The next frontier for crypto will be decentralizing AI

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Opinion by: Zain Jaffer, co-founder of Vungle

AI, Crypto and the Decentralization Dilemma

The centralization vs. decentralization battle has reached a new frontier, with artificial intelligence (AI) being the latest front in this ongoing struggle. As Bitcoin and Ethereum were built to resist government and corporate control, so are crypto AI projects pushing back against Big Tech’s growing dominance over AI models.

The Challenge of Decentralization

One of the core tenets that drives traditional fans of crypto is decentralization. It directly opposes the US Securities and Exchange Commission’s Howey test, which defines investment contracts as relying on a "common enterprise" and the "efforts of others" for profit. Most securities are tied to centralized corporations, but Bitcoin, Ethereum, and other sufficiently decentralized networks are designed to function without a central authority.

The Rise of Blockchain-based AI

To counter this, blockchain-based AI projects are emerging. Names like Tao, Virtuals (on Base) and AI16Z (on Solana) have launched decentralized AI models, hoping to disrupt the industry before Big Tech entirely takes over. Some are building their own large language models (LLMs) from scratch and training them independently from corporate AI giants.

The Data Challenge

Training an AI model necessitates huge loads of high-quality data. While crypto AI teams can scrape the open web, they still lack access to proprietary enterprise data sets. With their deep integrations into corporate workflows, tech giants have a significant edge here. That means fully decentralized AI teams are inherently disadvantaged by slower progress, weaker models, and less adoption.

The Role of DeepSeek

Enter DeepSeek, a China-based AI startup that disrupted the landscape by unveiling a smaller, highly efficient LLM that reportedly matches ChatGPT’s performance while using significantly fewer compute resources. Unlike the billion-dollar arms race in the US, DeepSeek built its model on a mere $6-million budget.

What DeepSeek Means for Crypto AI

Some crypto AI teams have already started integrating DeepSeek as an alternative to US-based AI models. If DeepSeek maintains a truly open-source approach, it could lower costs for AI teams and enable faster innovation. Decentralization purists, however, face a dilemma. While DeepSeek may reduce reliance on US tech giants, it introduces a new dependency on China, a country known for strict government oversight of AI development.

What’s Ahead?

DeepSeek represents a significant shift in AI accessibility, but it’s not a silver bullet. Questions remain about its training data, performance consistency, and long-term viability. However, early signs suggest it could be an essential alternative for emerging AI startups, including those in crypto.

Conclusion

The fight for AI decentralization is far from over. While blockchain-based AI teams push for greater autonomy, they must balance ideals with real-world trade-offs. Fully decentralized AI is still in its infancy, and whether it can genuinely compete with Big Tech remains to be seen.

FAQs

Q: What is the centralization vs. decentralization battle?
A: The battle between centralization and decentralization is an ongoing struggle, with AI being the latest front.

Q: What are the challenges of decentralization in AI?
A: Decentralized AI teams lack access to proprietary enterprise data sets and are disadvantaged by slower progress, weaker models, and less adoption.

Q: What is DeepSeek, and how does it impact crypto AI?
A: DeepSeek is a China-based AI startup that has launched a smaller, highly efficient LLM, which could lower costs for AI teams and enable faster innovation. Some crypto AI teams are integrating DeepSeek as an alternative to US-based AI models.

Q: What are the implications of DeepSeek on the fight for AI decentralization?
A: DeepSeek represents a significant shift in AI accessibility, but it also introduces a new dependency on China, a country known for strict government oversight of AI development.