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 focused on fundamentals were ridiculed as stupid or out of touch with the reality of Web3.

Financial nihilism would say everything is wrong. The Federal Reserve is said to be devaluing the dollar, which is a hallucination in itself. All money is rooted in nothing but faith. Stocks and public markets are “totally” that trick people into thinking they own the real thing, when in fact they are entitled to a viewing area in the custody software. All that matters are stories and narratives.

Lex Sokolin is managing partner and co-founder of Generative Ventures, a venture capital fund investing in the machine economy. He will be a speaker on the AI ​​Stage at Consensus 2024, held May 29-31 in Austin, Texas.

There is an elegance to Memecoin. Unlike many ICOs, various DeFi carpets, or vaporware L2 roll-ups, memecoins pretend to be nothing more than animal spirits of story and emotion. It is an honest product that does exactly as advertised. What deceives investors are other projects that promise the world but fail.

But there is a deep misunderstanding in this point of view. The anarchist rebel thinks it’s nice to say that nothing matters and everything must be destroyed. The builder understands that when rebellion reveals 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 jostling nightmare. Just because some things are meaningless doesn’t mean everything is meaningless. We’re here to build new things using the deep tools that brilliant technologists have uncovered for us. Those who see nothing but opportunism and financial games can get even richer on paper. But as a result they further impoverished the entire area.

Raising money alone should not be a sufficient goal for an entrepreneur.

My concern these days is the development of the crypto-AI industry. Generative AI will bring massive economic growth to the world in a naturally digital form. It raises privacy, ownership and financial issues that Web3 is uniquely positioned to solve. Artificial intelligence will test the economic infrastructure that blockchain has created over the last 15 years and whether its promises of self-sovereignty are truly true. Ultimately, AI offers us a way to move Web3 away from over-reliance on being a casino (a casino that is often dishonest about being a casino) as its core value proposition.

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But the usual failure mode rears its head. We are seeing large AI-themed projects launched as bridges to nowhere, using the AI ​​narrative to create marketing that masks the underlying reality, consisting of rushed vaporware with tokenomics that encourage investors to invest, stake or sell. Raising money alone should not be a sufficient goal for an entrepreneur. Designing financial incentives to attract investors to an AI-themed casino is to undermine the important role Web3 must play in economic activity in the next century.

Put financial nihilism aside! We shouldn’t undermine one of the greatest opportunities by treating it like a costume to wear on fundraising day. Instead, look at the classic advice given to people starting businesses: Find real customers who want to buy products and services to solve real problems, and design open protocols and networks to deliver those products and services better than centralized technology firms.

We can use the power of the crowd, community marketing and engagement, and tokenized protocol ownership to leave walled gardens and software cathedrals behind. The Internet and Linux did it before us, and we can do it again by building the techno-economic architecture of the AI ​​age. It would be a big mistake to gamble this opportunity to get quick returns in a single market cycle.