OpenAI is bitcoin

OpenAI sure looks bitcoin-ish.

The company’s breakthroughs so far — fetching eye-watering private-market valuations and kicking off a new-age gold rush — have upended the tech industry and threatened to scuttle entire categories of jobs. We’ve seen promised disruption like this before.

The artificial-intelligence startup, like bitcoin, has been a breakout success. It’s garnered public recognition and stoked contrasting visions of a second coming and impending doom. It also has something of a rival in Elon Musk, who has his own AI startup and is usually woofing for dogecoin.

But the comparisons aren’t all flattering.

OpenAI, like bitcoin, appears to be struggling to live up to its original pitch. For bitcoin, that involved becoming “electronic cash.” For OpenAI, the goal was to “advance digital intelligence in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return.”

OpenAI’s generative-AI products like ChatGPT have become cultural phenomena, but it’s unclear if they’re benefiting humanity as a whole. Now the company is working to move away from its nonprofit structure. Financial return, it turns out, may be a priority after all.

Plus, as the chatbot luster has worn off, people have started questioning whether the tech is even that revolutionary. That the future would begin with chatbot Q&As seems doubtful. The idea reads like a boomer manifestation with a bit of ’90s nostalgia sprinkled in rather than anything that would upend the status quo and necessitate universal basic income.

Much like with bitcoin’s “digital gold” narrative, the outsize attention that OpenAI has garnered extrapolates potential future gains from past performance. ChatGPT recently hit 300 million weekly active users, OpenAI cofounder Sam Altman said. The startup expects to generate $11.6 billion in revenue next year, a leap from the estimated $3.7 billion this year.

“Whether looking at monthly active users of ChatGPT or the revenue trajectory of the business, OpenAI is an outlier in tech history for commercial progress at an early stage,” Brendan Burke, AI analyst at PitchBook, told Sherwood News. “It stands out for the scale of its revenue as well as venture investment. Company peers include foundational model labs like Anthropic and xAI that are valued at a fraction.”

Now, as the pace of generative-AI development appears to be slowing, OpenAI is aiming to turn a profit by rolling out tiered products to convert its freeloading customers into paying ones. The $200/month ChatGPT Pro, for example, gives customers unlimited access to OpenAI’s latest model.

That pivot is akin to one of the biggest things that happened to bitcoin in the past year: spot bitcoin ETFs. Launched by the likes of asset managers like BlackRock, Fidelity, and Invesco, ETFs brought in fresh waves of retail dollars and furthered bitcoin’s role as a store of value and speculative investment rather than a viable currency.

If OpenAI’s adoption of generative AI tracks bitcoin’s evolution, there’s a chance it’ll end up being a place to park investor dollars, but beyond that the value prop may be less clear. Insert “c’mon, do something” memes here. 

Still, dollars are being parked. OpenAI’s last fundraising round drove valuations to $157 billion in October, nearly double its reported worth in February. Venture-capital investment in AI core software and foundation models jumped from $5.5 billion in 2022 to $19 billion in 2023, PitchBook’s Burke said.

It was “really outstanding investment growth at a time when deal activity overall was still on the downtrend,” Burke said. “We expected deal activity to moderate in 2024, but instead it kept growing to exceed $20 billion” through Q3 2024.

While bitcoin has had a few interesting developments over the years — the Lightning Network and ordinals, for example — those developments have had a mixed track record when it comes to adding new utility. 

“Blockchain is really a fundamental technology,” PitchBook crypto analyst Robert Le said. “We just haven’t seen it deliver a ChatGPT-type application yet.”

That’s another thing bitcoin and generative AI have in common: the underlying tech gets far more credit than the humans required to further its reach.

Read the other arguments for OpenAI's future here.

Crystal Kim is a reporter in New York. She has covered crypto, markets, and investing for Barron’s, Bloomberg, and Axios.