AI doesn't think. Crypto isn't money.
Both claim to be revolutionary, but both are built on fantasy.
In this video, I unpack the shared myth that code can replace care, that hype can replace real value, and that speculation can replace society.
From the greed driving crypto to the fear driving AI, I argue that both reflect a deeper crisis in capitalism itself.
This is the audio version:
This is the transcript:
What is going to cause the next crash? Is it crypto with its promise to replace money, or is it AI with its promise to replace thinking?
Both are hailed by their proponents and fans as revolutionary breakthroughs that are going to change the world as we know it. But frankly, each of them depends more on belief and hype than it does on any form of substance, at least so far.
So the question is not whether the bubbles of hype that now surround both of them will burst, but which one of them will go first?
Crypto was sold as digital democracy. It is a promise of money without the involvement of states or banks. The rhetoric was wholly libertarian. There was going to be an escape from regulation, an escape from tax, an escape from accountability. This was freedom without the state to constrain it, and yet none of that has been delivered , well, almost none of it.
The unaccountability does exist.
The fraud does exist.
The crime does exist.
And the escape from regulation does exist because the blockchain permits that, despite everything that is said about it by its proponents.
But the truth is that crypto has not become a currency. There's lots of activity in crypto, I fully admit it. Vast quantities of real money valued in dollars, or pounds, or yen, or euros, or whatever are thrown at this market. But none of it is really being used for exchange. This is about investment in hype. There is no substance to any of the cryptocurrencies created in the world. Even those which are supposedly called stablecoins are uncertain as to their value and whether they really have the true exchangeability that is implicit in their name.
All that has been created by crypto is volatility and not value, and that has concentrated power in a few new hands in the market, but has it actually delivered a new way of trading? A new way of exchanging? No, not at all.
Crypto's value depends almost entirely on finding new buyers for crypto. The bigger fool keeps on coming in to follow the price hike that has been created by the last new entrants into this market. That, of course, is the definition of a Ponzi scheme. And on the way, vast amounts of real energy is used, and frauds have destroyed its moral credibility over time because, let's be clear, everything that I'm saying about the fact that frauds happened with crypto is based on fact. Whole exchanges and individual currencies have failed because there is no backing to them. And I stress, I believe that this even extends as far as stablecoins.
Mania has dressed itself up as innovation in the case of crypto, but the truth is, there is no more to this than there was to the Tulip mania of the 17th century.
AI involves a different form of hype. AI has been marketed as a new form of industrial revolution, one that takes over the requirement that people think. The claim is that AI can automate everything from the law to love, and I have seen articles on the last point. Behind the rhetoric, however, there are massive corporate monopolies. They are controlling data and all the computing power that really is driving AI, and we're seeing that concentration grow in US stock markets, where all the seven largest companies who have driven most of the rise in the value of those markets over the last couple of years are AI-based in some way.
The claim is that there is going to be a productivity miracle as a consequence of the use of AI, and that is why these firms are so highly valued. But as yet, nobody knows where the productivity miracle is. Nobody knows that we won't actually all be spending a lot of time in the future correcting the mistakes that AI has made. And the hype hides enormous costs, costs of energy, and of surveillance and of labour displacement.
AI does not think. All AI does is recognise patterns in behaviour. The promise of intelligence is simply false. The name is misleading. It can't actually create something new. All it can do is take what is and manipulate it. And the consequence is that AI is not going to be the next stage in the industrial revolution because a revolution requires innovation, and that's not what AI can do. So AI's bubble is not only financial, it is moral and existential as well.
The fact is both crypto and AI present themselves as emancipatory technologies. In practice, both concentrate wealth, energy, and control in very few hands.
And both rely on stories of freedom from government or freedom from labour to attract investment.
And both are converting social energy into speculative profit, leaving the real economy starved of the resources it needs to tackle the real problems that we know we face in everything from housing to the environment, to flood defences and everything else.
The crypto bubble has been driven by greed, and it is already deflating. We've seen a recent crash, a fall of 30% in the value of some of these so-called assets in the space of a day. That bubble could deflate even further very soon. There is no value behind anything in the crypto market.
In contrast to greed in the crypto market, the AI bubble is driven by fear. The fear of missing out, and of falling behind. Large companies are throwing billions of dollars, pounds, euros, and yen into the AI sector, all because they are worried about being left behind. But they don't know what they're worried about being left behind from.
