Week 52 - GPT-4, Crypto Winter & Renewable Energy Boom
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Week 52 - GPT-4, Crypto Winter & Renewable Energy Boom
Happy New Year!
I hope your mind is settled and prepared to tackle the challenges and opportunities of 2023.
The future is notoriously hard to predict. But here are three statements I am fairly sure will hold true in 2023:
GPT-4 is coming soon
Crypto winter is here to stay
Renewable energy is booming
Let’s kick out the new year with an in-depth look at each of the three statements in turn.
GPT-4 is coming soon
Looking back at 2022, ChatGPT & GPT-3
In 2023, AI is no longer hidden away behind office building walls, IT systems, or user interfaces in apps. AI has moved its way into the hearts and minds of entire populations, including those people without an interest in tech.
Last year, OpenAI’s text-to-image model DALL-E 2 took the internet by storm. Followed by the equally impressive Midjourney and the open-source model Stable Diffusion. Then LensaAI selfies flooded social media feeds. But it was OpenAI’s ChatGPT that deeply penetrated AI into the collective awareness. Now, anyone with an internet connection can easily access and leverage the raw computer intelligence of a highly advanced chatbot without costs.
ChatGPT is a fine-tuned version of GPT-3, which is a general-purpose language model released by OpenAI in 2020. GPT-3 didn’t make a commercial breakthrough in the same way ChatGPT did as it was only released in private beta through a waiting list (I never gained access to it). And then it was exclusively licensed to Microsoft. GPT-3 is trained on much more data and has many more parameters inside of it compared to ChatGPT. The entirety of articles on Wikipedia was included in GPT-3’s training set, and it only accounted for about 0,5%.
Powerful and impressive as GPT-3 is, it is also racist and terrible. It has a tendency to indulge in bias and discrimination towards race, gender, and religion, spew profanities, make racist jokes, condone terrorism, and accuse people of being rapists. Compared to GPT-3, ChatGPT is impressively good at stirring around controversial topics, refuses to respond to inappropriate prompts, and admits when it doesn’t know the answer to a tricky question.
AGI & GPT-4
ChatGPT is still far from AGI (Artificial General Intelligence). The holy grail for AI researchers. OpenAI’s CEO, Sam Altman, says ChatGPT doesn’t even come close.
In short, AGI marks a point when AI achieves a level of autonomy and can outperform humans across different domains. Imagine a single AI model that could beat you in chess, write emails for you at work, and drive your car home. We have domain-specific AIs that could individually do well in each of the tasks, but not one super-intelligence which could manage all of them at will. AGI is still far away. Or is it?
In the summer of 2022, public debates on AGI gained steam after Washington Post reported that Google Engineer Blake Lemoine believed Google’s chatbot LaMDA had come alive. Google responded that there was no evidence to Lemoine’s claims and fired him soon after. But judge for yourself, here is his conversations with it.
Speaking of AGI, GPT-4 is rumored to be released in the spring of 2023. Nothing substantial has been revealed about it yet, but expectations are sky-high. The few people who have tried it, are not allowed to talk about it due to NDAs, but allegedly it should be just as exciting a leap as GPT-3.
The (human) AI writer, Gary Marcus, is certain that minds will be blown when GPT-4 is finally released, and it will be bigger and better than any of the impressive things we have seen from OpenAI so far. However, Marcus predicts that GPT-4 will still suffer from some of the same mistakes as GPT-3 because it's essentially built on the same architecture. Marcus predicts for example, that GPT-4 will still make “shake-your-head stupid errors”, mix truth with lies, hallucinate, lack trustworthiness, and be unreliable.
We can probably expect GPT-4 to be the world’s best “bull-shitter”. Capable of imitating human thought to a near-perfect extent. Yet, it still lacks common sense. “The dark matter of intelligence” as described by computer scientist Yejin Choi:
A way of describing it is that common sense is the dark matter of intelligence. Normal matter is what we see, what we can interact with. We thought for a long time that that’s what was there in the physical world — and just that. It turns out that’s only 5 percent of the universe (..) It’s the unspoken, implicit knowledge that you and I have. It’s so obvious that we often don’t talk about it. For example, how many eyes does a horse have? Two. We don’t talk about it, but everyone knows it.
“Common sense” is developed in humans by bodily experiences, e.g. we don’t put our hands on a hot stove because we know it will hurt. AIs are “by nature” unable to put two and two together like this, simply because they can’t experience the world as we can. Therefore, we can expect GPT-4 to be impressive, but not to be autonomous or sentient, not to be Frankenstein’s monster or a rocket ship, but a great source of entertainment and wonder.
