SWE Automation Is Coming: Consider Selling Your Crypto
[legal status: not financial advice™]
Most crypto is held by individuals[1]
Individual crypto holders are disproportionately tech savvy, often programmers
AI is starting to eat the software engineers market
Already entry level jobs, which doesn’t matter for crypto markets that much.[2]
But judging by progress at other tasks AI climb the seniority ladder to where most crypto holders are within the next few years. SWE Bench Verified went from single digit %s to 64% in a year and a bit, and the METR evals are not looking hopeful for humanity’s lead. Tech giants are doing increasing amounts of their work with AI.[3]
Many hodlers who lose their job income will sell crypto to maintain lifestyle
Many hodlers have become accustomed to a non-frugal life on the backs of their well paying SWE jobs. If those go away, forced sell pressure is likely to collapse the market once their fiat runs out. If you need $50k to not lose your house, you’re often going to sell crypto even if the market is down and it’s a bad time. If lots of people do this, the market has a bad time. Could well be a few months or even a few years out, but my guess is it happens.
This hasn’t happened yet, we’re still around an all time high[4]
These dynamics might not kick in for another year or three, and the gap between “can automate high level software devs” and “can automate building the next generation of AI, which iterates a few times then kills everyone” might be small. But probably worth a little consideration.
Counterpoint: National Bitcoin Reserve?
Could well happen, might be worth keeping a bit for upside and diversification. Generally advise not selling 100%, for expected regret minimization.
Money where my mouth is
I sold almost all my remaining crypto recently. Might be worth keeping a small amount for utility and exposure to any crazy upswings, especially in coins that might be useful in the AI era (e.g. cheap fast micropayments via SOL), but I think it’s time to mostly cash out our winnings overall.
best of skill to y’all as we head into the singularity. consider trying to avoid dying with a unnecessarily large pile of unspent money which could have shifted the needle.
I’m a SWE, use AI everyday to do my job, and I think the idea that AI is the cause of reduced engineer hiring is basically false.
There is probably some marginal effect, but I instead think what we’re seeing today is because:
interest rates are high relative to the boom years of 2012-2022
this pushes the risk free rate up
this means VCs can be more conservative
thus they demand portfolio companies spend money more efficiently
an easy way to be more efficient is to employ higher productivity SWEs
this cuts out the bottom of the market because it falls below a productivity bar
If interest rates were still 0%, companies could afford to hire lower productivity engineers and things would be more similar to how they were in the past. Also, on this argument, if AI makes engineers more productive, we’d also expect AI to be putting more people over the productivity bar, and thus mitigating the higher risk free rate effects. Thus, it seems, if anything, AI is having less of a real impact than it seems like it is.
I don’t know if SWE automation is coming. Programming automation is already here. Whether that puts engineers out of work remains to be seen (so far, no).
One counterpoint is that AI agents can easily hold crypto. They cannot hold stocks or even USD without legal recognition. Changes to the legal system might be very slow. Agents can already transact onchain.
Here’s a fun related hypothetical. Let’s say you’re a mid-career software engineer making $250k TC right now. In a world with no AI progress you plausibly have $5m+ career earnings still coming. In a world with AGI, maybe <$1m. Would you take a deal where you sell all your future earnings for, say, $2.5m right now?
(me: no, but I might consider selling a portion of future earnings in such a deal as a hedge)
Is there any way to make this kind of trade? Arguably a mortgage is kind of like this, but you have to pay that back unless the government steps in when everyone loses their jobs...
In principle, distressed sales shouldn’t affect the long term price since they have nothing to do with fundamentals—so it’s really just a discount for non-distressed buyers. However crypto is weird and more like a Keynesian beauty contest than most things, so who knows.
In the world where AI does put most SWEs out of work or severely curtails their future earnings, how likely is it that the economy stays in a context where USD or other fiat currencies stay valuable, and for how long? At some level we don’t normally need to think about, USD has value because the US government demands citizens use that currency to pay taxes, and it has an army and can ruin your life if you refuse.
I’ve mentioned it before and am glad to see people exploring the possibilities, but I really get confused whenever I try to think about (absolute or relative) asset prices along the path to AGI/ASI.
I mean, at some point AI will simply be able to hack all crypto and then there is that. But that’s probably not going to happen very soon and when it does happen it will probably be in 25% least important things going on.
That’s all conditional on P = NP, isn’t it? Also, which part do you consider weaker: digital signatures or hash functions?
Not necessarily. There may be a fast solution for some specific cases, related to the vulnerabilities in the protocol. And then there is the question of brute force computational power, due to having a dyson swarm around the Sun.