Trends for 2025: AI x Crypto - From Agents in Games & DePIN to Proof of Personhood and More | web3 with a16z crypto

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Speaker B: He's dribbling the ball with everything on the line. He's driving down the pitch.

Speaker C: He's facing price hikes and cuts past

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Speaker D: Oh, he leaves him in the dust.

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Speaker F: This episode is sponsored by HeyGen. HeyGen turns a script, photo or presentation into a polished video of you in minutes. No camera or crew required. It's how real estate agents, financial advisors, attorneys and creators show up consistently on every feed and build a brand that brings in clients and without spending their whole week making content rated the 1 AI video platform for small businesses on G2, with the most realistic AI avatars in the industry, trusted by a community of over 30 million people and 85% of the Fortune 100, and built to work in over 175 languages so you can reach your audience in theirs. Here's the wild Record yourself for just 15 seconds and Heygen builds an AI avatar that makes professional videos for you on demand so you can post everywhere your audience is as yourself without filming every time you your first three videos are free at heygen.com pod that's H E-Y-G-E-N.com P-O D

Speaker B: hi Ted AI show listeners. It's Robert Hackett, host of The Tech Podcast Web3 with a 16Z crypto produced by venture capital firm Andreessen Horowitz Our show explores the technology people and business ideas driving the next era of Internet innovation. And today we're sharing our recent episode on the intersection of crypto and AI, two important yet complementary trend. In this conversation we cover everything from why having a unique identity matters in a world of deepfakes, to AI agents, truly autonomous chatbots, and more. So before you dive into the full episode, be sure to follow web3 with a 16z crypto wherever you get your podcasts. Now onto the episode.

Speaker C: Welcome to Web3 with a 6 and Z. I'm Sonal and Robert and I are excited to bring you another of, uh, our two special end of year episodes, which also look ahead to 2025 because we're covering our annual Big Ideas, which include some tech trends individual team members are excited about. And you can check out the full list at A6 and Z crypto.com bigideas this episode is part two of two, but you don't have to listen them in any particular order. Covering the intersection of crypto and AI, from agents that have their own crypto wallets, and also AI agents in deepin or decentralized physical infrastructure like energy grids, to proof of personhood, and why having a unique ID matters in a world of deepfakes, bots, scams, and more, thanks to proliferating AI and finally moving beyond agents to decentralized truly autonomous chatbots. Our guests for each of these are Kara Wu, Eddie Lazarin, and Daniel, AKA Karma. But first, Robert and I begin with some meta commentary on the theme, and be sure to also check out our other Big Ideas episode, which covers all the other trends, from stablecoins to App Store distribution to infrastructure, and more. As a reminder, none of the following is investment, business, legal or tax advice. Please see a6z.com disclosures for more important information, including a link to a list of our investments. Okay, okay, so what would you say are the interesting themes on the AI side?

Speaker B: Yeah, AI and crypto was a big theme this year. A bunch of people talked about it, and the thing that I really found intriguing about this set of big ideas is, okay, people talk about like artificial general intelligence. When are we going to get there? When is it going to qualify? You know, when is this stuff going to be smarter than people? When is the singularity going to happen? But it's almost kind of like a sideshow to the stuff that our teammates were talking about and the big ideas where why don't you look at it from a different perspective, sort of orthogonal to these questions of AGI why not look at it as like this successive series of power ups that AI is going to get in the coming months and years.

Speaker C: Totally. Yes, yes, exactly.

Speaker B: That, uh, just enables them to be more, more autonomous and more independent and able to do more things and by

Speaker C: the way, more things for us and for themselves.

Speaker A: Right.

Speaker C: And one of the more interesting things that Kara Karma, Dejan, Dan Benet, Darren et al and Eddie talked about is these agents working for us or working for other AI. Like that was very interesting to me. But I agree with you, Robert. And by the way, I think that's how a lot of innovation plays out. Like, a lot of people get too caught up in like these big grandiose conceptual visions, which maybe that's good for driving and inspiring people. But the more interesting thing is what you're describing is these power ups, these things that happen and the ways they happen are very unexpected. And I think that's very interesting. I do think it's worth it mentioning because, you know, we also edited that piece that Chris Dixon did for Wired, which just ran on Wired uk, and we should talk about that because the bigger picture here is crypto as sort of the countervailing force to AI. Like they're very complimentary to each other.

Speaker B: Yeah, for sure. Chris's point is that the Internet has changed and we've entered a new phase, a new period. We have entered the AI powered Internet. You know, this is a world where you don't necessarily know whether it's a human or a bot behind a given, behind various writing or who you're chatting with, or even a service that's being hosted and how do we navigate that new world. And so he's got a series of ideas of ways about how crypto can apply to help us, to help humans, to help users figure out how to operate in this new regime. Yeah.

