Crypto asset management firm Grayscale said blockchain and artificial intelligence are complementary technologies, although the market has recently viewed them as part of the same deal.
Zach Pandl, director of research at Grayscale, said that while disruptive technologies often produce clear winners and losers, the relationship between artificial intelligence and blockchain is more symbiotic than competitive. The rapid adoption of artificial intelligence is expected to pay dividends for some industries, such as chipmakers, while also putting pressure on others, including the professional services sector.
“While cryptocurrency valuations are closely tied to declines in software stocks, we believe blockchain and AI are complementary from a fundamental perspective,” he said in a blog post on Wednesday.
U.S. stocks have been concerned about a downward trend recently. The S&P 500 Software Index is down about 20% year to date, with cryptocurrency valuations closely tied to the sell-off. But Pendel believes that parallel reductions obscure more constructive long-term dynamics between the two technologies.
Investor anxiety over the disruptive potential of artificial intelligence has triggered a broad sell-off in technology and software stocks, wiping out large chunks of market value as traders reassess valuations for long-term holdings.
U.S. software and services stocks fell sharply, wiping out about $1 trillion in market value amid growing concerns that rapidly developing artificial intelligence tools could upend traditional business models and revenue streams.
The S&P 500 software index fell sharply as investors retreated from popular technology stocks amid rising volatility and skepticism about the speed and profitability of artificial intelligence applications.
Pandel believes that blockchain may well become the financial track for AI agents. Today’s chatbots mainly operate outside the financial system. But if AI agents are equipped with digital wallets, he expects they will conduct transactions via blockchain rather than traditional banking infrastructure.
He said blockchain offers transparency, near-instant settlement, 24/7 availability and global reach through internet connectivity. While opening a bank account requires a human intermediary, any user (including bots) can create a blockchain address. Pandel said an increase in trading volume for low-value stablecoins would be an early sign that this argument is working.
At the same time, he believes blockchain technology can help mitigate some of the risks of artificial intelligence. As large language models proliferate, concerns about data provenance, deepfakes, and the centralization of resources and decision-making control are likely to intensify. Public blockchains can counteract these trends by providing verifiable records and more decentralized infrastructure, Pandel said.
The report acknowledges that artificial intelligence may also bring new challenges to encrypted networks. Advanced tools can make blockchain monitoring more effective, potentially eroding user privacy. AI agents may also discover new vulnerabilities in smart contracts; OpenAI recently launched EVMbench, an initiative aimed at leveraging AI to identify and patch such risks.
Read more: Dragonfly says cryptocurrencies aren’t losing to artificial intelligence, it’s just “capitalism kicking in”