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We must protect crypto-AI from financial nihilism
Financial nihilism is a flawed philosophy.
It was used to justify why memecoins and momentum trading are equivalent to projects with a working product and paying customers. Investors who focus on fundamentals have been ridiculed as fools or out of touch with Web3 reality.
Everything is false, financial nihilism would say. The Federal Reserve is said to be devaluing the dollar, which in itself is a hallucination. All money is only rooted in belief. Stocks and public markets are stonks, fooling people into thinking they own something real, when in fact they are entitled to a display field in custodial software. Stories and narratives are the only things that matter.
Lex Sokolin is the managing partner and co-founder of Generative Ventures, a venture capital fund investing in the machine economy. He is a speaker on the AI stage has Consensus 2024 in Austin, Texas, May 29-31.
There is an elegance to memecoin. Unlike many ICOs, or various DeFi mats, or vaporware L2 roll-ups, memecoins do not pretend to have anything other than the animal spirits of story and sentiment. This is an honest product, doing exactly what is advertised. It is these other projects, the ones that promise the world but fail, that deceive investors.
But there is also a deep misunderstanding of this point of view. The anarchist rebel thinks it’s cool to say that nothing matters and everything should be demolished. The builder understands that once rebellion has revealed the weakness of orthodoxy, new systems of meaning and value must be constructed to replace them. Nothingness is not a goal.
Crypto is intended to be a positive-sum game, not a dog-eat-dog nightmare. Just because some things don’t make sense doesn’t mean everything doesn’t make sense. We’re here to build new things using deep tools made available to us by brilliant technologists. Those who only see opportunism and financial games could get rich on paper. But they have consequently impoverished the whole of space.
My concern these days is about the evolution of the crypto-AI sector. Generative AI will bring enormous economic growth to the world in a natively digital form. It exposes the privacy, ownership, and financial issues that Web3 is uniquely positioned to address. The AI will test the economic infrastructure that blockchain has built over the past 15 years and verify whether its promises of self-sovereignty are actually true. As a result, AI gives us a way to move Web3 away from its over-reliance on being a casino as its core value proposition – a casino that has often not been honest about its status as a casino.
But the usual failure mode rears its ugly head. We see big AI-themed projects launching like bridges to nowhere, using the AI narrative to create marketing that obscures the underlying reality – which is rushed vaporware with tokenomics that incentivizes investors to invest, invest or sell. Raising money in itself should not be a sufficient goal for an entrepreneur. Designing financial incentives that attract investors to an AI-themed casino does a disservice to the important role Web3 must play in the next century of economic activity.
Throw away financial nihilism! We must not jeopardize one of the greatest opportunities by treating it like a costume to wear on a fundraising day. Instead, take a cue from classic advice given to people starting a business: find real customers looking to buy products and services to solve real-world problems, and design open protocols and networks to deliver those products and services better than others. centralized technology companies.
We can use the power of the crowd, community marketing and engagement, and ownership of symbolic protocols to surpass walled gardens and software cathedrals. The Internet and Linux did it before us, and we can do it again by building the techno-economic architecture for the AI era. Winning this opportunity for quick returns in a single market cycle would be a big mistake.