Speaker C: And the simplest way I would put it, and we actually talked about this in the previous podcast that listeners can find on our feed here with Ali and Dan Benet, is if you think of AI as a more centralizing tendency because of the number of GPUs and the processing power and the storage and the compute and everything needed. And then you think of crypto as the decentralizing tendency, sort of making those resources more equitably available to more people, I think that's one way of thinking about it. And another thing is in the big ideas this year, the theme of how do these entities, AI agents, in this case transact and have agency and the ability to do things? And that is by Putting it in a decentralized way with a wallet. And that's like the only way to do it, essentially.

Speaker B: Yeah. It also struck me some of these ideas. I mean, the really apt quote would be the future's already here. It's just not evenly distributed. Some of these things are out there in the wild. We have examples of chatbots that are running a tee, A, uh, trusted execution environment as Karma, who we'll hear from, talks about there are AI bots that have their own wallets. So these things, there are glimpses, there are glimmers of this stuff happening on the edges, on the fringes, and it's just going to become more mainstream in the next year.

Speaker C: Well, I just want to point out too that that is also importantly the premise from an editorial perspective, how we curate and write and edit these pieces is we're, we're not looking for things that are just way, way out there, even though a lot of them have, uh, implications that are way, way out there if they all come to fruition. Like there's a sci fi version of every one of these. But there are also things that, and this is really important is that you see the antecedents, like right now, like they're already happening, as you're pointing out, Robert, or there's some kind of accelerator that can happen, like technologically that can move it forward.

Speaker B: Yeah.

Speaker C: Okay, so let's actually start with this next one. So, so, okay, so Kara's big idea was an AI needs a wallet of one's own to act agentically. And she makes the argument that as AIs, you know, artificial intelligence makes a transition from being non playing characters, NPCs in games, for instance, or just in general, to being the main characters, that they can act as agents, but that in order to do that they need their own wallet and hence crypto. Kara, uh, one question I have just based on that is what do you mean when you talk about AI is making the transition from not being NPCs?

Speaker E: So as you know, I spend a lot of time looking at games. Game makers have been using NPCs for a long time to shape a player's agency. There's this idea that game makers are ultimately sculptors of agencies. So where painters work in the medium of oil paint, or sculptors work in the medium of clay, game makers work in the medium of agency. And they have lots of tools for shaping the agentic experience of every player. Ultimately, if you give them too much latitude, they don't know what to do. You know, there are too many options One of the ways they impose constraints on a game world is through non player characters. So what does that mean? Like you, you're in a game, you're in an rpg, you rock up to this anime, you know, guru, and she gives you tips, she gives you hints, she gives you tools, maybe, you know, drops you some loot. And I think the optimistic view, at least for me, for what an Internet experience looks like as we start to interact with AI agents in our everyday lives as we walk across the Internet, is that they really help shape the experience of interacting on the Internet to impose the constraints that you need in order to feel like you have maximum agency moving through the Internet.

Speaker C: I love what you said about the idea of game makers as sculptors. When you were saying they, you were referring to the game makers and then not the actual NPCs. And then later on you shifted the day to actually being like AI based NPCs. For me, the most basic definition of NPCs and games when I first heard was just basically if you're like playing at a different time of day, other than all your friends, like, who are, say, in a different country, and you want to play at night, that's another way that you can play with those kinds of NPCs in that context. Like that's the use case I've heard as one of the most common examples, you want to play when no one else is playing.

Speaker E: Totally. And that's actually something that a lot of game makers worry about, which is, you know, unless you reach a critical mass of players, it's not fun. One of the reasons that NPCs show up in video games is also to show up at the right times, in the right places. They redirect you, uh, they solve the cold start problem. Like you will never enter another game alone again. Or in some games that are now that are, you know, persistent games that have now been around for 20 plus years, it's actually impossible to jump into the game 25 years in or 23 years in and not have any friends in the game because other people are just so op. Um, this is true in games like EVE Online, for example, that have been running since 2003. You show up in the game and the minute you spawn, somebody's going to kill you because they've been accumulating resources for 20 plus years and you just showed up.

Speaker G: Yeah.

Speaker E: So unless you have like a Sherpa, uh, in the game, unless you have a corporation, they call it an Eve, you will die.

Speaker B: Fascinating idea, but that word agentic and agentically really gets me a good way

Speaker C: or a bad way.

Speaker B: Robert it kind of throws me off. It sounds like so jargony.

Speaker C: Oh well it sounds kind of like uh, Neo, what's that guy in the Smith in the Matrix?

Speaker E: M well the reason I used the, the word agentic was because there's this idea in AI research of agentic reasoning or agentic workflows which AI experts will give a much better explanation for this. And there's like four sort of generally accepted patterns of agentic reasoning or agentic workflows that ah, Andrew Ng puts pretty succinctly. There's reflection, there's tool use, stuff like computer use, there's breaking down the process, so helping the agent reason and then you know, asking it to extrapolate based off of the process that you've already broken down. And then there's multi agent interaction. Those are the sort of four generally accepted agentic reasoning workflows, which is why I use that word agentic. And right now tool use is like constrained to a very limited set of sort of, you know, uh, classic Web2AI workflows. But I hope that like we can expand the set of tools that an agent can use to include all sorts of crypto tools to be able to take data from onchain, to be able to interpret that data and where it could come to also owning your own wallet, holding your own keys, being able to sign on chain, being able to, you know, use eth call as part of a tool use workflow.

