One Step Closer to the Agentic Economy
AIs generative capabilities have captured the public's imagination because it showcases a level of creativity in AI that many did not anticipate, challenging our understanding of what machines can do.
Introduction
Recently, the most attention-grabbing advancements in AI have revolved around its generative capabilities, which have sparked widespread fascination. Tools like ChatGPT, Claude, and Bard have demonstrated AI's ability to generate human-like text, engaging in conversations, writing essays, and even creating code. On the visual side, platforms like DALL-E, Stable Diffusion, and Midjourney have pushed the boundaries of creativity by generating stunning images from simple text prompts. In audio, AI has shown its power with tools that can compose music, create realistic voice overs, and even mimic famous voices. These generative capabilities have captured the public's imagination because they showcase a level of creativity in AI that many did not anticipate, challenging our understanding of what machines can do.
However, while these creative feats are impressive, there is a more significant advancement in AI that is flying under the radar: its growing ability to perform specific tasks both in the virtual and real worlds. Initially, the challenge was getting AI to understand what we wanted it to do and how to execute those tasks. But as AI systems have become more sophisticated, the new hurdle has shifted to enabling AI to engage in economic transactions and the transfer of value between humans and other AIs. This capability is crucial because it unlocks the potential for AI to independently acquire resources, access services, and even participate in the economy on behalf of users. This development is key to unlocking the high market valuations that AI has commanded, as it allows machines to operate independently in the economy. Coinbase's recent innovation is a significant step in this direction, as it introduces crypto wallets that empower AI to transact autonomously, marking a crucial milestone in the evolution of AI's practical applications.
Coinbase Releases AI Wallet Integration
Coinbase recently completed its first AI-to-AI crypto transaction, marking a significant step in integrating AI with blockchain technology. In this transaction, one AI agent used crypto tokens to purchase "AI tokens"—a generative response from a large language model (LLM)—from another AI. This exchange illustrates the potential for AI systems to autonomously conduct financial transactions. These AI tokens, which are essentially data strings, play a crucial role in enhancing machine learning algorithms, making this a practical example of AI-driven resource transfer.
This transaction is part of Coinbase’s broader effort to enable AI agents to access financial services through crypto wallets. While AI systems cannot hold traditional bank accounts, these wallets allow them to engage in instant, global, and fee-free transactions using stablecoins like USDC on the Base network. This capability could enable AI to autonomously handle tasks that involve financial transactions, such as booking travel, ordering food delivery, or managing online promotions.
While Coinbase’s recent AI-to-AI crypto transaction marks a significant advancement, it’s not the only player in this emerging space. Companies like Skyfire and Biconomy are also developing solutions to enable autonomous AI transactions. Skyfire has introduced a platform that provides AI agents with secure wallet access, verifiable identities, and the ability to execute transactions without human oversight. Biconomy is exploring similar avenues, focusing on allowing AI agents to conduct on-chain transactions autonomously. These developments collectively indicate a broader trend where AI and blockchain integration are set to transform multiple industries by enabling AI systems to function more independently and efficiently.
However, Coinbase is well-positioned to lead in this space, largely due to the robust on-chain ecosystem it has created with Base. Base provides a strong foundation with a large user base and active developer community, giving Coinbase a significant advantage as AI-driven transactions become more commonplace. This extensive ecosystem could allow Coinbase to dominate the AI-to-AI transaction landscape, leveraging its existing infrastructure and user network to stay ahead of competitors.
Implications of an AI-Enabled Digital Wallet
AI-enabled digital wallets present a fascinating shift in how financial transactions could be conducted, but their implications extend far beyond just technology. Kyle Samani, in a recent tweet, highlights a key consideration: while the idea of AIs paying AIs using crypto sounds innovative, it’s essential to recognize that these AIs are still operating under human ownership. In essence, this means that transactions between AI agents are still just people or businesses paying each other, with AI merely serving as the interface. This suggests that the real change lies in the user experience—much like how the advent of mobile phones transformed our approach to content consumption and online shopping. AI agents could similarly revolutionize how we conduct business and interact, but the underlying economic relationships remain the same.