Crypto winter is here to stay
Winter is upon us, and in crypto land, winters can last for a long time. The recent collapse of FTX was a setback for the entire industry which could prolong the winter throughout 2023.
Coinbase Institutional predicts the following tendencies in 2023 Crypto Market Outlook:
A flight to quality among institutional investors
Creative destruction that will eventually lead to new opportunities
Foundational reforms that usher in the next cycle
Institutional investors are scaling back on risky investments in the face of a recession that could last until Q1 of 2024. In crypto, this means that institutional money will flow towards established names like Bitcoin and Ethereum. Still, Coinbase assigns a low probability to the chance that crypto will decouple from other traditional risk assets at least in the first few months of 2023.
In Coinbase’s view, the movement towards self-custody and decentralized finance (DeFi) will likely accelerate in 2023. This is due to a loss of confidence in centralized exchanges after scandals such as those surrounding FTX and Celsius which both collapsed after gross mismanagement of customer funds.
While we can clearly expect more oversight for centralized crypto exchanges, the regulatory faith of DeFi is uncertain. Coinbase CEO, Brian Armstrong, recently argued that self-custodial wallets and DeFi protocols should be treated by the law as software companies, not as financial services.
In Crypto Theses 2023, CEO of Messari, Ryan Selkis, sounds optimistic all-round about the industry’s future and emphasizes how bear markets are the prime time for building. But one area he is concerned about is regulation, especially in the DeFi space:
As I said up top, I’m not sure that we should take for granted that DeFi will survive the global regulatory gauntlet next year. DeFi is seen as the highest-risk subsector of crypto by members of Congress, and it will be challenging to effectively communicate a different story. If the value of crypto writ large is a complicated story to tell, just add DAOs, and it ratchets up the complexity to 11 for people who do not live and breathe the details of our industry.
DeFi is complex to understand, inconvenient to use, and I believe only a small percentage of crypto holders can confidently audit a smart contract for security holes. I fear that the complexity of DeFi will only increase as the builders keep building, and common ground for policymakers, lawyers, software developers, and crypto stakeholders will be even harder to find.
My own journey in crypto has been circular. I gambled in 2019/2020, won in 2021, lost in 2022, and in 2023 I am back to square one where I started as a skeptical observer.
Outside of Bitcoin and a few inspiring projects, the crypto industry as a whole looks like a hot air balloon dominated by scams and hacks. And there is plenty of evidence to support it. Just some recently surfaced evidence:
A new research paper found that 70% of unregulated exchange transactions are wash trading - meaning fake transactions meant to mislead investors and pump up the value of hollow crypto tokens.
One of DeFi’s biggest beneficiaries is probably North Korea’s nuclear and missile program.
Watch how Logan Paul distastefully deceived his fans to invest in a scam project, covered here by independent investigator and YouTuber Coffezilla.
Why would anyone buy a Pudgy Penguin for $1 Million?
At the same time, I don’t want to downplay the wide adoption of crypto in developing countries. Certainly, the Bitcoin technology and philosophy can be used for good. Yet, the crypto industry as a whole has utterly failed to deliver on its promises. Hopefully, new innovations will strengthen and emerge in 2023 that can lead the way for new opportunities as the old industry breaks down and decomposes.
Renewable energy is booming
The small island state Tuvalu announced during the latest COP27 climate summit in November that they were moving to the metaverse since rapid temperature increases, rising sea levels and droughts would soon prevent the nation from existing in its physical form.
As Tuvalu's Foreign Minister Simon Kofe says:
Without a global conscience and a global commitment to our shared well-being, we may soon find the rest of the world joining us online as their land disappears.”
The climate is changing, changing fast, and there is no way around it.
Two types of technologies are needed to future-proof human life: technologies that help us to adapt to climate change and technologies that help us to mitigate climate change.
Adaption technologies could be flood safeguards or more resilient crops which would render Tuvalu a future outside of the metaverse.
Mitigation technologies are any technology that helps the world in getting closer to a net-zero emission -when 0% more greenhouse gas is added to the earth’s atmosphere every year. Examples of mitigation technologies could be anything from energy-efficient lightbulbs to carbon capture and storage technologies or geoengineering. But above all else, the global energy system needs to shift away from fossil fuel-based energy sources and move to renewables.
In this regard, the latest report from International Energy Agency (IEA) brings some fantastic news. Below is a Twitter-thread summary..
