• Will AI take our jobs?
  • How Coinbase navigates a CBDC regime
  • Can AI root out hackers?

Dear Reader,

Welcome to our weekly mailbag edition of The Bleeding Edge. All week, you submitted your questions about the biggest trends in tech and biotech. Today, I’ll do my best to answer them.

If you have a question you’d like answered next week, be sure to submit it right here. I always enjoy hearing from you.

Will AI lead to mass unemployment?

Hi Jeff,

It seems like nobody is talking about the potential massive job losses that these new technologies may herald in. With fully self driving cars, what are Uber drivers supposed to do? With tethered drone deliveries, what are Door Dash drivers supposed to do?

With AI becoming so capable in so many areas, what are all the people who lose their jobs because of it supposed to do? The list seems to grow every day of technology being better than people at accomplishing tasks and with no need to be paid.

I’m curious to know your thoughts on how all these dispossessed workers are going to find work to support themselves in an ever-shrinking job market.


– Ross

Hi, Ross. Naturally, this is a common question. And in certain circles, this is actually being talked about a lot.

There tend to be two broad spectrums of thinking – those who believe that debt doesn’t matter, we can print as much money as we want, and universal basic income (UBI) should be a “right” are using the forthcoming “doom” of artificial intelligence (AI) as an argument to push the UBI agenda.

The other camp is typically one of abundance. This camp believes that artificial intelligence and robotics will usher in a much higher quality of life, less monotonous and strenuous work, better healthcare, longer life, and incredible opportunities.

There’s nuance in how things unfold, which I’ll get to in a moment. But I will say first that debts do matter. There are severe consequences to egregious spending, printing, and deficits, which I hope we’ve all learned in the last two years. And if the U.S. and the European Union continue down this path, it will become far more disastrous.

But as for jobs, this argument of millions of jobs disappearing and mass unemployment has been a theme for centuries. Every new technology impacts the workforce, and there are always fears of unemployment as a result.

As far back as the 19th century, English textile workers protested and destroyed textile machinery that was becoming common in the country. This is where we get the term “luddite,” as the group took the name of their leader, Ned Ludd.

But would any of us want to go back to a world in which our clothes are woven by hand? Of course not, it would be unthinkable. And the employment of textile machines created opportunity and growth, just as new manufacturing technology has always done.

The reality is that we already have large shortages in the labor force. Labor force participation rates are down compared to 2019, and disabilities have spiked since the spring of 2021 to record levels, which has had a dramatic impact on the available workforce.

A more recent example is Amazon. The company has been investing heavily in warehouse automation for years. Many of the company’s warehouses are nearly fully autonomous. And yet, at the same time, Amazon has been an incredible job creator.

The reality is that we already have large shortages in the labor force. Labor force participation rates are down compared to 2019, and disabilities have spiked since the spring of 2021 to record levels which has had a dramatic impact on the available workforce.

The trucking industry and retail services industries are two simple examples of where we continue to see problems filling jobs. This is where technology can be used to address those shortages.

And while in several years’ time, there will be less need for Uber drivers due to the use of fully autonomous robo-taxis, there will be new jobs created to service, maintain, and clean shared autonomous vehicle fleets.

Entire industries are now emerging as a result of current technological advancements. Bipedal, or humanoid robots, will be everywhere before the end of this decade. Those robots need to be designed, built, tested, and maintained.

We’re also at the early stages of what I have referred to as the Great Recalibration. The world’s manufacturing infrastructure is experiencing a massive shift towards decentralization and producing products close to their end consumer markets. We’re in the early stages of a boom in building advanced manufacturing plants in the U.S. and Europe.

Again, lots of jobs.

The nuance in this shift is that there will be job displacement as opposed to massive, permanent job losses. Said another way, some jobs will largely go away, but others will be created. The key point is that we’ll need to be willing to retrain, and learn new skills, as the workforce changes.

If I have one major concern, it’s about the speed at which this disruption takes place. A hundred years ago, these shifts happened over many years, if not decades. The disruption could be absorbed over an extended period of time.

In the case of AI, we should expect that things happen much more quickly. And that’s going to require us to have a flexible mindset and a willingness to learn new things and tasks so that we can grow with those changes.

I know that it can be uncomfortable to embrace change and have the willingness to learn new skills as we get older; but doing so always affects a better outcome. And with the abundance of outlets from which we can explore these new developments and take short courses online for these new technologies, it has never been easier to do exactly that.

We have so much to look forward to. It will be a bumpy transition, but what comes next will be truly remarkable.

Where does Coinbase fit into a CBDC system?

What role will Coinbase and other cryto exchanges play when the U.S. adopts a digital dollar? Will they be hurt by the development, or benefit?

– Mark B.

Hi, Mark. It’s a good question. As readers know, the federal government has taken an incredibly aggressive regulatory stance against even the most “buttoned up” blockchain companies like Coinbase.

And my hunch is that this is largely an attempt to “stall for time” while the federal government lays the groundwork for an eventual central bank digital currency (CBDC). If I had to summarize the strategy, I’d say there are three steps.

  1. Stifle or shut down the competition (digital assets)

  2. Build the architecture for a state-backed digital asset (CBDC or digital dollar)

  3. Bring the industry back, but make sure it operates on “your terms.”

The first step is well underway. Back in March, the White House released a statement condemning crypto and asking Congress to close regulatory gaps in crypto.