They don't know what their competitors are going to find, and it's that paranoia, that the competitor might find a use for AI, which they don't know about, that is driving their fear, and so they're spending. But just like crypto, when the money stops going in, as it will do, because at some point people are going to realise there is going to be no rate of return on the money being spent on AI, then this market will collapse because its promise of productivity is not going to happen, at least in the short term. It might in 20 or 25 years' time. We might see real gains by then, but over the timescales that those in the market now think are relevant to determine the rate of return they require on their investment, there is no chance at all that they will see the productivity gains that they want.
We need, therefore, to stand back. The future cannot be built on hype or crypto coins, or code alone. Real progress means investing in people, in care and sustainable production. We need technology that serves society, not speculation that extracts from it. The only truly intelligent system is one that is grounded in human cooperation and not ultimately in AI or crypto or even tech.
We have to work together. And the trouble we have is, we may have a crash before we realise this. That is my big fear. One or both of these two sources of hype that are now underpinning most of the value of the stock markets and financial markets, and indeed the growth in GDP around the world on which politicians are hanging their hopes, might fail. And what we need to do is realise that could happen and we need to go back to fundamentals. And fundamentals are all about you and me, and not the machine that comes between us.
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The politics and policy of care is the next big idea to add to your canon of work here – along with resource accounting, country by country reporting etc. If anyone can give the politics of ‘care’ idea the real mechanics of possibility (how do we pay for it?) – it’s you.
Thanks
I certainly think AI is overhyped. It is a tool that will help productivity, similar to the production of calculators and spreadsheets. Workers will be more efficient and fewer will be needed in some sectors but only some. It definitely won’t have the impact the Internet has had. The hype has developed mainly through people trying to appear smart by talking about it (like the “millennium bug”).
As far as crypto, and I only know about Bitcoin, I think that is more of a threat. A beautifully designed bombproof system that has a finite supply like gold (although we could find more gold). I personally wouldn’t touch it – it really is for people who wish to engage in illegal activity or gamblers – and it is very volatile, many fortunes will be made and lost. My concern is large chunks of the economy could move to crypto and tax revenues lost. That is the challenge for governments. We’ve got to tilt the tax system to things that can’t move. Land, roads etc.
Thanks
I agree crypto is not a currency, and its value depends almost entirely on finding new buyers for crypto. But that’s true of a lot of investments, that do in fact keep and increase their value over long periods. Is a 1955 painting by Willem de Kooning really worth $300million ? – only if investors and the art world commentariat think so. Lots of investments are like this, aren’t they ? Crypto suffers from the confusion of being called a currency, and some believing it could actually be widely used as a currency – and also from having only digital existence – it raises the whole question of how people value ‘things’ that only have a virtual reality. If you’re not really immersed in that world – just as if you’re not immersed in the art world – investments like these may seem ridiculous, but perhaps they can be sustained just by those that are immersed in those worlds, and believe strongly enough in it.
The art world collapsing has the benefit of opening access.
Bitcoin’s collapse will have massive financial ramifications.
New coins generated (“mined”) are free to the miner who generates (hadshes) a low enough hash (binary form, many leading zeros). The coin is the energy for computing power. The threat to Bitcoin is people stop wanting to buy existing coins. That is a real threat. Gold is held and used by governments hence reasonably secure future as a store of value. Let’s hope governments don’t start trading in crypto and give it legitimacy
I have posted this, but question a lot of it.
‘Investment’ in art, in crypto currency, in racehorses, in most ‘things’ is gambling by any other name. Real investment would have an outcome – I invest in your business so the business can expand and make more profit, providing me a return on my investment. Although it is also a gamble as the business may not succeed.
Apologies for a couple of typos (I was out walking the dogs) but I do genuinely think Bitcoin will be around for a long time (don’t know about the others). It’s totally transparent, everyone can see every transaction ever done. Obviously the identities of the buyers & sellers are anonymous. You hear of frauds but I suspect it’s carelessness in keeping the private keys secure. Mathematical as good as no chance of guessing anyone’s private keys making it totally secure.
Please don’t be daft.
No one can see what is done unless they have the transcription codes.
If you are going to talk total nonsense might you do it somewhere else?
AI, much like the internet and social media, has its benefits, but it is often introduced to the masses without proper guidance and a full understanding of its flaws. Some companies have reduced their workforce to implement AI, only to realise the need to rehire staff later. Cyberpsychosis is becoming a significant concern for individuals dealing with mental health issues or loneliness. The recurring pattern of prioritising profit above all else is the usual insanity. Reducing the need for brain use can only lead to future problems for humanity.
