Venture Capitalists Doubt Decentralized AI Can Compete with Industry Giants

At a recent conference in Prague, two top venture capitalists, Rob Hadick and David Pakman, raised concerns about the role decentralized crypto projects might play in competing with major AI companies like OpenAI and Microsoft.

While the merging of crypto and AI has sparked significant investment, both VCs warned that this may not be the moment for crypto to disrupt the AI giants.

Hadick expressed skepticism about the typical approach of crypto projects, which often seek to bring off-chain services onto the blockchain. He believes that, rather than improving existing models, crypto tends to complicate them, often with little benefit. In his view, AI’s real value for crypto is in its ability to enhance the development of decentralized applications, improving efficiency but not necessarily changing the game.

Pakman, on the other hand, acknowledged AI’s powerful influence on software development, especially in Web3, and the potential it holds to improve infrastructure, security, and application behavior in decentralized ecosystems. However, both he and Hadick agree that decentralized AI is unlikely to challenge centralized players in the near future.

Pakman also highlighted the potential of Web3 in decentralizing access to AI resources, suggesting that, while centralized systems currently dominate, crypto technologies could help create a more equitable future by distributing the compute power needed for large AI models.

The discussion also touched on agent-based AI, which can autonomously perform tasks for users. Hadick remained wary of these projects, comparing them to the crypto gaming hype of 2021, which ultimately failed to deliver on promises. He warned that agent-based AI could end up being a winner-takes-all market.

While both VCs remain cautious about the immediate impact of decentralized AI, they see potential for future collaboration between AI and crypto, though the path forward remains uncertain.