publicly. This openness promotes confidence in the system and adds to Bitcoin's perceived worth as a safe and dependable store of money.
Bitcoin, like gold, is both portable and borderless. It can be quickly moved over the world without the need of middlemen or physical transportation, making it an appealing asset for individuals looking for a globally accessible store of value.
While Bitcoin's volatility has been criticised, supporters claim that as adoption and liquidity grow, its price stability will improve, cementing its position as digital gold. As the world gets more digitised and the desire for decentralised, scarce assets rises, Bitcoin's unique qualities make it an attractive alternative to conventional stores of value such as gold.
Energy Consumption Concerns
Bitcoin's energy usage is often identified as a key disadvantage by opponents. The mining process, which protects the Bitcoin network and allows new bitcoins to be produced, demands massive quantities of processing power and energy. By 2022, Bitcoin's yearly power usage is expected to reach over 127 terawatt-hours, which is more than many nations use in a year.
However, it is critical to contextualise this energy use. First, Bitcoin's energy usage is a benefit, not a flaw. The vast amount of energy necessary to mine new bitcoins is what keeps the network safe and resistant to assaults and takeovers. The more energy spent, the more expensive and difficult it is for a single party to obtain control of the network.
Second, although Bitcoin's energy consumption is undeniably large, it is not out of line with other big sectors or financial systems. The conventional banking and gold sectors need enormous quantities of energy for operations, transportation, and security. When compared to the worldwide energy consumption of these industries, Bitcoin's impact is modest.
Furthermore, Bitcoin's energy mix is growing more renewable. Many mining operations are carefully positioned near renewable energy sources such as hydroelectric, solar, or wind power to benefit from low-cost, clean electricity. Bitcoin's environmental effect is expected to lessen over time as the globe switches to more sustainable energy sources.
It's also worth mentioning that Bitcoin's energy use isn't necessarily wasteful. The energy is being used to protect a decentralised, censorship-resistant, and limited monetary network - an important service in an increasingly digital and AI-dominated society. As adoption increases, the energy used each transaction becomes more efficient and justified.
Scalability and Adoption Challenges.
As innovative as Bitcoin is, it has tremendous challenges in terms of scalability and widespread acceptance. The Bitcoin network presently handles around 7 transactions per second, which is far from the hundreds of transactions that standard payment processors like as Visa can manage. This low throughput may jeopardise Bitcoin's capacity to serve as a widely accepted currency for everyday transactions.
Furthermore, the energy-intensive mining technique used by Bitcoin to protect the network, known as proof-of-work, has prompted environmental concerns. As the network expands, so does its energy consumption, which may restrict its sustainability and scalability.
Another problem is user experience and accessibility. Bitcoin's technical nature and dependence on sophisticated notions such as private keys and addresses might be intimidating for newbies. Widespread adoption may need improved user-friendly interfaces and educational initiatives to demystify technology.
Regulatory ambiguity is also a major concern, with varied approaches to bitcoin governance across nations. Lack of clear and uniform rules may stymie Bitcoin's widespread acceptance, especially in sectors with stringent compliance requirements.
Furthermore, Bitcoin competes with other cryptocurrencies and blockchain systems that promise to provide quicker transaction speeds, reduced fees, or other functionality. While Bitcoin has a first-mover advantage and enormous network effects, it must continue to innovate and adapt to be competitive in an increasingly crowded market.
Despite these obstacles, proponents claim that Bitcoin's decentralised structure, irreversible record, and finite supply make it particularly suited to survive in an AI-dominated future. However, resolving scalability, user experience, and legal issues is critical for Bitcoin to reach its full potential as a worldwide, decentralised money and store of wealth.
Prospects for Bitcoin in an AI Future
In an AI-dominated future, Bitcoin might play an important role in allowing new use cases and possibilities. As AI systems become more powerful and widespread, the demand for a decentralised, censorship-resistant, and trustless digital asset such as Bitcoin will grow.
One of the key prospects for Bitcoin in an AI future is to enable safe and transparent transactions between AI systems. AI-powered autonomous agents, robots, and machines will need a dependable way to exchange value without depending on centralised middlemen. Bitcoin's peer-to-peer network and immutable ledger may offer the infrastructure required for these AI entities to deal directly, eliminating the need for third-party monitoring or intervention.
Bitcoin might also function as a universal store of value for AI systems. As artificial intelligence (AI) grows more popular in fields such as banking, investing, and asset management, there will be an increased need for a digital asset that can serve as a stable reserve currency. Bitcoin's scarcity, divisibility, and worldwide accessibility make it an excellent choice for this purpose, enabling AI systems to keep and transfer value across borders and countries.
Furthermore, Bitcoin may allow new types of AI-powered decentralised apps (dApps) and smart contracts. Developers may construct novel decentralised platforms for a variety of use cases, including supply chain management, identity verification, and data markets, by combining the transparency and immutability of the Bitcoin blockchain with AI processing power.
In the field of digital identity and personal data management, Bitcoin may offer a safe and privacy-preserving alternative for people to own and monetize their personal information in an AI-powered society. AI systems will increasingly depend on massive volumes of data to operate properly, and Bitcoin may enable a fair and transparent data exchange between humans and AI organisations.
Furthermore, Bitcoin's decentralised structure may assist to reduce the dangers of AI centralisation and possible AI control by bad actors or authoritarian governments. Bitcoin, by dispersing computing power and decision-making over a worldwide network, has the potential to counteract the centralisation tendencies of AI systems, fostering transparency, accountability, and individual sovereignty.
Overall, Bitcoin has several and diverse prospects in the future of artificial intelligence. As AI continues to transform different facets of our life, Bitcoin's distinct qualities and underlying principles may position it as an essential component in allowing a more safe, transparent, and egalitarian AI-driven future.
Risks and unknowns
While Bitcoin has exciting potential in an AI-driven future, there are various dangers, challenges, and unknown aspects to consider while evaluating its proposed role.
One major problem is a lack of regulatory certainty about cryptocurrencies such as Bitcoin. As AI systems grow more popular and powerful, governments throughout the globe may expand their inspection and regulation. Stringent laws may hinder Bitcoin's decentralised nature and censorship resistance, eroding its primary value proposition.
Another concern is the scalability and acceptance issues that Bitcoin now faces. Despite its rising popularity, Bitcoin's transaction processing capabilities are limited, and the network may get clogged during peak demand. To achieve widespread acceptance in an AI-dominated society, major increases in scalability and transaction throughput would be required.
Furthermore, the energy consumption necessary for Bitcoin mining has drawn criticism, especially in terms of environmental sustainability. As artificial intelligence advances, there may be more pressure to address the energy-intensive characteristics of Bitcoin's proof-of-work consensus method.
Furthermore, the long-term security and immutability of the Bitcoin network are uncertain. While the network has proved durable so far, the arrival of quantum computing or other technical advancements has the potential to destroy Bitcoin's cryptographic underpinnings.
Finally, there is uncertainty about future competition from other cryptocurrencies or other decentralised systems. While Bitcoin now has a first-mover advantage and huge network effects, its supremacy is not assured in a constantly changing technical context.
These dangers, critiques, and unknowns emphasise the need of continued study, development, and open conversation in addressing the problems and ensuring that Bitcoin, or any other decentralised system, can successfully serve its original purpose in an AI-dominated future.