If You’re in Crypto, Pivot to AI Now
By Steven Waterhouse
As the world watches the rapid advancements in artificial intelligence, it’s time for the crypto industry to reassess its position. While blockchain technology has shown promise, the true technological revolution of our time is AI. Crypto’s future may lie in a supporting role rather than leading the charge.
I’ve been involved in the crypto space for a while, including helping pioneer institutional investment in Bitcoin, and investing in and operating multiple on-chain companies. My Ph.D. in AI has also given me a perspective on the future of technology. The most promising path forward lies not just in blockchain innovation but in building intelligent systems that address real-world challenges, irrespective of whether blockchain is involved.
In the realm of crypto, the only part still thriving is DeFi, which provides a better version of TradFi with improved engineering, programmability, and composability. Stablecoins and tokenization have proven their worth by showing real-world value. As a result, institutions like BlackRock and even crypto-focused companies like Coinbase are preparing crypto products anticipating regulatory clarity. Moving global payments and financial instruments on-chain is a move that makes perfect sense.
Meanwhile, AI is rapidly progressing, with various forms emerging from traditional AI labs and providers to open-source and decentralized AI initiatives. The demand for AI products and services is already greater than the demand for pure crypto applications.
This has led to the saying: if you’re in crypto, pivot to AI.
This pattern shouldn’t be surprising. While crypto has struggled to find mainstream use cases beyond speculation, AI tools are already enhancing productivity and transforming industries worldwide.
Furthermore, there’s a clear disconnect between token values and actual technological utility, as highlighted by memecoin activity and what has been called the “crime szn.” While decentralized technology is revolutionary, token value has been driven by memetic appeal more than genuine technological value creation. While meme value is real in some ways, it highlights a core issue of crypto.
This does not mean crypto is finished. Blockchain and crypto protocols may become essential to a future AI tech stack. However, they’ll serve as the infrastructure underlying AI-centered products and services rather than existing as standalone products.
To make AI cheaper, here are some things to consider: distributed computing power for training and inference, verifiable computation and data provenance, tokenized access to computational resources, decentralized storage of training data, and reward mechanisms for contribution. These measures have provided utility, but they’ll be used to improve AI products and services that solve real challenges for people who don’t necessarily understand the underlying technical infrastructure.
We can imagine protocols built using blockchains that generate revenue through licensing or usage and are paid in other forms of value, like stablecoins. This models contrasts with the token-as-the-product model currently in use.
For founders focused on crypto-native applications, this shift represents both a challenge and an opportunity. The challenge is expanding beyond the crypto ecosystem: Crypto Twitter and industry conferences. The opportunity is participating in the genuine technological revolution that AI represents.
How can teams make this actionable? First, teams need to think bigger. Founders must ask themselves how AI can transform their target markets and then consider how crypto technology could enable this transformation. This strategy means changing how we build and market crypto products.
Instead of beginning with tokenization or blockchains, start with real-world problems that AI can solve. Then ask how decentralized systems can improve the AI component, integrating these where they add value.
Use crypto where it makes sense, especially where it reduces costs or improves efficiency, but focus on delivering value through intelligence and automation.
For example, companies could use blockchains to build decentralized marketplaces for critical processes, making AI more accessible and cost-effective. Agents might also use cryptographic verification or privacy systems to act securely on our behalf online, using our login information, identities, and credit cards.
In both cases, crypto aids the main goal of making AI systems more effective and trustworthy.
Companies that understand this dynamic will thrive. They will build AI-first products that bring in crypto where it adds value or design crypto services explicitly to improve AI-based products or services. The market won’t support teams that treat everything like a nail and use blockchains like a hammer.
Ultimately, the future belongs to AI as the primary framework, with thoughtful incorporation of crypto where it suits.
For much of the crypto industry, this is a moment of truth and needs a profound recalibration. We can cling to crypto as a standalone revolution and speculative tokens as retail products, or we can embrace crypto’s supporting role as excellent technology in service of AI.
The latter may be less glamorous, but it’s ultimately more likely to create real lasting value and impact. The sooner acceptance of this reality happens, the better positioned we will be to contribute meaningfully to the technological transformation that is underway. It’s time for the crypto industry to think bigger than itself.
If you’re in crypto, pivot to AI.
Dr. Steven Waterhouse, Founder & GP of Nazaré Ventures.
