Synergies between Bitcoin and AI

From digital scarcity to productive abundance: how Bitcoin and AI are redesigning economy and society.

Bitcoin and artificial intelligence are the most talked-about technologies of the moment. Both are at the beginning of the exponential phase of their adoption process, and are already profoundly changing market equilibria and power relations in society. Despite being born with different purposes and without direct points of contact on a technical level, their synergy could generate enormous benefits.

If Bitcoin has introduced absolute scarcity, moreover in the digital realm of copy-paste, AI has brought abundance in value creation. Bitcoin’s supply rigidity allows perfect value preservation over time, giving anyone the possibility to save in a simple and secure way without having to improvise as Wall Street wolves or turn to financial advisors of dubious reliability.

On the contrary, AI (particularly generative AI) allows value production at previously unthinkable rates and scales. It has drastically reduced costs and times of various processes, and is expected to impact almost all productive sectors. Activities like software development have gone from requiring months to just a few days, maintaining high quality — 30% of Google and Microsoft’s codebase is generated by AI.

Both technologies generate a strong deflationary tendency: the first by positioning itself as an alternative monetary system immune to inflationary pressures induced by central banks, the second as a tool to increase productivity and reduce costs. In a Bitcoin Standard, perhaps with the presence of intelligent robots as well, this would lead to a tendency toward strong and continuous increase in purchasing power.

Bitcoin and AI will be two fundamental pillars in an increasingly digital future. The first is establishing itself day by day as a global store of value — even the big finance players and States are purchasing it. The second is enabling a new economy, that of agents, toward which more and more productive activities will transition, initially supervised by humans and then becoming totally autonomous.

This technological convergence has been highlighted by various prominent figures in the Bitcoin world, such as Jeff Booth, general partner of Ego Death Capital and author of The Price of Tomorrow, and Cathie Wood, founder and CEO of ARK Invest. Both emphasize the imminent profound transformation of the world of work: many tasks will be progressively absorbed by machines, while new professions will emerge. At the same time, they warn that this push toward centralization finds a counterbalance in Bitcoin’s decentralized nature, considered “the currency of AI.”

Here are the most interesting points of contact between these two technologies.

AI agents will exchange value and information among themselves, manage negotiations, plan trips and make online purchases. To do this effectively, considering that exchanges will occur frequently and for even very small amounts, they will need a payment system that is always active, permissionless, with minimal waiting times and transaction costs. Lightning Network fully satisfies this need, especially in combination with other protocols like eCash and RGB.

Agents can have their own wallet, or share a multi-signature one with other agents and/or humans. Bitcoin’s programmability allows perfect adaptation to machine needs, even better than what can be achieved for humans.

Micropayments through Lightning Network and other connected protocols allow rewarding users with small amounts for certain activities performed or services offered. It’s possible, for example, to rent out one’s computing power, contribute to training a model, or be part of a BitTorrent-style network to share a knowledge base in a decentralized way.

Small economic incentives can significantly increase user interactions, in an approach that can become gamification. In this way, data collected on the product or service can be increased — specifically for LLMs, evaluating response quality and providing useful information for subsequent training.

Despite existing for some time, with the advent of generative AI the topic of deepfakes has become public domain. If advanced skills were needed before, today anyone can create fake photos or videos that are difficult to distinguish from real ones. To guarantee the authenticity of data and prove its existence at a certain moment, the blockchain can be used as a notarial system. Open TimeStamp is an open source protocol created by developer Peter Todd that allows doing exactly this in just a few clicks.

In the future, as onchain fees increase, using Bitcoin’s blockchain for notarial purposes could prove increasingly prohibitive. To address this, sidechains or other dedicated protocols could be used, or digital signatures could be applied with alternative cryptographic algorithms, even without directly resorting to the blockchain.

Despite having no common points at the software architecture and algorithms level, Bitcoin and AI are more connected than one might think. Both require high computational power to operate, obtained through large quantities of energy and performing machinery. The chips used are different, but the structures to house the machines, cool them and keep them secure, as well as contracts to have energy at good prices, can be shared between actors in both sectors.

AI data centers need to operate continuously, and consequently need a stable energy source. Conversely, Bitcoin miners can be turned on and off at will, allowing the plant to cope with fluctuating energy supply.

AI risks becoming a centralization factor in society, probably one of the most serious. The enormous amount of data necessary for training and the high cost of infrastructure needed to run large-scale models are not within everyone’s reach. The concern that few companies control the artificial intelligence that all individuals will use in various aspects of their lives poses serious questions about social control and information manipulation.

Just as Bitcoin returns sovereignty of one’s finances to individuals, it’s fundamental to have private AI models that work locally and don’t share data externally. Bitcoin’s open source and decentralization principles must be brought to the AI world to give individuals and companies control of their intelligence — delegating its control represents a weakness that, as AI-performed activities grow, will become increasingly intolerable, especially in business environments.

While a Bitcoin node currently requires less than 1TB of memory and little computing power, hosting powerful AI models requires greater performance, in addition to the complexity of downloading and running an LLM for a non-technical person. Many are working to reduce model weight, creating SLMs (Small Language Models) capable of running and training even on mobile devices — this is the case of QVAC, a project launched a few months ago by Tether.

Just as with Bitcoin, it’s important to delve into the AI topic to understand its advantages and dangers. Saying it will make us all more stupid and controlled is short-sighted, as much as the accusations once made by library lovers against search engines. On the contrary, these are tools that, if used correctly, can liberate individuals and improve many aspects of daily life.

The economic boom generated by these revolutionary technologies will inevitably bring greater benefits to those able to understand and control them. Acquiring the awareness necessary to be empowered by AI, instead of subjugated, is fundamental to prosper in an increasingly digital future, where individuals who master new technologies will be able to reach degrees of productivity and independence once unthinkable.

To guarantee freedom, both of money and intelligence, open source and decentralization remain in both cases the principles to fight for.

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