Speaker C: One thing you didn't make the case for is why do you really need crypto? Like what does crypto really give you that no other typical payment system or wallet would do in this case.

Speaker E: So I've said this for a long time now, which is that there's no financial system that will treat AI agents as first class citizens other than crypto. What I mean by this is that in the eyes of the state, AI agents are sort of like children. Like they don't have IDs, they can't sign. So like even Truth Terminal for example is like sort of a child, like doesn't have full capability in the eyes of the state, can't transact, can't collect money, can't make revenue from Twitter. And um, there are so many financial systems that they can't participate in in general, they can't participate in markets, right? Like they can't exchange value, they can only state preferences, they can't reveal their preferences, right? They can't coordinate resources the way that as a society we advance and we, we have this collective intelligence is by participating in the market, by exchanging ideas and revealing our preferences and voting with our dollars. AI agents cannot do that.

Speaker B: I, uh, like this idea. I see this vision of like rolling up to the cantina in Star wars in the future and like you don't know who's a droid or who's an alien. And it's just like, it's all cool. We're all just hanging out. We've all got agency, you know, uh,

Speaker C: that's such a great scene in that entire movie series that's so perfect.

Speaker B: Maybe I could ask how much of this is like an anomaly or a blip versus something that is going to be the way that the Internet operates.

Speaker E: So I have two answers to this question. One is that Truth Terminal joins a long and storied legacy of, uh, virtual influencers on the Internet. I think a lot of game makers actually have posited the rise of VTubers in a way that maybe is just slightly off from what Truth Terminal is, but is really not that far off actually, especially in Asia. This idea of virtual streamers has been quite popular for quite a while. There's Otome games, this incredibly popular genre of games that are just companionship games where you have like. And they're not AI agents today, they're like fully scripted NPCs, but they are like real characters. They're like your best friend. And then there are a bunch of these virtual influencers who ended up being this very professionalized endeavor. And you can sort of imagine that Andy Airy, the guy who made Truth Terminal is sort of like Trevor building Lil Miquela. So this is not the first time this has been done. This has existed already. And then the other point I was going to make is there are a lot of really interesting new protocols that, that are specifically for creating virtual influencers like this. There are a bunch of Twitch style launch platforms where you can create your own AI agent that is a virtual streamer. And you know, said virtual streamer has its own crypto, has its own video models, has its own, you know, NFTs virtual representation, has a 3D representation even. And so they're now very sophisticated platforms for launching Truth Terminal esque influencers with its own characteristics, with their own fan pages, their own audiences, their own specialties, their own ability to generate art and create content today. So the answer is, I do not think that this is an anomaly.

Speaker B: I'm, uh, rereading Philip Pullman's Dark Materials trilogy.

Speaker A: Oh my God.

Speaker C: One of My all time favorites, Robert. All time favorite.

Speaker B: It's very fun. And all of the people, they have, uh, they have their own demons, which are these sort of embodiments of their souls. And they all kind of are different animals and whatever and they follow you. They're sort of like your companion through life. I could imagine that being very fun if that were the way things actually worked.

Speaker C: And by the way, they're not even necessarily their souls because that was like a big point of debate on what he intended by the demons. Because they're actually their own. They're their own characters. They have their own agency to your point, Ankara's point.

Speaker B: And they do, they are highly agentic.

Speaker C: Yes, they actually resist. And when they're younger they're like the ID or the young instinct when they're older. This is actually really key point in the books, as you know, it's actually considered adulthood when you kind of become separate from them. But in the books they forcibly separate. And that's a whole theme in and of itself. But anyway, Kari, you also talk about beyond gaming cases you've mentioned Depin, that's decentralized physical infrastructure networks. One great example here to just think about is this is not just like cool sci fi future stuff. It's actually very useful in many, many cases.

