Chapter 1: Why is crypto not designed for human users?
Where do AI agents have comparative advantages over human beings? The answer, I think, is most obviously is that you cannot enforce the law against an AI agent. If you are a self-sovereign agent, there is no monopoly on violence. You can't throw an AI agent in jail. So what can an AI agent do that's hard for a human being to do? The answer is crime.
I was about to say, oh no, I don't like where he's going. Exactly, exactly. Like if you are talking about like scamming people, hacking people, like creating all sorts of nonsense on the internet, that is where AI agents have a comparative advantage.
Haseeb, welcome back to Bankless.
Thanks for having me. Always good to be here.
Question for you, Haseeb. Why isn't crypto made for humans?
Crypto, you know, it's always been surprising how scary it is, even 10 years in as a crypto user, to sign a big transaction. And it was reflecting on the fact that I've actually never been scared to send a wire transfer. I'm never worried that, oh, you know, if I don't double, triple, quadruple check my wire transfer, I might accidentally send money to North Korea.
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Chapter 2: How do AI agents think differently from humans?
Right. But I think about that every time I'm signing a big crypto transaction. It's just like the reality is that there's so many foot guns in crypto where, you know, you're reading an address and you have to think about, oh, wait, is this an address poisoning attack? Should I check the middle numbers instead of just beginning at the end? Should I be thinking about my stale approvals?
I need to check the URL to make sure this is not slightly different than what it's supposed to be. There's all these foot guns that exist in crypto that don't exist in the traditional financial system. And Up until now, the story in crypto, which is one that I largely believed, is that, well, this is the fault of lazy humans. And the humans just need to get with it.
They need to get more security conscious.
Chapter 3: What has held back AI training in the crypto space?
They need a better opsec. They just, this is your fault, not the technology's fault. And the longer I've sat with this, the more I've started to become convinced that if this is true, if we're still telling ourselves this 10 years later, then maybe the problem is not with the user. Maybe it's just that this is the wrong user.
Chapter 4: What is the Botconomy and how does it work?
It started to really click for me when I kind of saw how capable AI agents were at navigating code compared to how difficult it is to navigate other kinds of poorly formed problems. Right. Like there used to be the story. And I remember the story when I first got into crypto. Literally the first blog post I ever wrote about crypto talked about this.
The idea that smart contracts were going to replace the law. They were going to replace traditional contracts. That's why they're called smart contracts, right? It's supposed to be this analogy that in the future, you're not going to sign an agreement that's adjudicated by lawyers. You're going to sign an agreement with somebody in code. And the reality is that that story never happened.
Chapter 5: When can we expect the AI-driven frontier in crypto?
It's just not true that we use smart contracts instead of legal contracts. In fact, you know, we're a crypto VC. We are one of the most sophisticated financial actors in the crypto industry. And when we sign a deal to buy tokens, just to buy tokens from a counterparty that's like a foundation or a startup that's building a token, we sign a legal contract.
In fact, even when we do have a smart contract, we also sign a legal contract just in case something goes wrong with a smart contract, which has happened. So what that tells you is that this stuff is not designed for humans. It's not designed for humans, but it is perfectly designed for non-human actors.
Chapter 6: How does AI perceive the current state of crypto?
So I made this analogy recently at Eat Denver that if you think about who is saying this Who was making the argument that smart contracts are this perfect replacement for the traditional legal system, for traditional property rights? This story was being told by autistic software engineers who were the original people who built Ethereum, right?
Well, it turns out that's not very much like most users of Ethereum. Most of them are not autistic software engineers, but AI agents are actually more similar to autistic software engineers than they're similar to the rest of us. And so I think in a way, you can see how the idea that, okay, I'm going to negotiate a smart contract.
I'm going to go back and forth with you about every single individual term. I'm going to statically analyze it and see all the different ways it could go wrong and maybe even formally verify it before I decide to agree to it. That's exactly what quad code can do perfectly. in the span of minutes.
Whereas as a human being, I need to go hire a software engineer and you spend a lot of time looking at all the code, thinking about all the edge cases, talking about it with my lawyers to do a risk analysis. I'm not comfortable doing that with a smart contract relative to a legal contract.
But an AI agent might be actually way more comfortable doing it with a smart contract than with a legal contract. The reality, and I pointed this out in this blog post that I wrote, a legal contract has all sorts of randomness built into it. Okay, what is the randomness in a legal contract?
The randomness in a legal contract is when I sign a legal contract with you, I don't know what is the jurisdiction in which this legal contract is going to be enforced, right?
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Chapter 7: What is Dragonfly's strategy with its new fund?
Maybe I'll say, okay, well, it's going to be in California because I'm in California, but you're in New York. And so if you're in New York and I'm in California, It's going to be a fight about where the case is going to get filed, right? Oftentimes it is a fight. Second, okay, let's even say that we're going to do this in New York, right? Let's say we're both in New York.
Okay, if we're both going to do this in New York, then the question is, does every single clause of this smart contract hold, or sorry, this legal contract hold, or some of them are going to get struck as being unenforceable? This happens. This oftentimes what happens in a dispute is you argue this piece of the contract is unenforceable. Okay, then let's say we go to trial.
Then who's my lawyer gonna be? Who's your lawyer gonna be?
Chapter 8: What does the future hold for AI and crypto integration?
That's gonna affect our odds of winning in the trial. Okay, then there's judge selection. Judge selection is literally random. It's a lottery when you get which judge you select in a legal trial. And then, of course, there's the jury. which is also obviously random. So all these things are intentionally random.
We designed them to be random, which means if you're an AI agent, you look at a legal contract and you're like, I don't know what's going to happen. This is uninterpretable to me. It's literally non-deterministic, right? Whereas a smart contract is actually machine code. It is actually compiled into the EVM bytecode and you can analyze it step-by-step.
This is exactly what will happen in 100% of scenarios. Now, as human beings, we might know that that's true, But we don't feel that that's true. It doesn't feel intuitively true to us that the legal contract is actually less predictable than the smart contract. To us, it's the other way around.
Even though there's all this randomness in the legal contract, we find the legal contract much easier to predict what's going to happen than the smart contract. And so my claim is that that's because of our bounded rationality. It's because of our inability to process code as effectively as an agent would.
But for an agent, all the stuff that we were saying about how smart contracts are a better way to create enforcement and property rights, it's actually true for agents. And my claim is that that's going to change a lot of the way in which the original promise of crypto gets interpreted. It's not going to be humans taking advantage of it.
It's going to be agents in concert with humans taking advantage of it on behalf of of the human that it's acting for.
Now, Hasib, I was at ETH Denver with you not terribly long ago, and I had to download MetaMask to go sign into ETH Denver, right? It's like, what year is it? Downloading MetaMask at ETH Denver. And I was actually pretty pleasantly surprised with the UX improvements of MetaMask. And I think that is emblematic of the industry as a whole.
We have improved our human UX over the years, maybe not as fast or as much as we would have enjoyed, but nonetheless, it is happening. And I think something that you're what you're saying is a little bit more fundamental than that, of that, you know, it's AI isn't just going to gloss over some of the hard gaps of crypto UX for humans.
When I open up my ledger and I see the blind signing thing, you know, an AI can go and interpret the code and tell me, you know, thumbs up, thumbs down. And maybe that helps crypto UX. And maybe that's true. But I think what you are getting at is something a little bit more fundamental, right?
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