When people who follow AI advancement look into the future, they see some potential bottlenecks. These are impediments that could slow down the progress. For the moment, we are seeing things moving at an outrageous pace. This is not something that is guaranteed.

This leads those who are monitoring the situation to consider what could dam up the works. Naturally, the goal is to attack those areas to alleviate this situation. It is a practice that is done by those who make YouTube videos along with the leaders of Big Tech.

Everyone involved is concerned where these pitfalls might reside.

In this article we will discuss how crypto is going to play a major part in solving one of the potential bottlenecks. This is something that I do not hear discussed since the world is really not focused upon crypto.

Image generated by Ideogram

Funding: Crypto Will Be Crucial To AI Expansion

Before going into the major theme, let's look at a few of the potential bottlenecks that are often cited.

A brief list is:

• silicon
• energy
• algorithms
• hardware
• data

These tend to get a lot of attention. As we can guess, there are major companies, led by Big Tech addressing these. It is not difficult to associate names such as Google, Nvidia, Meta, Amazon, and X to this list. We can see these companies taking on a number of issues.

Then we have a variety of start ups. Entrepreneurs see issues and take action to solve them.

As a side note, for investors, the solution to some of these problems is the wealth opportunity of a lifetime. These answers will generate tens of trillions in value.

Which brings us to the main point.

The Biggest Bottleneck: Money

What could slow the pace of AI? Driving to the core, this could be money. The ability to keep funding is crucial. We are talking about big numbers.

Each frontier model is costing exponentially more. There is no way around this. It is the aggregate of all aspects, including the potential bottleneck areas listed above. Each of those categories, along with labor, has to be increased to generate a new model. Without advancement in each area, the new models do not see improvement.

All of this costs money. We are becoming immune to some of this as funding rounds are denoted in billions. Xai and OpenAI raise billions every few months, tapping into the capital markets. We know Google and Meta are dropping similar numbers out of their operations.

If we have an exponentially growing industry regarding the money required, how will the supply keep pace? Funding is not unlimited, with VC firms having an upper cap. Things can suffer a setback if we have a prolonged global recession, something that many speculate is likely.

Even moving beyond that, what do the numbers look like in 2028 or 2029? Remember, each generation keeps growing. Then, even when we move past the frontier models, there is all the development of platforms, applications, agents, and infrastructure.

Crypto: A Massive Funding Mechanism

Here is where crypto becomes so valuable. It can serve as a major funding mechanism for future AI systems.

The key to this premise is that most crypto operates as value capture mechanisms. Whatever the crypto is tied to, the value is enhanced by its success. This can be a network (Ethereum), DeFi application (UNI), or game.

As value increases, the ability to fund expands.

What makes this most interesting is the fact that, since we are operating in the digital realm, the fundamental basis of this value is the network effects. We have decades of evidence in Web 2.0 how this works.

Web 3.0 is going to follow the same pattern with the difference being how much will be driven by AI. Tokenization is also a crucial change, one that will help with the exponentials.

We could see radical growth rates due to AI. This means values will skyrocket. Since it is captured via tokens, the ability to fund expands massively. It really comes into perspective when we realize that AI is capable of driving much of this value.

To illustrate, let us put a market cap on crypto of $20 trillion. This might seem outlandish considering where we stand now but think in terms of growth in utility. Networks and platforms are going to multiply, filled with AI agents.

What happens when that type of capital is accessible? How can that be leveraged?

The simple answer is funding. Future value will be used to keep the expansion going. Much like Google and Meta, Web 3.0 systems will self-fund through the value generation. The larger networks will likely deal in much larger denominations.

Crypto is still market driven, with price often not reflecting much value. That will change as Web 3.0 systems are developed. There will still be the market activity, which is necessary. The utility will factor a great deal more into the equations, providing a funding mechanism that can grow exponentially.

When you think about it, crypto is the only monetary system that can expand at the pace of AI.

There is a circular feedback loop in value that is not only built, but captured. This is rather innovative.