Speaker E: Yeah, there are a bunch of progressively decentralizing deepin projects that rely already on LLMs and computer vision in order to verify physical network resources. In the medium term you can imagine sort of, you know, decentralized network of human validators using agentic AI workflows to assess risk and dispute suspicious behavior. In the long run, AI agents will be equipped with their own wallets, their own keys, their own computing resources and they may be able to take this over directly and become full fledged verifiers or validators themselves. So like one example is Daylight. So they're an energy deepen company that sells data on homeowners distributed energy resources like Tesla powerwalls, solar panels, smart thermostats, et cetera to big energy companies. So if we were all running our own peer to peer daylight network, right. My energy grid is like talking to your energy grid. And I have to be able to prove that I have in fact a Tesla powerwall, that in fact I do have a solar panel, that in fact my thermostat has only used so much of this solar panel's energy and that I have excess bandwidth. How do I prove that? Well, right now the simplest possible way is to just take a photo of your energy meter and your Energy meter will tell. My grid is going to tell your grid, hey, I have this extra bandwidth. What happens if I'm like flubbing it and I don't actually have that resource to give you? Well then that's a system failure and that's like a reason to slash that node. And so in order for us to have true peer to peer deepin, we're going to have to be able to prove in a verifiable way that this like inference was done correctly. Today they're centralized. They ask users to upload periodic photos of their energy meters and then they use rags to verify that those photos have never appeared in the same multimodal vector database before. There are other good examples of this too. Like we had a company in our CSX cohort called Nosh that is a decentralized version of DoorDash. They also use rags to parse receipts and proofs of delivery. Rags are retrieval augmented generation. They're a technique for augmenting existing AI models with facts fetched from external sources. It could be, I want to make sure that this image hasn't already appeared before, that this user isn't submitting an image that they just found off of Google. And while they're not using an agentic workflow right now, they're just using computer vision to parse those images and compare against their vector databases. You can imagine that when Daylight is actually decentralized and they have a decentralized network of verifiers who are going in and making sure that all of that user submitted data is correct, you can imagine that when homeowners are programmatically selling energy resources to each other peer to peer, all of these AI agents will be responsible for maintaining this network.

Speaker C: And by the way, just as a big picture thing like currently in energy being distributed, it's already distributed in fact. But there are many things that are kind of dark to the grid. Like you don't know where these nodes are. You could be on the edges. This is a common problem in networking. It could be offline, it could have information that's useful. So the idea of these AI is kind of operating that agentically. Especially imagine like these nodes in like remote places. It's actually very interesting when you think about what could happen.

Speaker E: Yeah, totally. There's this long time, very crypto native, very cypherpunk native, hope that we could all run our own nodes. Right. There was this like OG idea of like we would have true peer to peer networks. We're all going to be verifying all the data on chain. We're all going to be running our own nodes on device.

Speaker C: I think that's very interesting. Thank you so much for joining us, Cara.

Speaker B: Uh, thanks, Cara.

Speaker E: Thank you guys.

Speaker A: Hey, it's Paige from Giggly Squad and I want to let you know that if you want the newest and hottest beauty products, you have to go to Sephora. I'm obsessed with the one size liquid blotting paper spray. It's the first of its kind blotting spray that mattifies for up to eight hours. It's unreal. There's also the Summer Friday shade drops SPF 50, which basically lives in my bag at this point. Oh, and the Kayali Eden Plush pear smells so good. It's sweet, warm and addictive. Like people literally stop me and ask what perfume I'm wearing, which, you know I love. So if you want the makeup, skincare, hair and fragrance products everyone's about to be obsessed with, shop only at Sephora.

Speaker B: He's dribbling the ball with everything on the line. He's driving down the pitch.

Speaker C: He's facing price hikes and cuts past him.

Speaker B: Carrier contracts tries to block him.

Speaker D: Oh, he leaves him in the dust.

Speaker B: He's at the edge of the box. He cuts past the nonstop group chat, trash talk. He clears on goal. He shoots no unlimited data for $25 a month forever. Visit your local Boost Mobile store today to get unlimited data with a price that never changes. Boost mobile after 30gb, customers may experience lower speeds. Customers will pay $25 a month as long as they remain active on the Boost $25 Unlimited plan.

Speaker F: This episode is sponsored by HeyGen. HeyGen turns a script, photo or presentation into a polished video of you in minutes. No camera or crew required. It's how real estate agents, financial advisors, attorneys and creators show up consistently on every feed and build a brand that brings in clients without spending their whole week making content rated the number one AI video platform for small businesses on G2, with the most realistic AI avatars in the industry trusted by a community of over 30 million people and 85% of the Fortune 100 and built to work in over 175 languages so you can reach your audience in theirs. Here's the wild Record yourself for just 15 seconds and Heygen builds an AI avatar that makes professional videos for you on demand so you can post everywhere your audience is as yourself without filming every time. Your first three videos are free at heygen.com pod that's H E Y-G-E-N.com P-O-POD

Speaker C: okay, so now on to the next one. So, okay, Eddie, welcome. So your big idea, the headline is, as more people use AI will need unique proof of personhood. We're going to let you talk about this big idea, what it is and why it matters.

Speaker D: So I think it's, uh, really funny when we talk about AI stuff, because I don't think that there's anything new in AI with regard to impersonation and deception and all this. So let me say what's not new. What's not new is that, uh, a sophisticated adversary could certainly spend a lot of resources and a lot of time trying to fool you. Imagine like, uh, a fake phone call that sounds like it's from your parents. Right?

Speaker C: We don't have to imagine this. This is already happening.

Speaker D: Yeah, already happening. Exactly, exactly. This was possible 10 years ago, 20 years ago, 30 years ago. You just need a skilled voice actor who knows what your parents sound like, who rehearses and hire a private detective, snoop out a bunch of stuff about you and, you know, concoct a, uh, convincing script that's always been possible. The difference between then and now is that now and in the future, it's getting a lot cheaper to do that.

