Bitcoin Killed The King & Now Network Effects Will Determine Its Future: Generative AI as the Next Consumer Platform

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Aug 28, 2023

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Bitcoin Killed The King & Now Network Effects Will Determine Its Future: Generative AI as the Next Consumer Platform

In the world of technology and innovation, two concepts have been making waves: Bitcoin and generative AI. While they may seem unrelated at first glance, there are actually some interesting connections between these two topics. Both Bitcoin and generative AI rely on network effects, brand recognition, and embedding to establish their positions in their respective domains.

Bitcoin, the decentralized cryptocurrency, has disrupted the traditional hierarchy of currency issuance and control. In a hierarchical system, a central authority, typically the government, issues a currency and enforces its use through various means, including violence and taxation. This system works as long as people believe in the authority and the stability of the hierarchy. However, Bitcoin has challenged this belief by offering a decentralized alternative that relies on network effects.

Network effects are the key to Bitcoin's success. As more people believe in and adopt Bitcoin, its value increases. This belief is fueled by the decentralized nature of cryptocurrencies, which eliminates the risk of a single authority manipulating or ruining the currency. Additionally, the software-encoded rules of Bitcoin provide predictability and increase trust among users. The ubiquity of Bitcoin also contributes to its network effects, as it can be used and accepted in many places around the world. Furthermore, the resiliency of Bitcoin's network, which is self-healing and can withstand attempts to damage it, adds to its appeal.

In contrast to hierarchical networks that rely on power and rigidity, decentralized networks like Bitcoin fight with flexibility and ubiquity. They adapt to market needs and can be improved quickly, thanks to their programmable nature. Moreover, the interconnectedness of today's world allows beliefs to spread faster and in higher densities, amplifying the "belief" network effect that gives older forms of currency their power.

The future of Bitcoin hinges on the strength of its network effects. While governments may attempt to ban or regulate Bitcoin, the network math protects it. Even if some governments choose to ban it, other individuals and entities will continue to use and believe in its value. Over time, the network gravity will prevail, and Bitcoin will become even more valuable as more people believe in it.

Generative AI, on the other hand, is revolutionizing the consumer platform landscape. One of the most significant advantages of AI is its ability to personalize user experiences. This has been evident in sectors like edtech and search, where AI tailors content based on individual needs and preferences. Verticalized applications of generative AI, such as Consensus and Perplexity, are providing evidence-backed answers and targeted insights in specific domains.

Enterprise-oriented applications of generative AI, such as Glean and Vowel, enhance internal search capabilities and improve collaboration within teams. AI tools like Millie, YourMove, and Mumkin are augmenting human relationships by optimizing dating app profiles, facilitating difficult conversations, and even prompting users with the perfect message to send. The potential for AI to create personalized digital twins trained on individuals' writing and speech opens up new possibilities for communication and engagement.

Generative AI also has vast potential in the creative realm. Tools like Descript, RunwayML, Boomy, and Riffusion enable the generation of video, audio, and music content from scratch. These AI-powered tools can be invaluable for game developers, allowing them to generate media assets, graphics, 3D models, soundtracks, and even non-player characters (NPCs).

Small businesses can also benefit greatly from generative AI. With tools like Harvey and Spellbook, legal teams can automate tasks like intake, research, and document drafting. Ecommerce businesses, which operate primarily online, can integrate AI tools into various aspects of their workflows to streamline operations and enhance customer experiences.

In conclusion, both Bitcoin and generative AI rely on network effects, brand recognition, and embedding to establish themselves in their respective domains. Bitcoin's decentralized nature and the belief network effect contribute to its value and adoption. Generative AI, on the other hand, enables personalized user experiences and has transformative potential across various industries. As these technologies continue to evolve and expand their networks, they will shape the future of finance and consumer platforms.

Actionable advice:

  • 1. For businesses, consider integrating generative AI tools into your workflows to enhance productivity and personalize customer experiences.
  • 2. Stay informed and updated on the developments in the world of cryptocurrencies, particularly Bitcoin, as its network effects will determine its future value and adoption.
  • 3. Embrace the power of network effects in your own endeavors. Build strong networks, establish brand recognition, and embed your products or services into the lives of your customers to create lasting value and loyalty.

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