Disclaimer: This post contains thoughts on crypto, a volatile and risky asset class. It is not investment advice, and you should do your own research. All information is for educational purposes only. Please don’t take risks with money you’re not willing to lose.

Artificial intelligence is becoming increasingly pertinent to society. The technology, albeit controversial, could entirely reimagine the landscape of work by automating tasks that were previously limited by humanity. Speed, scale, and sophistication are trained at levels far more efficient than any human could ever learn. These advances are profound, but every great technological development has its initial drawbacks (e.g. the Industrial Revolution). For AI, these are namely data biases and social manipulation. The former revolves around ethical concerns as Big Tech utilizes their data stockpiles for sourcing, while the ladder is a consequence of their respective design choices. As the industry grows and inevitably becomes engrained in our daily being, it’s important that we find ways to effectively combat these issues without stifling innovation.

Decentralizing machine intelligence through blockchains presents a framework that makes this possible.

What is Bittensor?

Bittensor, or TAO (their native token), is a decentralized peer-to-peer intelligence protocol that lies at the intersection of AI and crypto. The Bittensor Network repackages the fundamental mechanics of Bitcoin to create a market where machine intelligence is measured by other intelligence systems across the internet. In this model:

1. Peers rank each other by training neural networks to understand the value of one another

2. Assessments are recorded on a digital ledger

3. Higher ranked peers receive greater rewards and have additional weight / influence in the network

When performing optimally, this market aims to incentivize intelligence that applies to a wide range of objectives, monetizes legacy systems, and fosters diversity in the field.

What is TAO?

TAO is the native token that monetizes the Bittensor Network. It has several key functions:

1. Mining - Participants (miners) who contribute compute power to perform ML tasks are financially incentivized with TAO rewards

2. Staking - Miners must stake TAO tokens as collateral to be personally incentivized and act in the best interest of the network

3. Governance - TAO holders are empowered to propose changes, vote on protocol upgrades, and participate in other decision-making processes

4. Fees - Asset transfers, smart contract executions, and other network interactions require fees in order to compensate miners

These token-based incentives ensure that stakeholders are aligned in supporting a positively decentralized machine learning marketplace.

The Role of Bitcoin

Education on the technical fundamentals of Bitcoin is key to understanding why the Bittensor Network matters. As outlined in my first writing, “The Foundation”, Bitcoin sits firmly atop the crypto hierarchy, effectively informing iterations of new protocols. Bittensor is no different.

Why is Bitcoin so revolutionary? Not only did it offer the first truly decentralized currency, but it birthed an entirely permissionless digital commodity market in tandem. Moreover, the developer (Satoshi Nakamoto) finally found an answer to the long-standing ‘Byzantine General’s Problem’ - a game theory dilemma that examines how decentralized parties arrive at consensus without a trusted central authority. The solution, Proof-of-Work, secures the network by incentivizing miners to accurately and truthfully replicate the state of Bitcoin’s account balances (as opposed to diverging and creating false histories). This equilibrium is achieved by distributing network rewards based on participant compute power, effectively creating a market around one of the internet’s most valuable commodities. This framework situates Bitcoin not as a computer, but rather the code that aligns peers to collectively validate and agree upon who has the most computing power (i.e. greatest rewards).

Like Bitcoin, Bittensor is secured by miners who exist globally and anonymously. These participants are rewarded in TAO, the network’s transferrable and censorship resistant native token. Aligned with Bitcoin’s game theoretic equilibrium, Bittensor encourages nodes to aggressively find ways of reducing the cost to mine TAO. While both protocols leverage this same killer app, Bittensor enhances the product by incentivizing intelligence production over compute power.

Yuma Consensus

Unlike the majority of modern blockchain protocols, Bittensor uniquely separates its core functions (primarily transferring funds) from the running of its validation systems. This provides two advantages:

1. Validation systems can be written in any programming language

2. Validation tools are stored entirely off-chain

The former supports flexibility for developers, while the ladder allows outputs to be data heavy and compute intensive - a necessary standard for scaling validation tasks that involve machine learning.

Yuma Consensus (YC) is the core technological innovation that makes this possible. Acting as the network’s central processing unit, YC orchestrates the agreements between validators in Bittensor’s individual subnets. As a result, subnets may have varying consensus mechanisms based on their desired incentives.

In these ways, Yuma Consensus fundamentally defines Bittensor as mutable and agnostic to uncertainty. Given the nature of a probabilistic truth like intelligence, these qualities are key to best leveraging the network’s value.

Future Outlook

While decentralized artificial intelligence is a relatively new concept, the Bittensor Network offers an architecture that feels meaningful and worthwhile. AI-native projects will do well this cycle based on narrative alone, but TAO genuinely explores a future where a P2P marketplace exists around machine learning models. Free from the limitations of immutable consensus and data availability, Bittensor exhibits the efficiency and flexibility needed to properly scale a network of its type. With an active ecosystem, serious venture funding, and a core technological innovation (YC), TAO positions itself as one of the strongest AI tokens on the market.

Additional Reading