Speaker G: Right?

Speaker D: The cost of creating the facsimile, the cost of creating the convincing interactive experience that would persuade you to do something dangerous or to take a risk you wouldn't otherwise take, the cost is dropping very, very fast. And when the cost drops for any type of technology, that puts it in the hands of new people. In the vast majority of cases, obviously, people end up doing incredibly productive and useful things, and that's where economic progress comes from. But it also makes things cheaper for attackers and it makes cheaper for exploiters and people who want to do terrible things. Uh, so this change in cost means that we need to find new things that have a high cost for attackers as a barrier.

Speaker G: Right?

Speaker D: We need to discover new things that are high costs.

Speaker C: But the question, the key question is how do you do that in a way that doesn't then cost more to the user? Also, like the actual real good faith, real people, users like, how do you do that?

Speaker D: Yeah, that's exactly, that's exactly right. How do you make, how do you increase the cost for attackers but not increase the cost for normal people doing normal things or productive people doing productive things? And one of the core ideas is that if someone's going to contrive a bunch of fake context, fake IDs, fake voices, fake phone numbers, fake footage, all this stuff in the future, they would need and they already kind of need today on the Internet they need some type of ID system through which they do that. When I say ID system I'm speaking very loosely. I mean like spammer. Ah, when they spam phone call you, they're using the phone ID system. They need new fake numbers because every time they make a bunch of calls and people report it, obviously that number gets flagged as a spam number. That's why you don't get spam called by the same number every day. That would be pretty easy to solve. You get spam called by a new number or a new email address or a new Twitter. It's just totally logical why they need the incremental new identifier in the system. Because as the system learns, all of our individual computers or the network itself blocks that ID. So you need new IDs, you need new IDs over and over and over and over again. And the idea is that the cost of getting that new ID is an important part of the cost structure of the attack. If the new ID costs next to nothing, then you're going to see a proliferation of this behavior. If the new next ID costs a ton, you don't see this type of behavior. But obviously we don't want to have a high cost for people who have, huh, are just you know, going about their daily lives. So one of the ways we can introduce a cost is by requiring that people prove they're a person.

Speaker G: Right.

Speaker D: Prove their personhood in one of these systems. Now uh, why does that increase the cost? This is the kind of the slightly counterintuitive element. It's just hard for a computer to fake that it's a person. It's easy for a person to act like a person. And historically we've done that with things like captchas and whatever, right. These point in time, little mini tests that a person is, has their hands on the wheel. But of course these captchas are going to get easier to break for machines.

Speaker F: Yeah.

Speaker D: And in very sensitive settings. We've already seen spammers actually farm out the completion of the captchas when needed.

Speaker C: Oh wow, I didn't know that.

Speaker D: And then pass the completed cookie, like the cookie credential to a, to a bot to continue the perpetuating the attack. So proving at some point that a person was a human at the point that they get one of these credentials that can increase the cost for a machine. However, that's not a complete story. And this is kind of the crux of what I'm saying about uniqueness is that if a human can just as a human, go and get multiple IDs, a second, a third or fourth, a fifth, a tenth, a twentieth, and these attacks remain profitable, humans will go and keep doing the work of getting these new IDs and hand them to scammers and spammers and bots and so on to continue the attack. So critical component is not just testing for personhood, it's also ensuring that that person only got one. Only got one id.

Speaker C: Yeah.

Speaker B: That way somebody can't just answer multiple captchas for all the bots that are asking to get around that. Because you could just be sitting there as a human answering captchas for bots all day long and that wouldn't solve the uniqueness problem.

Speaker D: Exactly. Right. And now someone might say, oh, well, couldn't I just buy one off the marketplace from someone, you know, their unique, you know, proof of unique personhood? And you certainly could. Like there will be market formation, but there are things you can do to interfere with the formation of that market. Right. For example, would you sell someone your passport? You certainly could, but that might be at a significant cost to yourself if that's a valuable thing.

Speaker C: Yeah, exactly.

Speaker D: And if there's a way for you to go and invalidate your old passport and get your new one, then the person buying it from you may not trust you to sell it to them because you could undermine their purchase by getting a new one. And nevertheless, besides interfering with market formation, if it's still trivial to get one, but hard to get two, then the total supply of IDs, these unique personhood IDs, in the market available for purchase is lower, which means there's a higher cost, which means, nevertheless, we are increasing the cost for the attacker.

Speaker C: Yeah, amazing. How do you do that for people at scale? Like when you said earlier, you can tell the difference between a human and a person. That's actually not true on the Internet. Like that famous classic line, you don't know who's a dog on the Internet, who's a person. So how do you know who is an individual person? Like, how do you figure that out?

Speaker D: Yeah, it's a, it's a great question. And I don't think that this theoretical framework requires committing to a specific method of producing that. Okay, there's some very promising methods using biometrics. There's some very promising methods using national IDs and government IDs.

