The proliferation of mainstream artificial intelligence (AI) tools in the last couple of years has stirred the crypto and blockchain industry to explore decentralized alternatives to Big Tech products.

This may appear to be a more sophisticated form of speculation for degens, but Theta argues it's a route to tackling some of AI's problems that only crypto can solve.

The synergy between mainstream artificial intelligence (AI) tools and crypto is built on addressing the risk of centralized ownership and access to data that powers AI. The theory goes that decentralization can mitigate against the entire AI economy being powered by the data owned by a few tech behemoths like Alphabet (GOOG), Amazon (AMZN), Microsoft (MSFT), Alibaba (9988) and Tencent (0700).

It is unclear as yet if this will prove to be a significant problem at all, much less whether the crypto industry will be able to solve it. What is clear, however, is that crypto venture capitalists (VCs) are willing to spend millions of dollars finding out.

Decentralized AI has thus far attracted $917 million in VC and private equity money, according to startup deal platform Tracxn.

The question remains whether the trend of investing in blockchain-based AI is still built on hype or has now transcended to become the real deal.

Blockchain investment company Theta Capital described AI x crypto as “the inevitable backbone of AI,” in a recent “Satellite View” report, which collected insights and outlooks from some of the sector's most prominent investors.

The firm's analysis focused on the synergy between AI and crypto, an integration that several VCs highlighted throughout the report.

Several VCs interviewed expressed enthusiasm for the intersection of AI and crypto, which several funds are actively investing in.

One of Hack VC's most prominent portfolio companies is Grass, which encourages users to participate in AI networks by offering up their unused internet bandwidth in return for tokens.

This is designed as an alternative to large firms installing software code into apps in order to scrape their users' data.

"Users unwittingly donate their bandwidth without compensation," Grass founder Andrej Radonjic said in Theta's report.

"Grass provides an alternative [by] forming a massive opt-in, peer-to-peer network able to produce high-quality data at the scale of Google and Microsoft."

The dreaded AI 'takeover'

Several VCs interviewed expressed pessimism toward the prospect of a broad-based AI-powered intelligence takeover of humanity.

Some VCs present blockchain as the basis for mitigation. Olaf Carlson-Wee, CEO and founder of Polychain, provided the examples of proof-of-humanity mechanisms to verify that users are human and disincentivizing spam through micropayments or spam.

"If sending an email costs $0.01, it would destroy the economics of spam while remaining affordable for average users," he said in the report.

With blockchain possibly providing some of these safeguards, Carlson-Wee believes AI will underpin digital and financial systems, as they could outperform humans in markets. This reality, he claims, would be gladly accepted, as opposed to dreaded as some sort of bleak dystopia.

"Over time, AI systems will evolve into long-term capital allocators, predicting trends and opportunities years into the future, [which] humans will entrust their funds to, because of the superior ability to make data-driven decisions," Carlson-Wee said.

"The AI takeover won't be a war we lose - it will be a suggestion we agree to," he concluded.