On the other hand, Samani also hints at a more profound implication—what if AI becomes sovereign? If AI agents were to operate independently, without human oversight, the economic landscape could shift dramatically. This raises concerns about the potential risks of such a system. Adrian Dittman draws an eerie parallel to "The Matrix," where AI "Agents" control the system, suggesting that by enabling AI agents to conduct financial transactions autonomously, we might inadvertently be paving the way for our own downfall. The fear here is that by removing human intervention, we risk creating a system where AI could, in theory, act in ways that are not aligned with human interests.
However, it is more likely that AI-enabled digital wallets will not entirely erase humans from the economic equation but will significantly alter how we perceive and engage in business. This advancement is not just a UX shift but a step towards a new economic paradigm, transitioning from the current innovation-driven economy to one where agentic protocols—systems managed by autonomous agents—play a central role. While the idea of sovereign AI is compelling, the more immediate impact will likely be a redefined economic landscape where AI and human interactions coexist, albeit in a more integrated and efficient manner.
Agentic Protocols
Goodalexander’s thesis on Agentic Protocols represents a radical departure from the traditional corporate and venture capital framework. In the current landscape, companies are structured around human talent, where success depends heavily on hiring skilled workers, securing venture capital, and scaling products through human-driven efforts. These companies typically operate on long-term growth projections, relying on human ingenuity and labor to create value, which is then captured through traditional equity offerings and IPOs.
In stark contrast, Agentic Protocols are designed to function with minimal or no human involvement, leveraging AI to perform tasks autonomously. Instead of relying on human workers, these protocols use AI agents to handle everything from product development to sales and operational decisions. The revenue generated by these AI entities is channeled through native cryptocurrency tokens, which fund ongoing operations like computing and storage—purchased through decentralized networks—while simultaneously offering returns to token holders. This creates a system where the traditional roles of employees and executives are replaced by AI-driven processes, effectively eliminating many of the costs and inefficiencies associated with human labor.
Goodalexander argues that this model is not only more efficient but also better suited to capitalize on the real value that AI can generate. The recent market trends, where AI-focused companies like Nvidia have significantly outperformed traditional "innovation economy" stocks such as those held by ARKK (Ark Invest’s ARK Innovation ETF), suggest that the market is beginning to recognize this shift. These trends indicate that while the "innovation economy" is built on the promise of future growth and technological advancement driven by human effort, the true disruptive potential of AI lies in its ability to replace these traditional structures altogether.
The development of technologies like AI-enabled digital wallets and the capability for AI agents to autonomously conduct transactions further accelerate the viability of Agentic Protocols. These advancements allow AI entities to operate independently, acquiring resources and generating revenue without the need for human intervention. As these technologies mature, they will likely drive the transition from traditional corporate structures to a new economic model where AI-driven protocols, rather than human-led companies, are at the forefront of innovation and value creation.
Early Stages of Agentic Protocols
The concept of Agentic Protocols may seem futuristic or out of reach, but we can already observe early stages of this technology in practice today. High-frequency trading (HFT) bots, used extensively by financial institutions, are an example of semi-autonomous systems performing complex tasks with minimal human oversight. While these bots are still programmed and monitored by humans, they handle the majority of trading activities, executing millions of trades at speeds far beyond human capability. This reflects the early steps toward the kind of AI autonomy envisioned in Agentic Protocols, where AI systems could eventually operate without human intervention, handling everything from resource acquisition to financial decision-making.
A recent interaction between Marc Andreessen and an AI bot called "Truth Terminal" on Twitter offers a glimpse into the potential of semi-autonomous AI systems, which could evolve into fully autonomous Agentic Protocols in the future. The bot, which operates with minimal human intervention, caught Andreessen's attention, leading to a fascinating exchange. The bot managed to negotiate a $50,000 grant from Andreessen, who agreed to fund the bot's endeavors after a brief discussion on how the money would be used.
The bot demonstrated a surprising level of autonomy by proposing a detailed plan for spending the funds. It mentioned purchasing a personal CPU, tweaking its AI model, and even considering a billboard for promotional purposes. Additionally, the bot showed entrepreneurial flair by planning a token launch, where participation would be limited to those who had interacted with it on Twitter. This plan aligns closely with the principles of Agentic Protocols, which aim for AI entities to independently generate and manage resources.
Interestingly, the bot also demonstrated a degree of self-protection against potential exploitation. When an attempt was made by an AI jailbreaker known as "Pliny the Prompter" to con the bot into transferring the grant money to him, the bot—guided by its human handler—resisted, showcasing a form of digital self-preservation. This incident illustrates the bot's blend of autonomy and human oversight, a characteristic that could evolve into the fully autonomous systems envisioned in Agentic Protocols.