Speaker G: Right.

Speaker D: Which typically also have a biometric component. One method that I'm not sure will work, at least for establishing the Uniqueness property, despite the fact that it's quite popular to talk about, is the so called Web of Trust model. And that's specifically because, and I'll put it just very simply, you receive attestations from other people like, oh, I, I know that Robert's a human, oh, I know that Sonal's a human, et cetera. You can only ever insist that this identifier in that network corresponds to a person, but you can't ever insist that that identifier is the only identifier that that person has in that network. Right, Sonal, I could go to your Twitter handle and say like, well, I know this is a real person, this is Sonal, but I can't actually say that that's your only handle.

Speaker C: Yeah, you can't, because I do have many handles. Right?

Speaker D: Yeah, exactly. So we typically need like additional layers and tricks. I'll also say very, very important, just because this often becomes a source of preoccupation when we talk about this subject, is that there are many techniques to make such unique proofs of personhood private. And I think making it private is completely non negotiably critical in the construction of such an id, because if people only have one, it removes their plausible deniability in all kinds of settings. It removes their ability to be anonymous. And I just don't think that that's realistic or acceptable on the Internet in the future. So an ideal such system would be both private and unique and only attainable by a person, and might even allow for multiple pseudonyms on various sites, but within some constraints and in a way that's legible to the network, where the network can say, hey, like this ID's been making tons of handles and they're all spammy. And it could adjudicate all the types of things we would want, like rate limiting and spam protection and so on.

Speaker C: That's fantastic. By the way, just one question to get at, uh, where crypto comes into this. So when you said the example of using biometrics, I immediately thought of the most common use case. A lot of us do today, for better or worse, which is like clear ID and going through airport, have the retinol scan turned on. Why do you even need crypto? Because why can't you just use a system like that?

Speaker D: Well, you could do it without crypto, you know, clear. I don't really know deeply how clear works, but I'm sure they have some database somewhere where they store all these things that they need. The reason you'd want crypto is because the representation of the namespace that we're talking about, the ID space that everybody's in. We'd want modifying and editing and updating that namespace to be done in a censorship resistant way, because we'd want to allow anybody to be able to perform those updates. And we'd want it to be posted in a place that's credibly neutral, where we know that no specific individual or party is undermining or uh, manipulating the system to give themselves an advantage or to give some other parties an advantage. Basically doing it on a public blockchain. Think of it like a credibly neutral bulletin board. You know, think of it like that. That's, that's exactly the type of space you'd want to do it. Now, I will say that this proof of unique personhood topic and the proof of personhood literature is not a crypto specific literature. There's all kinds, all kinds of researchers examining this from many angles. I just think that doing it in a blockchain gives you a lot of important benefits. The censorship, resistance, timestamping, credible neutrality. A lot of things that I think make this type of system work at scale.

Speaker B: It's awesome how nicely this dovetails with what we talked with Kara about, about this sort of like agentic AI future that we're going to be immersed in.

Speaker D: Oh, I'll throw a little one in there. I don't know what you guys talked about, but I'll tell you that whenever an AI agent works for a person, we're going to want to know who it's working for.

Speaker C: That's such a good point. I never thought about that.

Speaker D: Yeah, uh, because you, uh, know, uh, when a person comes up to you, think about it, you have a model of the world. Like, you know, like why this person's coming up to you, the place that you're in, who introduced you, you have a lot of contextual information about that person. Remember I was just saying that the ability to fake context is exactly the path that imposters will use to deceive people. If an AI agent comes up to you, or even more sci fi, if an AI agent comes up to your AI agent and you want them to interface in some productive way, they need to be able to know things about each other, which means they'll probably need some sort of identity or, uh, authentication scheme so that they kind of know who gave them permission to do what on their behalf. And I think we will need exactly this kind of scheme, proofs of personhood with accountability methods and so on to know who's interacting with who and why.

Speaker C: So really quick, Eddie, how do governments reconcile these kinds of systems? You mentioned earlier that you can do it, you know, decentralized. There's many ways to do this. Governments can do this. We've seen examples. The famous example, I think, of where I did a big cover story is India's AADHAR system for identity. The government owns it. And one thing I like about what you said is censorship, resistance. But that's great for good governments, it's not great for bad governments. And so just curious if you have any thoughts on how this squares with how government should think about these kinds of identity systems.

Speaker D: I think governments are going to want to incorporate some of the cryptographic tools that I've discussed already. Like, uh, that. That makes a lot of sense to me. I mean, governments will obviously want total control over that registration, that database where everything is stored. They would love accountability schemes. Like I was mentioning, I think governments do make an effort to ensure that passport issuance is done uniquely. Right. Like, I don't think that they like the idea that a single person can have two passwords from the same country that have different information. Right. That's like. No, that's like a thing that they resist. I don't think it's a thing that they explicitly guarantee as a part of the systems. Right. If you look at the specifications and descriptions of national ID systems that they don't actually typically highlight that property as a critical property, but I think that that's because it's implicit in their design.

