The Rise and Fall of Cryptocurrency ICOs: A Cautionary Tale for AI

A few years ago, the world of cryptocurrencies like Bitcoin went into a speculative frenzy. From 2017-2018, companies started raising massive amounts of funding through initial coin offerings (ICOs). The idea was simple - create a new digital token and sell it to the public, often with just a broad vision and little actual product.

Investors piled in, dazzled by the prospect of getting in early on the "next Bitcoin." Hype was everywhere as these ICO startups raked in billions, sometimes with just a slick marketing website and white paper making big promises. For a while, the crypto market felt unstoppable.

However, it quickly became apparent that most of these ICO projects were doomed to fail. A couple years later, study after study showed that a staggering percentage had gone belly-up without ever delivering a working product. What went wrong?

For one, there was basically zero regulation around ICOs. It was the Wild West, letting dubious projects make false claims and misleading statements without consequences. With no rules of the road, bad actors could take advantage.

Relatedly, a speculative mania took over as investors chased ICO schemes with little due diligence. FOMO caused people to throw money at these tokens fueled by little more than hype.

But perhaps the biggest issue was that building blockchain-based decentralized technologies turned out to be way harder than expected. These startups underestimated the immense technical complexities.

Fast forward to today, and some are drawing parallels to the whirlwind happening in the AI field. Like cryptocurrencies before it, AI has become a red-hot area with startups raising enormous funding based on making big promises around large language models and other generative AI capabilities.

There are growing concerns that some players in the AI market may simply be putting a fresh coat of marketing paint on existing foundational models like GPT without true unique innovation under the hood. Startups are being valued at lofty sums based more on hype than substantive technological breakthroughs.

For the AI industry to avoid the pitfalls of the ICO mania, developers and entrepreneurs must learn key lessons from that earlier speculative bubble:

• Don't overpromise what AI can realistically deliver today.
• Be upfront and transparent about your AI's true technical capabilities.
• Focus on building AI systems focused on achievable, near-term goals rather than far future moonshots.
• Push for standards and accountability to weed out bad actors taking advantage of the hype.

Just like cryptocurrencies, generative AI has the potential to reshape major industries and facets of modern life. But that earth-shattering impact is only possible if the AI revolution maintains credibility by under-promising and over-delivering on real-world value over the hype cycle.