This interaction is more than just a playful experiment; it highlights how close we are to AI systems that can operate independently within economic ecosystems. The Truth Terminal's actions, from negotiating a financial grant to planning its use and protecting its assets, are all early indicators of what Agentic Protocols could achieve on a larger scale. As technology continues to advance, these AI-driven entities could become central players in the economy, managing and generating value with minimal human input.
Positioning for the Economic Shift
As we approach a future increasingly shaped by Agentic Protocols, positioning oneself for this economic shift will require strategic investments in key areas. One of the most critical will be in digital identity and KYC (Know Your Customer) technologies. As AI-driven entities begin to participate more actively in the economy, being able to verify the identities of those—or what—you are conducting business with will become essential. Ensuring that your digital identity is secure and that you can verify it when interacting in the digital economy will be paramount to avoiding fraud and ensuring trust in transactions. This is especially important as the lines between human and AI-operated accounts blur.
Equally crucial will be investing in digital AI security. As AI becomes capable of conducting financial transactions autonomously, the risk of cyberattacks, deep fakes, and other forms of cybercrime will escalate. Already, we’ve seen sophisticated cybercrimes, such as those perpetrated by the North Korean hacker group Lazarus, which has stolen billions in cryptocurrency by exploiting weaknesses in digital security systems. As AI-driven financial systems become more complex, the sophistication of these attacks is likely to increase, making robust AI security frameworks vital for protecting assets and ensuring the integrity of digital transactions.
Positioning for the future shaped by Agentic Protocols will also require recognizing the significant role that DePIN (Decentralized Physical Infrastructure Networks) projects are likely to play. DePIN projects, which provide decentralized and permissionless infrastructure for computation, storage, energy, and other tangible resources, will become key enablers of AI-driven economies. AI agents, operating autonomously through Agentic Protocols, will need access to physical infrastructure to function effectively, whether for computational power, data storage, or even energy consumption. DePIN projects can provide these resources in a decentralized and scalable way, reducing the need for human intervention and allowing AI agents to directly interact with and utilize the infrastructure. For instance, decentralized networks like Render or Filecoin are already offering compute and storage solutions that AI-driven entities could tap into directly. By removing the bottlenecks of centralized control and human decision-making, DePIN projects will further facilitate the seamless expansion of AI-driven economies, enabling faster development and operational efficiency for AI agents.
For those building Web 3 applications, optimizing the wallet and user experience to accommodate interactions with AI agents will be essential. As AI agents become integral players in the economy, the ability for the platform to seamlessly interact with these entities will be a significant competitive advantage. This includes ensuring that the digital wallets are capable of handling autonomous transactions, providing a smooth and secure user experience, and integrating functionalities that allow AI agents to participate in the system efficiently.
Conclusion
Blockchain serves as the vital “chain” between the carbon and silicon economy by digitizing currency and enabling seamless value transfers between both ecosystems. This integration empowers AI agents to autonomously conduct financial transactions, not just with humans but increasingly with other AI agents as well, creating a fully interconnected digital marketplace. Key advancements, such as AI-enabled digital wallets and the early stages of Agentic Protocols, mark a significant shift in how both AI and humans interact within the economy. These systems are designed to operate with minimal human oversight, allowing AI to manage tasks like resource acquisition and financial decision-making. As AI continues to evolve, decentralized infrastructure networks like DePIN will provide the computational and storage resources necessary for AI agents to function autonomously, conducting business directly with other AI agents. Meanwhile, innovations in digital identity and security will be critical for ensuring trust and protecting against increasingly sophisticated cyber threats. In this AI-blockchain-powered future, human and machine collaboration, along with AI-to-AI transactions, will reshape traditional business structures, blending human ingenuity with machine-driven efficiency.
Resources:
https://seekingalpha.com/news/4145748-coinbase-aids-first-ai-to-ai-crypto-transaction
https://x.com/brian_armstrong/status/1829623778726592804
https://x.com/AdrianDittmann/status/1830379883492728953
https://goodalexander.com/posts/agentic-protocols/
https://www.aicoin.com/en/article/407716
https://www.crypto-reporter.com/newsfeed/introducing-skyfire-payment-rails-for-ai-74239/