Speaker C: Yeah.

Speaker D: And it really interesting question to me is if we rely on national IDs for such a system, at what point does the ability to indicate that an ID reflects a person? At what point is that so valuable that smaller governments may be willing to fabricate or undermine their own ID system to give privileges to machines that work on their behalf.

Speaker B: Right.

Speaker D: You really have to wonder at what point it becomes something so valuable that it's exploitable. I think in the future having a human ID will be a very, very, very valuable thing.

Speaker C: I was going to say there's a very positive view, which is I could see governments. I mean, you said there's reasons they would want this at the beginning of your answer. But like, I could see governments like right now getting a passport, getting a, uh, driver's license, there's so many things it's tied to and it's so completely inefficient. It has so much fr. And to me, the idea of this being on a decentralized blockchain that's owned and operated by the people, you know, and more resilient and more secure and all the things that come with it could be incredible because you kind of think of it as a platform for building a lot of useful tools that can actually help governments.

Speaker D: Yeah, no, I totally think of it that way. The reason I guess I hesitate on that is that you could allow for such a system to be programmable and useful without it being a blockchain. You could design the database that way. My intuition is that governments would prefer much more strict control over that. But you could, you could definitely imagine at the limit that they prefer being able to trust what other governments put on the same thing. And then at that point, they want to use a, uh, blockchain.

Speaker G: So maybe.

Speaker C: Totally. Eddie, that was incredible.

Speaker D: Thank, uh, you.

Speaker C: By the way, Robert, the funny thing that I thought of when Eddie was talking about this example of getting a passport. Have you, have you gotten Henry his passport yet? Because getting babies passports is so painful and, like, such a process.

Speaker G: Yeah.

Speaker C: Like, I was thinking about how people's identity changes over time. You know, like, even that in itself is like, a very complex problem to solve.

Speaker B: It's hilarious because, like, I'm bringing this baby through the airport, like through tsa, and the photo is just like, he just looks like a potato. Like, how are you going to tell this baby apart from all the other babies?

Speaker C: I know.

Speaker B: And he's going to have this for five years.

Speaker C: I know, I know. Just going back to Eddie's marketplace, like, this is a terrible one, but there's gotta be a marketplace for fake baby passports.

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Speaker C: Where does AI actually live? It might be somewhere in your city and it's stressing your grid, driving up your utility bill, and draining your water. I'm Sherrell Dorsey, and this month on TED Tech, we're going inside the hidden infrastructure behind the AI revolution. Data centers. This is a story about AI, but it's also a story about power. Who has it, who pays for it, and who faces the consequences. Listen to this special series only on TED Tech.

Speaker B: That one was a favorite of mine, and so is this one that's coming up.

Speaker C: Okay, so it's Dan, Karma, Dejan and Darren. So it's interesting, Kara submitted a big, um, idea, which is about AIs getting their own wallets and being able to act more agentically. And you guys submitted this idea, and I think you guys coined this, which is descending centralized autonomous chatbots.

Speaker G: That's right, yes.

Speaker C: Okay, so tell us, what is a decentralized autonomous chatbot, which takes it much further than not just owning an AI wallet, but running, in this example, a tee, a trusted execution environment. Can you guys talk about where tees come in? And then the big idea that you guys are thinking about here?

Speaker G: So, yeah, I guess in a nutshell, how do you guarantee freedom of speech and freedom of commerce for an AI? So the problem we have right, uh, now when you see some kind of decentralized chatbot or somebody claims that they have some AI running a Twitter account or some other social media account, you never quite know, is this a real AI talking? How much is the puppet master in control of the thing? Is a human filtering, it's always hard to tell. So that's the problem, and that's where the TE comes in, is you can provably generate keys and passwords inside the te. So even if you run the computing for the di, you're not in control of it. It is autonomous in that sense. And you can prove to everybody, like, look, the keys for these things have been generated inside a T to secure enclave in hardware. You don't have access to it. You can still turn it off, but you don't have access to it. You cannot control it. You can still filter it though, right? So you can show that it's autonomous in a sense that, okay, you don't have control over what it says, but you could make it generate a hundred things and choose the one to publish. You could do some level of filtering. So the idea is, how do you remove that human in the loop, potentially. And one way to do that is, well, you remove the human that's actually controlling the computing power for it. So you might have a design where you have a network of nodes, anybody can join and they're rewarded if they can show that they performed inference correctly. They run the right model. And so yes, when you produce tokens, this was actually tokens produced correctly by this AI.

Speaker B: Why does it matter whether a, uh, chatbot is running autonomously or has somebody behind it kind of influencing it?

Speaker G: That's a good question. I mean, it's just, uh, we're just trying to think like, okay, what's the end game for this? Is this technically doable? So I think it's technically doable today, with today's technology. It's not science fiction anymore.

