Potential Risks of AI and Crypto Investments
If AI and cryptocurrency are not merely bubbles, we might face significant consequences. What if the trillions invested in these technologies yield real value? The resulting upheaval could be immense and detrimental.
Historical Speculative Manias
Many speculative trends have been short-lived, causing minor financial losses, much like the tulip mania of 1635. However, there are instances where substantial losses have led to bank failures, freezing financial systems and precipitating recessions, as seen in 1929 and 2008.
Profit and Progress in Speculation
Occasionally, the assets generating speculation are legitimate but overpriced, resulting in early investors suffering while later ones benefit, similar to the tech boom of the late 1990s. A rarity is when initial investors profit without facing a downturn.
The Value Surge in AI
Could the current AI and crypto boom be the first of its kind in history? An estimated $3 trillion to $6 trillion has been invested in AI infrastructure, accounting for much of the recent US economic growth. The leading AI companies have substantially driven stock market gains.
Job Displacement and Societal Impact
With AI expected to cause permanent job losses ranging from 10 to 50 percent, companies are already downsizing and being rewarded by stock markets. Historical patterns show that displaced workers often don’t transition into new roles as technology evolves.
Regulatory Challenges
Attempting to reverse the advancement of AI seems impossible due to its substantial investment base. Regulation tends to focus more on fraudulent activities rather than addressing the broader societal impacts of automation.
Concerns Over Cryptocurrency
Cryptocurrencies aim to facilitate transactions without traditional intermediaries, yet their speculative nature raises concerns. If these digital assets are indeed valuable, their impact could be profound and troubling, particularly given their potential for misuse.