Senator Elizabeth Warren became vocal once more, this time pointing the finger at Binance for needing to provide more transparency around its operations. The reason was baked into an assumption of illegal business practices without any proof. But it appears to have resonated. The CFTC sued Binance in March for alleged crypto trading derivatives violations.

The Securities and Exchange Commission (SEC) also began opening up lawsuits. They went after half a dozen promoters in the same week. They then went after Terra Luna founder Do Kwon, arresting him in a foreign jurisdiction.

And as we’ve shared before, Coinbase received a “Wells notice” from the SEC. This is a notice companies receive before a regulatory action is taken. The SEC was messaging Coinbase – one of the most buttoned up players in the industry – that it wasn’t safe either.

That’s step one. Now, onto step two…

We know the U.S. Federal Reserve is looking to roll out its digital payment network called FedNow in July.

FedNow is a non-blockchain solution for near-instant settlement and peer-to-peer transactions. The technology is in direct competition with open source, decentralized, and permissionless blockchain technology like Bitcoin, Ethereum, and others.

One of the reasons I believe the government will eventually “back off” from its aggressive stance is because of the actions the largest corporations are undertaking. They are not listening to the regulatory condemnations.

Instead, they look to be rolling out their own proprietary solutions to blockchain technology.

This includes companies like Microsoft, which released its in-browser crypto wallet. The company even released some code that looks to be in competition to decentralized storage solution Filecoin.

Then as Ryan Watts, President of Polygon Labs, and former head of gaming at YouTube, points out… there is a wave of established corporations building on a project called Polygon.

The Nasdaq exchange looks like it wants to fill the custodian role by launching its custody service in the near future. This hints at more common entities beginning to offer trading services for bitcoin, ether, and many others.

Subscribers may even recall that JP Morgan was conducting debt swaps with a digital asset only a few months ago.

Some of the largest corporations in the United States and the world look to be preparing for a new financial world order, the introduction of a digital dollar.

And when the infrastructure is in place for this digital currency, I fully expect regulators to move on to step three.

They will let the industry come back, so long as it operates under the government’s terms.

And if events unfold like I predict, I believe Coinbase – and other blockchain companies – will be welcomed back into the fold… on one condition. These companies will be expected to “play ball” with the new monetary regime and support the state-backed digital currency.

Once that new framework for digital assets has been put in place from a regulatory perspective, we can expect to see the bull market return in digital assets and the blockchain industry.

Can AI fight “the battle that never ends”?

Thank you for all your very interesting and thoughtful replies to questions and your explanations of what is going on in two of my favorite areas, fusion and AI. The progress in both areas is phenomenal. I have a question regarding AI.

As we all know, the security of computer networks and systems is a battle that never goes away. Hackers are continuing to find new ways of hacking systems. It seems like AI might be a game changer when AI imbedded into security software would be able to think for itself and recognize intrusions into systems.

AI might be able to recognize out-of-the-ordinary access to systems and send up a red flag and/or bump them out of the system. This might tip the scales against the hackers. Would you like to lend your thoughts on how AI might augment the security software of our networks and systems?

– Steve L.

Hi Steve, this is such an interesting area of discussion which can be very complex. And that’s because there is only one foolproof, perfect solution to cybersecurity which is completely impractical.

The only way for an individual, company, or government to ensure that it’s protected from hackers is to not be connected to anything. No smartphone, no internet connection, no Wi-Fi or Bluetooth connection, and to operate any isolated computing system inside of a large Faraday cage.

Like I said, completely impractical.

The reality is that networks need to “breathe” so that they are useful. When implementing cybersecurity technology, the process can’t be so restrictive and time consuming that it reduces productivity of any individual or organization. And that means that there will always be threat vectors for hackers to gain access.

Making matters more complex is that no single cybersecurity software can do everything. There are firewall vendors, data encryption providers, identity and authentication management, end device protection software, privileged access management solutions, anti-virus protection, and so many other solutions required to reduce the surface of potential attacks.

To your point, even before machine learning technology became widely available, cybersecurity vendors were automating the process of identifying unusual behavior on networks and sending a red flag to network administrators. That kind of technology has been around for the last two decades.

Things got a lot more sophisticated as machine learning technology advanced and this process of network monitoring and enabling the ability to “fight back” in real-time became possible. These kinds of systems are widely in use today.

And what’s now exciting is that in the last 12 months, more advanced artificial intelligence in the form of neural networks is creating interesting possibilities with regards to increasing network security.

The nuance however is that both the good guys and bad guys have access to this kind of technology. We’re getting to the point in which good AIs are battling bad AIs. There is a great opportunity in the cybersecurity space in the next few years to employ and upgrade network and device security.

Cybersecurity is always a system and a process. And it requires constant improvements to keep up with the new tactics and technology that hackers use to achieve their goals.

And one final point about fusion since you mentioned it: What very few are discussing is that AI is having, and will have, a critical role in the advancement of nuclear fusion.

AI is being used for advanced materials development, which can be used in nuclear fusion reactors. And machine learning, a form of AI, will be critical in terms of maintaining the magnetic field that contains the fusion plasma inside of a fusion reactor.

This is a process that must be automated given the complexity and real-time nature needed to control a magnetic field. Machine learning is an accelerant to making that a reality. Fusion isn’t just a hardware problem to solve, the software is equally important.

We’re in for an exciting year with regards to fusion and an even better one in 2024. The world is going to be surprised to understand how quickly things are moving and how close we are to 100% clean, limitless baseload power generation.


Jeff Brown
Editor, The Bleeding Edge