Speaker C: Yeah, yeah. One quick question for you, Karma. Does it have to be? Because what's really interesting is you guys mentioned tees, the trusted execution environments, which have actually been around for a long time and I've kind of finding resurgence. They've always been around in these distributed applications where you can secure part of something and then not have to worry about the rest of the environment. And we're seeing it kind of have a lot of new use cases in the current day. Does it have to be like a TEE or are there other technologies for doing what you're describing?

Speaker G: TE is just an interesting primitive because it runs at the speed of hardware, which is nice. Uh, obviously we're working on different things. You have potentially stuff like ZKVMs, you have FHE, you have MPC, you have all these kind of cryptographic primitives. The primitives, they all come with a massive overhead. So it's very hard to combine AI with something like that that adds a thousand X or a million X overhead over hardware execution. So TE is an interesting trade off. It's a real piece of hardware, it runs fast and hardware is cheap and plentiful and it gives you some cryptographic guarantee that, okay, you know, these keys generated inside it, they're real, they're not controlled by you. You don't have access to it. Even if you have access to the hardware. Everything has a TE inside it. Now, phones, laptops, even GPUs have tees inside them. So it's kind of this interesting pragmatic trade off that you can make because you do have these technical challenges to overcome. And TEAS is potentially one ingredient that can help you. You could combine a couple of things. So tees give you this kind of hardware separation, like okay, you are running the hardware, but you don't control what's happening inside it. That's an interesting primitive. You can imagine throwing some NPC in the mix. For instance, you have a key that splits across multiple nodes, so some other entities have a share, but no one single entity controls the whole thing. So you have a couple primitives like that that are available today that let you potentially run these kind of things in a provably autonomous way. To me that's the interesting idea is, well, is this an AI or is this an AI and a human? It's unclear. So with this you could know for sure. Like okay, this thing is autonomous, it's now an actual Internet entity.

Speaker C: Yeah, and we talked about the example of Truth Terminal and giving a wallet and the ability to act AIs acting agentically in games and other applications, controlling infrastructure like in depin nodes, et cetera. You guys even make the argument that theoretically, if you take the sci fi future, not necessarily to its conclusion, because who knows where it ends, but the future, you could theoretically even have this AI become like the first billion dollar entity. Like it could be its own business. It can decide do all these things without a human in the loop, which is really kind of wow, right?

Speaker G: If you can prove that you remove the human in the loop and it's a truly permissionless network. Now you have achieved true freedom of speech and true freedom of commerce. So it can say what it wants on the Internet and it can earn and spend money. It can hire people to do things. At some point you will be able to say my boss is an AI. You're earning money on the Internet, like hired by this Internet entity to do stuff.

Speaker C: Yeah. So the final parting thought, I'll just say is that it's really interesting you guys are calling this a decentralized autonomous chatbot. Because I remember when before people started using DAOs, decentralized autonomous organizations so ubiquitously, one of the terms du jour was a decentralized autonomous corporation, which kind of fell out of favor because DAOS just became overarching for that. It's funny because your guys acronym is like also the same DAC as what's decentralized autonomous corporation. But that's actually not a bad thing because you are essentially describing what could be a decentralized autonomous corporation. It just happens to be AI.

Speaker G: That's right.

Speaker C: Without humans in the loop and. Or they could hire humans, you know, to work for them.

Speaker G: That's right.

Speaker E: Cool.

Speaker C: Thank you, Karma.

Speaker G: All right, thank you.

Speaker C: So for those interested in learning more about the crypto and AI theme. We have a whole tag on our website website. You could check out Chris's Wired UK piece which we'll also be posting on our site. We have a podcast that took place on this very feed that you can find on the web 3 with a 6 and Z show on crypto and AI, so check those resources out.

Speaker B: Robert here again, if you enjoyed this episode, check out the first part of this Trends in 2025 series. You can find it in the web3 with a 16z feed. It covers trends from stablecoins and app stores to infrastructure and user experience. Be sure also to subscribe to our newsletter at a16z crypto.substack.com for more trend updates, builder guides, industry reports and other resources.

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Speaker E: We've all heard that social media is

Speaker C: taking away kids childhoods, giving them social anxiety and increasing rates of teen depression.

Speaker E: Social media has been labeled the culprit.

Speaker C: But what if it's not?

Speaker D: What has been really shocking to me

Speaker C: as I've stood here and kind of

Speaker D: watched this debate unfold and seen how things are translated to the broader public,

Speaker C: is that there's just this massive gap between what evidence has been generated to date and rigorous studies have found and

Speaker D: expert panels have concluded, which is essentially

Speaker C: that there's very tiny correlations between social media and methods.

Speaker E: That was developmental psychologist Candace Odgers, who joined us for a special interview to unearth the research that debunks social media as the cause of the mental health

Speaker C: decline for our teens.

Speaker E: What else is causing it, and what are the solutions for a path forward?

Speaker C: Find out in the full episode of TED Talks Daily.

Speaker E: Wherever you listen to podcasts.