Daily Balajisms – Community, cryptography, commodity

AI is eating software, crypto is making communities computable and composable.

Balaji Srinivasan recently tweeted that “software was eating the world, and now AI has eaten software”. He thinks that after AI has eaten everything digital, there remain only three things that are scarce: community, cryptography, and commodity.

Ten years ago, Balaji wrote an essay for Wired titled “Software is reorganizing the world”, as a variation on the famous essay by Marc Andreesen, “Why software is eating the world”. In that essay Balaji proposed an idea of a reverse diaspora – a community that starts scattered online and gets “printed” onto one physical location. Today he would call it a part of a network archipelago – a network of real estate properties crowdfunded by a cloud-first community and connected online and on-chain.

We can even contemplate further how cryptography can virtualize commodities – bitcoin is digital gold, and can be viewed also as virtualized oil or a money battery. Cryptography can make communities computable and composable, like DeFi and DeSci.

Today, the progress in AI and crypto makes it possible to scale communities and shrink civilizations. It’s the “Instagram with a dozen employees has beaten Kodak with 1000x more employees” moment, but on steroids.

But to preserve liberty in the face of digital authoritarianism, or what John Robb calls the Long Night scenario, we need to promote sufficiently decentralized AI, social networks and crypto. In high-trust societies a certain pragmatic recentralization in these technologies can happen on a viable scale.

The recent phenomenal progress in AI will also improve robotics in a couple of years. Balaji explains that principal-agent problem can be solved by aligning incentives through giving employees equity, and also through robotics – “no people no problems”. Or “less people, less problems” – because robots and drones just need to be charged and they are not misaligned like people. (Abstracting from AGI discussion here, as the current LLM paradigm will not create conscious agents – it is based on predicting next token, according to my understanding).

Balaji, in his book The Network State, discusses the hypothetical scenario where AI can help China “to make a pencil” – meaning that AI can improve and scale central planning. This means that technology can make previously unviable solutions or ideologies viable.

Small teams can beat big corporations. Fractal localism posits that ideology isn’t scale-free – communism works on a family scale, but not on city or nation scale. But technology can change this dynamic – making sovereign collectives more self-sufficient through automation and crypto, and making egalitarian ideologies scalable beyond very small scales, like an extended family (maybe to a band or tribe level). Because with crypto, communities can become computable and composable – people can get a portable horizontal community resume from their peers – and track it on-chain.   

Commodities can be abstracted and virtualized with crypto, bitcoin has a use case of a digital gold, virtual oil, or a money battery. Crypto, (and AI) can make communities computable and composable – this can scale sovereign collectives or shrink populations needed for viable civilizations.

Balaji thinks that AI, Crypto and Social are the three most important technologies today. They reinforce each other and can have centralized or decentralized versions. The higher the trust in a community the higher the (re)centralization of these technologies can be.

The digital bank run on Silicon Valley Bank started on group chats. Before the news hit twitter it was too late to withdraw money, as 42 billion dollars left the bank within few hours. This shows that group chats are upstream of twitter, not just that twitter is upstream of what Balaji calls the downstream media.

We can say that communitarianism is upstream of attentionalism which is upstream of capitalism.

AI is eating software and crypto makes communities computable and composable.