Key takeout
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Stocks can withstand AI disruptions when they quickly adapt to changes in technical and economic demands.
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New businesses that have spurred AI such as robotics, biotechnology, and space are expected to drive growth, and stocks that reflect such advances are likely to overcome the upheaval of innovation.
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A period of disruption should be expected as AI forms the workforce and market. So, the next few years are adapting to new technologies.
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The future of Bitcoin is based not only on proving itself as a true reservoir of value, but also on moving to a medium of exchange. AI can facilitate this primarily by affecting scalability and transactional processes.
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As a decentralized system, Bitcoin is not affected by internal politics. To stay relevant, just keep new technologies up to date.
No one has the means to predict what will happen in the next 50 years, especially in financial markets that are influenced by many external factors.
However, analyzing the current state of AI and its impact on fintech sectors such as Bitcoin and stocks will help you understand what the best investment options are among these financial tools.
The purpose of this article is to make more informed decisions and understand whether Bitcoin or stocks are a better choice in the future.
Stock or Bitcoin: Survive the AI Revolution?
AI accelerates innovation and efficiency in several industries, sectors and aspects of our lives, ensuring improvements in technologies like Bitcoin in terms of efficiency and, preferably, scaling. But what about stocks? Is their investment concept a thing of the past? Let’s find a little more.
What happens with stocks?
The world’s first stock market took shape in 1602 with the establishment of the Dutch East India Company in Amsterdam. What began as a trading company’s stock market quickly became a model for raising capital and investing. By the late 17th century, London had developed its own trade hub, but the New York exchange did not appear until 1792, spreading the model to the Atlantic Ocean.
Stocks represent ownership of a company, and the stock market is where investors buy and sell them. Inventory values fluctuate based on company performance and market conditions, including its ability to adapt to technological changes such as AI.
Inventories from companies that have adopted technological advances over the centuries have overcome the economic cycle, war and chaos that technology has brought about. Without the benefits of hindsight, the same is true for companies that bet on AI.
Specifically, companies that apply AI through automation, data analytics and new business models can be successful.
Historically, market indexes like the S&P 500 have generated annual revenues of around 7% to 10% over decades adjusted to inflation. This index tracks the performance of the 500 largest publicly available US companies and is widely used as a benchmark across the stock market.
Compared to the S&P 500, Bitcoin (BTC) performance is extremely high, as shown in the table below.
What happens with Bitcoin?
Bitcoin is a relatively new invention, created in 2009 by Nakamoto Komuto At.
The project was introduced in a white paper detailing peer-to-peer electronic cache systems using blockchain technology.
The Bitcoin case goes beyond the investment tool or store of value concepts. The proposal includes a true currency revolution that challenges gold and other financial tools.
Its distributed design resists the inflation that is common in central control and fiat systems. With a fixed supply that closes 21 million coins, the rarity of Bitcoin appeals to those seeking protection against financial debilitating.
Furthermore, blockchain transparency and security are well matched with the need for AI for verifiable data.
Over the years, Bitcoin has established itself as both a valuable store and an alternative currency, pursuing its original goal of becoming a widely used medium of exchange.
How AI affects stocks and the stock market
As analyst and investor Jordi Visser predicted, the next 50 years could challenge the survival of the stock market as an institution by “speeding the innovation cycle and making public companies an inefficient investment vehicle.”
Stocks have been around for a long time, but AI-driven disruptions have little room for complacentness, and companies that can’t adjust for risk have fallen behind. This is especially true for high-tech giants like Fanstock (Facebook, Amazon, Apple, Netflix, Google). They are one of the biggest investors in AI, but these companies still need to respond to rapid development and adopt effectively.
AI also affects the stock market, from rapid analysis of huge amounts of data to predicting market movements and automating decision-making processes, to faster and more efficient operations. AI has a major impact on the way investors approach trading and investment strategies.
Overall, AI could boost corporate innovation, but it also expands the gap between adaptable and stagnant companies.
How AI affects Bitcoin
Visser views Bitcoin as a better future investment, compares it with gold, which has endured for thousands of years.
Beyond its role as a valuable store, Bitcoin is suitable for the future of finance. The combination of AI and blockchain could disrupt the traditional financial system and draw more capital and participants into the digital economy.
AI is expected to improve Bitcoin’s security and trading strategy, improve crypto trading through automated tools, enhance data analytics, and improve forecasting market patterns. All of these changes can also lead to increased system efficiency.
Bitcoin mining benefits from AI in terms of efficiency and better resource allocation by predicting the optimal time for mining activities to reduce costs and maximize output. System maintenance is improved as AI detects existing or future failures, which improves overall reliability.
However, Bitcoin faces regulatory risks, scalability issues and volatility. This could block risk aversion investors who generally prefer more predictable and stable investment tools, such as stocks.
The convergence of AI and blockchain will trigger a new era of Bitcoin, creating a more intuitive and secure ecosystem, allowing it to nurture wider adoption and gain an edge over stagnant inventory.
Which will survive in the next 50 years?
It is virtually impossible to see 50 years from now. Both Bitcoin and stocks have their own strengths and weaknesses, and their future ultimately depends on economic, technological and social changes.
If you adapt to an AI-driven economy, stocks will likely endure. Investors can reduce the risk of individual companies’ failure by putting money into diverse portfolios, such as index funds, which seem safer. Stocks in robotics, biotechnology, space and AI may perform better than technology-driven assets.
The advent of quantum computing is often discussed in relation to Bitcoin’s security model, but most experts agree that risks are still theoretical and far away. When combined with AI, the impact can be positive or negative depending on the advances in technology and the way the Bitcoin network adapts. Mining centralization can be a concern only a small number of entities to gain early access to advanced quantum AI systems.
On the other hand, this combination can improve transaction processing, wallet security, or blockchain analytics, and advance Bitcoin security and network optimization by improving Bitcoin efficiency and user experience. As long as the Bitcoin community stays ahead of the curve with quantum resistance upgrades, the net impact could be positive.
As diversified finances gain investment traction, Bitcoin is more competitive than gold. In doing so, it has emerged as a great storehouse of value, encouraging traditional markets to shift funds to digital finance.
This article does not include investment advice or recommendations. All investment and trading movements include risk and readers must do their own research when making decisions.
