Web3 will be the Economy of AI Agents
What that means and the potential business opportunity it presents
Chat GPT, while immensely impressive, will admit that it is nothing more than an “AI language model”. This means it can take in prompts and output information to hopefully fulfill those prompts, but it can’t actually do anything. Just ask it to order a pizza for you and GPT will inform you of its inability to do so.
Being developed, however, are AI agents which can think and act independently of human input. With these agents, a human would just give them a task and the agent would go off and do what it needs to accomplish it. For example, a human could tell their AI agent, “order the cheapest large pepperoni pizza in the area and have it delivered to me.” The agent would then search the surrounding area for large pepperoni pizza prices, select the cheapest one, and order it for delivery to the human’s address. One issue arises in this scenario, though. How does the AI pay for the pizza?
There are a couple ways AI could handle payments, each with their own pros and cons, but using blockchain is easily the best option.
The Fiat Option
It makes sense the first payment method that comes to mind is a credit or debit card. After all, this is how we pay for just about everything in our day to day lives. But if we think through this more deeply, we’ll clearly see that this just won’t work for AI agents the way it works for us.
For starters, how is the AI accessing your fiat? Are you going to give it your credit card or bank account information? If so, are you confident the creators of the AI agent are securely storing that information? If compromised, an attacker could take control of your bank account and/or credit cards.
Perhaps you could just deposit your dollars into an account the AI has access to. The concern that arises with this solution is that the money would ultimately be accessible by the creators of the AI agent as well. The AI won’t be able to have its own bank account, it doesn’t have a social security number — or any other form of ID, for that matter. This means the money you deposit into that escrow account is its own bank account, and the AI agent’s creator company is essentially the bank. Besides the obvious issue with trusting some big tech company with all this money, this functionality would require that company to leap through more legal hoops than they may be willing to — especially if there’s a feasible alternative that avoids the headache.
The Web3 Option
Consider this, insead. Your AI agent is created with its own Ethereum wallet that only it has access to. Aside from that, a multi-signature smart contract wallet is created. This means that for any transaction to happen, you first need to deposit the necessary funds into the multi-signature wallet and both you and the AI need to approve the transaction before it is sent. If this sounds too cumbersome and you’d rather let the AI have permission to send transactions without your approval, that setting is easily updateable with current multi-signature wallets like Safe. If the AI goes rogue, it will only be able to spend whatever money is in the multi-signature wallet, minimizing the economic harm it could cause.
With Web3, it’s also easy to customize how you want your AI agent to spend your cryptocurrency on your behalf. You could go with the multi-signature wallet approach described above, or you could just send cryptocurrency to the AI’s wallet directly, or you could grant the AI permission to spend tokens (like USDC) from your wallet directly. Each of these have different levels of security, but the great thing is they are easily changeable and customizable to any user’s preferences.
This is a much more seamless and secure way for AI agents to handle payments than fiat. It also avoids any legal liability for the AI’s creators, since they will never be holding any funds on your behalf.
While exciting (or horrifying), we have work to do before autonomous AI agents ordering pizza with cryptocurrency can become a reality. Solving for the following blockers will be an unimaginable business opportunity.
AI Wallet Security
Since the AI will have its own wallet and some ability to spend cryptocurrency on your behalf, it’s paramount that the AI’s wallet be secure. Depending on how the AI itself is developed and hosted, there are different ways to achieve this.
If the AI is hosted on a server that you have access to, such as a program running on your computer or a device you plug into an outlet and forget about (similar to a wifi router), then you could plug a hardware wallet into that device and trust that the AI can send transactions from that wallet without ever being able to access the private key. This is, in my opinion, the most secure way of handling things. However, users may not want to have a physical device plugged in at all times nor be responsible for running the software on their computer. In such a case, the AI would need to be hosted on a server inaccessible to the user. Rather than a hardware wallet, the AI in this scenario would need to programmatically create a wallet using something like ethers.js, web3.js/.py, or GETH. While functionally simpler for the end user, the private key is now less secure. The private key is the gateway to a wallet. If you have the private key to a wallet, you essentially own that wallet. Obviously, we don’t want this private key to be accessible by anyone other than the AI itself. There is undoubtedly a way to do this, such as hiding the private key behind a cryptographic puzzle that only the AI can solve, but a solution will still need to be built for this use case specifically. Whoever builds it will be handsomely rewarded by our AI overlords.
Payment Acceptance
Okay, so we have our AI out there trying to pay for things with crypto, but what if nobody accepts crypto? Unfortunately, the current state of things is such that very few retail stores accept cryptocurrency, which presents an obvious problem for our AI assistant.
Luckily, this issue is easily solved. Payment apps like Venmo, PayPal, and Stripe, are starting to allow cryptocurrency transactions. Any retailer could accept a crypto payment through Stripe, for example. However, these payment options don’t seem to integrate with just any ethereum wallet but instead use their own custodial wallets. So our AI friend can’t send a payment through Stripe just yet, but it won’t take much to get there. Once the AI agent becomes more of a daily reality, companies like Stripe will have an un-ignorable incentive to add support for native crypto payments. It’s not very likely that retail stores will want to miss out on the action by refusing to accept crypto payments either! Tokens like USDC, a “stablecoin” whose value is pegged to the US dollar, will allow these businesses to accept cryptocurrency without the risk of price volatility.
Parting Thoughts
It is often said that blockchain is a “solution without a problem”; that is has no tangible use case. In the next 5 to 10 years, maybe less given how parabolic AI advancement has been, personal AI agents will be commonplace. Those agents will need to transact value autonomously, and no tool truly allows for that with the security and ease of use that blockchain does. Businesses that build for this now will be nicely positioned once these agents come online.
Disclaimer
Nothing in this article is meant to be financial advice. I am not a financial advisor, I am a software developer who specializes in blockchain-related development.
