Crypto Will Dominate the AI Era: Balaji Srinivasan Explains Why

Former Coinbase executive Balaji Srinivasan believes that cryptocurrency will become the primary form of money in the era of artificial intelligence (AI).

Srinivasan shared with his one million followers on the social media platform X that he sees crypto as “digital scarcity” and AI as “digital abundance.” However, he points out that AI will not make everything abundant.

He explains, “What is money in the age of generative AI and robotics? It essentially becomes cryptocurrency. Just as intelligence turns into electricity, money transforms into cryptocurrency.”

Here are his key points:

1) Cryptocurrency and Scarcity: In a world where AI makes many things abundant, cryptocurrency remains provably scarce. This scarcity is beneficial. For example, scarce crypto assets can verify human identity when AI tools make it easy to fake being human.

2)    Money as a Bridge: Money connects different economic actors. You don't need to pay your hand to move, and you don't need to pay a robot you own. But a robot owned by someone else will require payment to use. Thus, you would send a coin to unlock and use that drone.

 3)   Persistent Scarcity: High-level scarcity does not disappear, so money remains necessary. However, many types of scarcity might vanish. For instance, stationary household robots like washing machines could be replaced by mobile household robots that can walk and perform various tasks.

Srinivasan also mentions that web3 backends, such as Bitcoin (BTC) and Ethereum (ETH), offer superior security compared to any web2 system. He argues that in the age of AI, the most crucial form of scarcity will be crypto private keys, which will be used to control robots and automated systems.

In summary, Srinivasan envisions a future where cryptocurrency underpins economic transactions in a world dominated by AI, ensuring security and maintaining the concept of scarcity.