Just 2% of companies raising money off the back of artificial intelligence hype will survive, the chief executive of trading platform Bitpanda has predicted.
Amid the excitement surrounding AI and the influx of investment into the sector, Eric Demuth told Decrypt that there is "a lot of good AI stuff in the making," but that the current cycle resembles previous goldrushes.
"It's the same with every hype, right?" he said in an interview with Decrypt, which took place during the Sifted Summit 2023 in London.
"You saw this with Blockchain. We saw this with NFTs. We saw this with web3 – everything was web3 and then nothing was web3."
As with previous hype cycles, he said, the end of the boom will bring a clearout of the sector.
"Two percent will survive, or maybe less, and the rest will be washed out," he added.
Despite the rather bearish prediction, Bitpanda, of which Demuth is also a co-founder, is also working on its own AI projects, having launched a $10 million division dedicated to the technology in May.
The unit is working on developing AI-powered products, including customized investing features and a personalized wealth manager for its investing platform.
"We have done some AI stuff already for quite some time with our internal processes. So for internal operations, fraud prevention, they're very good tools and some things we built ourselves," Demuth told Decrypt on Wednesday. "And now we felt ready [to] tap into the first proper AI things for retail customers."
He added that when tech hype cycles tail off, this gives serious players time to build, suggesting this has happened in crypto.
"All the bandwagon people are jumping down the next train and letting the grown-ups build stuff," he said. "The crypto bros are now the AI bros."
Crypto not forgotten amid AI hype
That makes now the perfect time for banks and other legacy financial firms to catch up to financial innovation, he said, with the current lull in the crypto market offering downtime to "actually integrate it and build it."
"You don't want to build while there's demand, then that's already too late," he said. "But now it's actually a very good time."
He added that bigger banks have also been held back by lack of regulation until recently, with the introduction of the EU's landmark crypto bill and clarity in other jurisdictions.
Earlier this year, Bitpanda announced it had partnered with Coinbase to offer institutions a back-end solution that helps them offer crypto services to their customers.
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Source: Decrypt.co
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