Living in Los Angeles has its perks, one of which is easy access to great hiking trails. In just 30 minutes, one can disconnect from the hustle and bustle of the city and take a hike on a canyon or ridge trail. Conversations flow freely, with occasional interruptions from fellow hikers and fitness enthusiasts. During one such conversation, a data scientist friend was asked if she thought that ChatGPT, an AI language model, would replace her role in the company amidst layoffs. She responded that her job required too much specific context, acknowledging the protective barriers and moats created by proprietary corporate datasets.
ChatGPT is an AI bot that reflects the “average” opinion of the information and sentiment embedded in the data sources on which it was trained. It should give a sense of the consensus view on digital assets, constructed from an advanced statistical exercise. The question is, what does ChatGPT think about crypto, and does that thinking pose a threat to investment writers and strategists?
Prompted to explain bitcoin to a high school student, ChatGPT responded that bitcoin is a type of digital money that people can use to buy things online. Unlike traditional money, it is made using computer code and stored on a public ledger called the blockchain. Bitcoin is decentralized, meaning it’s not controlled by any government or financial institution. Transactions are processed directly between users without the need for intermediaries like banks or credit card companies. Bitcoin offers a level of privacy and security that traditional financial systems cannot match. However, its value can be volatile, and there are risks associated with investing in it. Overall, bitcoin represents a new way to transact and store value digitally and is seen by some as a potential hedge against inflation or as a store of value like gold.
Prompted to explain if cryptocurrencies are useful, ChatGPT responded that cryptocurrencies can be useful for several reasons. Cryptocurrencies like bitcoin and ether are decentralized, meaning they are not controlled by any central authority or government. This can make transactions faster, cheaper, and more secure. Cryptocurrencies can be accessed and used by anyone with an internet connection, regardless of where they are in the world. This can be particularly useful for people who do not have access to traditional banking systems or for cross-border transactions. Cryptocurrency transactions are recorded on a public ledger called the blockchain, which means they are transparent and can be verified by anyone. Some cryptocurrencies like ether allow developers to create decentralized applications that can run on the blockchain. These applications can be used for a wide range of purposes, including finance, gaming, voting, and supply chain management. However, cryptocurrencies are still a relatively new technology and are subject to high volatility and regulatory uncertainty. Additionally, cryptocurrencies are not yet widely accepted as a form of payment and may not be suitable for everyone. As with any investment or financial decision, it is important to do your own research and consider your individual circumstances before investing in cryptocurrencies.
ChatGPT’s training data included information up until September 2021, around the peak of the last bull market. A prompt on “What is FTX and who is Sam Bankman-Fried?” confirms a lack of awareness of recent events. ChatGPT’s reference to the global nature of cryptocurrencies is a good reminder that digital assets make it easier to make cross-border remittance payments and provide a decentralized and trusted open-source alternative for regional or local financial services and infrastructure. It’s all too easy to overlook these critical use cases, which are taken for granted as part of modern life in a developed economy, absent the infrequent banking crisis.
Comparing Google Trend search data for Bitcoin versus Ethereum, it is clear that people are more interested in Bitcoin. The search activity for Bitcoin and Ethereum has been combined to create a relative ratio of activity, with the intent to proxy user interest. A value of 1 would suggest an equal amount of search activity within a country is spread across Bitcoin and Ethereum; 10 means 10 times more searches for Bitcoin than Ethereum. Given that BTC currently has about 2.3 times more market capitalization than ETH, it’s not surprising that no ratio in the chart above is much below that number. Switzerland at 2.3 is neutral (as usual), aka in line with market cap expectations. Russia, Egypt, and Nigeria show substantially more interest in bitcoin over ether, while Serbia, China, and Switzerland (the Ethereum Foundation is based in Switzerland) are relatively more interested in Ethereum. From a glance at the countries within the top and bottom of bitcoin/ether search activity bins, we could conclude that developing and frontier economies are more focused on store of value and decentralized payment system utilities, whereas developed economies are more interested in refining and upgrading existing financial technology infrastructure via blockchain rails and smart contract platforms.
In conclusion, ChatGPT provides a unique perspective on the consensus view of digital assets. It is important to remember that cryptocurrencies are still a relatively new technology and are subject to high volatility and regulatory uncertainty. As with any investment or financial decision, it is important to do your own research and consider your individual circumstances before investing in cryptocurrencies. The global nature of cryptocurrencies makes it easier to make cross-border remittance payments and provides a decentralized and trusted open-source alternative for regional or local financial services and infrastructure. By overlooking these critical use cases, we miss out on the potential benefits of digital assets.