a16z Partner Dialogue: How AI and encryption technology are changing the future of the internet

In this conversation, a16z Growth partner David George and a16z crypto partner Chris Dixon discuss their vision for the new internet, including topics such as decentralized AI infrastructure for encryption, AI as a native form of media, and more. They also discuss how the original business models of the internet are breaking down and how the new internet is introducing entirely new business models for creators.

How Technology Has Evolved

Chris Dixon believes that technological waves often appear in pairs or trios. Fifteen years ago, mobile internet, social networks, and cloud computing were the three major trends. Now, AI, encryption technology, and new hardware like robots, self-driving cars, and VR( are the three most interesting trends today. They also complement and develop together.

Encryption technology provides a completely new way of internet architecture. It has some unique features that can turn things that were previously impossible into reality. The essence of encryption goes far beyond Bitcoin or meme coins; it intersects with AI in many ways. One of the most fundamental ways of combining them is to use encryption architecture to build AI systems.

How Cryptocurrency and AI Interact

Chris Dixon mentioned several projects invested by a16z:

1. Jensen: Build a decentralized computing resource network to optimize the supply and demand of computing power.

2. Story Protocol: A new way to register intellectual property on the blockchain, allowing small creators to set their own terms.

3. WorldCoin: Identity verification through blockchain to address the challenges of AI potentially faking human identities and content.

4. Decentralized Physical Infrastructure Network ) DPIN (: such as Helium, a telecommunications network project owned by the community and built through crowdsourcing.

Chris emphasizes that a core advantage of encryption technology is composability). This allows creative content to be freely combined like LEGO blocks, encouraging people to use new tools while providing economic models.

Breaking the Economic Contract of the Internet

Chris pointed out that ChatGPT has shown signs that the internet economic contract may be broken. For the past 20 years, the internet has formed an implicit economic contract: search engines and social platforms obtain permission for content, and in return, creators can gain traffic. But now AI generates content directly, and users don’t even need to click on links, thus cutting off the revenue sources for creators and leading to the collapse of the original economic model of the internet.

Is AI frosting or sugar?

David George mentioned a metaphor by Marc Andreessen: Is AI "frosting" or "sugar"? If AI is just "frosting", then the existing industry giants will win, as they can simply add an AI chatbot to their existing products. However, if AI is "sugar", then you need to build the entire product from scratch, and the AI field is more likely to be dominated by emerging companies.

Here for the tools, staying for the network

Chris Dixon proposed a classic user growth strategy: "Initially attracted by the tool, ultimately retained by the network." Many users start using a product because of a specific tool, but the reason they stay is the network effect. AI can also adopt a similar strategy; for example, a tool for generating images with AI can serve as an entry point, but ultimately what should be formed is a complete AI creative community.

Imitation Technology and Native Technology

Chris pointed out that the development of new technologies usually goes through two stages: the imitation stage and the native stage. AI is currently still in the mimetic stage, and the AI applications we see mainly serve to replace human labor. However, the real AI revolution will occur in AI-native products, such as AI-generated game worlds, AI-generated interactive content, and so on.

AI as the Cornerstone of Creativity

Chris believes that AI will not replace human creation, but will give rise to entirely new forms of art, providing a new canvas for human creativity. This could be in the form of virtual worlds, games, or new types of movies.

Balancing Supply and Demand in AI

David and Chris discussed that the bottleneck in AI development may not lie in technology, but in the speed of human adaptation and the impact of policies and regulations. The real challenge is how to get users to accept AI and integrate it into their daily lives.

How AI is Changing Industries

They discussed the regulatory obstacles facing the application of AI in various industries, as well as the legitimacy issues of AI training data. Chris believes that the model for the widespread application of AI may first achieve breakthroughs in a specific area like autonomous driving ( and demonstrate that it performs better than humans, and then be promoted to other industries.

What is the ideal future of the internet?

Chris stated that we are at a crossroads. The original vision of the internet was a decentralized network, but now more and more profits are concentrated in the hands of a few tech giants. He emphasized the need to focus on the construction of blockchain and decentralized networks to ensure that the internet can continue to innovate and develop.