I know AI has helped in many ways, and will presumably help in more ways as it is developed. But …
I had occasion yesterday to chase up an insurance claim. It’s hard to get to speak to a human being in these companies, let alone a human who knows the answer. So I went through their preferred route of a Chat bot. I was told to say what I wanted, using my own words. I’m an editor, so I reckon my own words, carefully written, ought to be clear and concise. But no, the AI system hadn’t got a clue what I was on about and invited me to rephrase my question.
We got there in the end, after I took a completely different approach and avoided the AI system. I had to choose among predetermined options until I got offered a series of questions that I might be wanting to ask, and so I accepted the one that would (I hope) get me the answer I wanted – eventually, not same day.
AI can certainly do some things amazingly quickly, but it can’t cope with anything that it hasn’t encountered before.
Agreed, entirely.
Do you think there is any role for a public stablecoin and a digital wallet?
No.
Why?
And if the BOE provides banking to everyone with funds, who provides it to those who want to borrow.
Think systemically.
These billions-do we know in whose hands they sit?
If-when -the crash comes- will a few of them keep much of the money?
I presume those who have invested will lose. How will it affect the govt, finances and the rest of us?
There seems little comment from the politicians or the media.
The UK government has £5 billion worth from the proceeds of crime and they haven’t sold them
It seems that the rate of return on capital in “normal” commercial/industrial investment is either falling profit margins or stagnant. Capital is desperate to find other sources of exploitation. The imagined honey pots of crypto and AI are irresistible to the city gent or wide boy class. Whether classical crashes a la 1929, 2008 will happen before a crypto or AI crash is interesting. Crypto and AI if expanded requires vast quantities of energy/electricity for cooling purposes plus the extra infrastructure required such as more power lines sub stations etc needing more resources such as steel, concrete, copper, other rare earths minerals, water….. Meanwhile the climate crisis worsens and our whole economic, social, ecological systems are under threat of severe dislocation and ultimate collapse.
Both ai and crypto are incredibly energy hungry. At a time when most of the world is managing to supply a reasonable portion of their energy needs with renewable, these ask for inputs that can only be supplied by fossil fuels.
If I were a fossil fuel investor with deep pockets protecting both these sectors would seem to give a reasonable ROI.
This is a thought-provoking take on the hype surrounding both AI and crypto. It’s true that much of the excitement is fueled by speculation and belief rather than tangible value. The comparison between fear-driven AI and greed-driven crypto is particularly insightful—it highlights how human psychology often shapes markets and technologies more than the actual innovations themselves. I also like the point about unfulfilled promises, especially in crypto, which underscores the gap between idealistic narratives and reality. Definitely makes you think twice about what’s genuinely transformative versus what’s just hype.
This is in today’s Private Eye.
“Once upon a time, history was said to be written by the victors. But in the case of Israel’s war in Gaza, the AI Machine will also have its say.
With the prospect of peace in the strip seemingly closer than at any point in the past two years, the Israeli government is employing a company called Clock Tower X to craft pro-Israeli messaging for social media.
It will also create “websites and content to deliver GPT framing results on GPT conversations” – in other words, material that is intended to influence the outputs of large language models such as ChatGPT to produce answers framing Israel in positive light”.
Truth will become ever harder to discern..
Accepted
Propaganda loves such reiteration.
I gave AI a go.
Had a long paper written with no line or para breaks, it looked like a massive indecipherable block of text in multiple pages in MS word
Asked ChatGPT to reformat it with line breaks and paragraphs without any changes to the actual text.
It always asked multiple questions about the details of how I wanted it presented and tried 6 times to deliver it, each time listing all the marvellous things it had done while actually presenting me with a download with summaries or totally corrupted text output
Hilariously each time it kept offering more and more formatting options (like adding headings / making bold etc etc) which I accepted.
It failed miserably on every single attempt and I eventually suggested that maybe it was beyond its capability and it apologised and agreed with me.
It did however offer me some VBA code to do it.
I haven’t tested it but suspect it’ll take some de-bugging.
Most unimpressed by AI :-I
I have to say that sounds like you think using AI is akin to driving a car without learning the functions of the steering wheel, accelerator, clutch, brake and gear stick. I am sorry – but from what you say I think I can very safely say all the mistakes were your own.
I must get on and write my guide to AI.