Winning Web3 Investment Strategies Must Combine Artificial Intelligence and Blockchain Technology

Artificial Intelligence (AI), specifically generative AI, is definitely having its “moment” right now. While AI has been around for years, the introduction of consumer-facing ChatGPT changed minds and investment strategies overnight. In fact, the AI market is “projected to reach a staggering $407 billion by 2027, experiencing substantial growth from its estimated $86.9 billion revenue in 2022.”

And to think, right before AI burst onto the scene, a different new technology was investors’ darling, gaining momentum and increased attention. Remember blockchain?

While blockchain technology is a force just as ground-breaking and pervasive as AI, its association with cryptocurrency volatility, along with a “failure of imagination” of its use cases and possibilities, created a lull in attention.

However, even with the crypto chaos, the blockchain market size is still rising exponentially globally as more and more institutional investors, multinational corporations and governments consider blockchain’s benefits. In fact, the blockchain market is on pace to grow from $17.57 billion in 2023 to $469.49 billion by 2030.

AI and blockchain are each changing the way we live, work and play in profound ways. But it’s when these technologies converge that their true potential is unleashed, creating a new realm of possibilities.

The combination of AI and blockchain empowers a generation of applications that harness the unprecedented productivity gains facilitated by AI while leveraging the security and transparency offered by blockchain. This convergence can open doors to innovative solutions that bring about enhanced efficiency, trust and accountability across various sectors.

With the blockchain AI market projected to grow to $980.70 million by 2030, at a CAGR of 24.06%, companies that leverage both blockchain and AI to unlock new possibilities and seize on that value could experience exceptional wealth creation.

The Pitfall of a “One Trick Pony” Strategy

Investors often fall into the trap of fixating on a single industry or company that captures their attention due to promising trends or extraordinary growth potential. While this approach might yield short-term gains, it carries significant inherent risks. Relying solely on one industry or company overlooks the dynamic nature of the market and the broader impact of technological convergence.

Major breakthroughs and transformative advancements seldom occur within the confines of a single industry or company. Technological progress often emerges at the intersection of multiple fields, where different innovations converge to create exponential growth and unprecedented possibilities.

For instance, blockchain’s decentralized and immutable nature provides a secure and transparent infrastructure that can revolutionize antiquated processes. However, it is the integration of AI’s capabilities, such as massive data processing, pattern recognition and intelligent decision-making that can unlock the true power of blockchain.

The most successful investment strategies are those that consider how technologies will evolve together. True potential lies in companies that combine multiple technologies, diversifying their offerings and creating synergies. Examples of such companies include NVIDIA, AMD, Apple, Microsoft, and Alphabet, which have embraced the convergence of blockchain and AI.

Blockchain and AI Partnership Prove They’re Better Together

From the Metaverse (yes, it’s still a thing) to manufacturing, the Web 3.0 dynamic duo of blockchain and AI is on the path to redefine entire industry sectors — creating operational efficiencies, improving human experience and solving decades-old problems.

The convergence of these technologies has the potential to reshape the way we interact, transact, and create content in the digital realm, leading to a paradigm shift in entertainment, commerce, and social interactions.

For example, as Forbes notes, “The blockchain-based supply-chain market is expected to grow to over $14 billion in revenue by 2028, while the healthcare market transitioning to blockchain technology,” a rapidly growing trend, “is expected to reach more than $126 billion by 2030.” The manufacturing industry is expected to see the largest financial impact due to AI. An Accenture report forecasts that the manufacturing sector will reap the greatest financial benefit from AI adoption, with a gain of $3.8 trillion.

Manufacturing

Blockchain can provide a secure and transparent system for automating, tracking, and verifying the entire manufacturing process, from raw material sourcing to the final product. AI algorithms can analyze large volumes of data generated throughout the production line, identifying patterns, detecting anomalies, and optimizing manufacturing processes. This convergence can lead to improved safety protocols, predictive maintenance, streamlined supply chain management, and overall cost reductions for manufacturers.

Supply Chain Management and IoT

Blockchain’s distributed ledger capabilities create a transparent and traceable supply chain ecosystem, while AI can comb through vast amounts of data generated within the supply chain, optimizing inventory management, demand forecasting, and logistics. The integration of these technologies can create enhanced visibility, real-time tracking, and authentication of goods, thus potentially reducing fraud, improving efficiency, and mitigating risks.

Healthcare

Blockchain’s secure and decentralized nature can facilitate the sharing and management of patient data, ensuring privacy, interoperability, and security. AI algorithms can improve diagnostic accuracy, develop personalized treatment plans, and enhance patient outcomes. Additionally, blockchain could address challenges related to pharmaceutical supply chain integrity and integrate with AI to revolutionize clinical trials, patient monitoring, drug development, and overall healthcare management.

The Arts and Entertainment

Blockchain can help artists establish ownership rights and protect their intellectual property. Smart contracts enabled by blockchain can automate royalty payments and provide artists with greater control over their creations. Additionally, AI technologies can enhance the creative process by assisting in content generation, curation, and personalization.

The convergence of transformative technologies like blockchain and AI presents an opportunity to unlock unparalleled growth and innovation across multiple sectors — but none of it is happening overnight. Innovators and entrepreneurs are discovering new ways to leverage these amazing technologies every day and are creating startups and high-growth companies that harness their combined potential.

Investors that are able to identify those companies and capitalize on the digital future can reap the benefits. An investment strategy that involves embracing the interconnectivity of technologies and considering how they can evolve together will likely define success in the Web3 era.

Originally published at https://www.newsweek.com on August 14, 2023.