Matthew Graham - Tokenized Identity and the Future of AI Companions - TOKEN2049 Singapore 2025

Hi everyone, how are you? I was just uh thinking about the difference between doing a um difference between being on a panel and and having slides is um for especially for an introvert like me. On a panel, you can just pretend you're talking to three or four people. But now I got to I got to really realize that I'm talking to a full room. But it is good to have a full room.

Uh today I wanted to unpack uh the rise of digital companions. So um look, we're very early days as we all know for AI. In internet United States terms, it would be maybe uh maybe Amazon's already been founded, but we're still very much pre Google or in crypto terms that might be uh Bitcoin, but definitely were not Ethereum days, right? So it's obviously very early days which means high uncertainty and there are a number of different ways that many things related to AI obviously could play out and that certainly includes the the way that we interact with AIS which is what I wanted to talk about today. But certainly my claim is one vision of how things could play out is that once personality becomes ownable, a monetizable digital asset and that crypto can play a major part in in kind of realizing that.

Um, first though, let's talk let's talk about AI companions. Let's talk about the way that we interact with LLM. And actually this is something that fascinated me as a kid long before this industry exploded in just the last few years. And the reason it fascinated me as a kid is because I remember reading about an experiment. I was just like, you know, 8 n years old and as precocious kids do, reading about all kinds of stuff.

And I remember reading about an experiment at MIT. uh I believe it was from 1964 to 1967 where a uh a linguist was studying the way we relate to computers and he set up basically the world's first chatbot. Three years in, he suddenly realized that some of his assistants were interacting with the chatbot um on their own free time in a way where as if they were almost a very close friend, they were confiding and they were confiding secrets, even asking for advice, things like that. He actually found it so kind of alarming that he basically shut down the experiment. Uh it was called Eliza actually the Eliza chatbot which is why a lot of times AI companions you see that they're called uh Eliza is kind of a a throwback to that but the point is that there's something that is fundamentally different about the way that we interact with LLMs versus other types of electronic devices.

So, um I'm sure all of us use Google search or maybe a few of us use Bing, etc., etc., but has anyone here ever when they typed in Google something in Google search, has anyone ever typed in thank you afterwards or please before, has anyone anyone in the room, anyone? No one, right? I I certainly have not.

But has anyone ever been in check GPT and found themselves being polite or saying thank you or please or hey I have a quick question for you or if you don't mind. I I know I have sometimes anthropomorphized checks you it just kind of happens right so there's something really unique that is happening when we when we interact with LLMs um which is which is kind of what I I wanted to unpack obviously today right um that these are these are not just assistant these are not just tools that we're calling as functions in the same way that that search engines are we are we inevitably start relating to them at least a little bit like a person uh which is pretty weird obviously right it's kind of mind-blowing when you when you think about it and this happens on a wide spectrum so the little bit of the spectrum would be when you accidentally when you find yourself being polite to it as if it were a person that's maybe one end of the spectrum but at the very other end of the spectrum room is um there's there are whole companies like replica and uh character AI with with as many as 20 million daily active users where people are talking to AI companions and actually many of them uh are not talking to them for two minutes a day they're talking to them in in fact the median the mean rather is is 75 minutes a So this is like an enormous amount of time and we're talking about tens of millions of users already. So that would be kind of the far end of the spectrum. Um these are clearly filling a major a major need in people's lives. Um and and so this is this is only the beginning, right?

Because to many of us in in this room, it feels almost it feels kind of weird, right? like it feels weird, maybe a little sketchy. It's like why why would people even do that, right? For at least some of us, right? But if you think, you know, early days of uh you know, dating online, early days of many different types of technologies, people thought internet dating was weird, right?

So it's it's hard to to kind of judge, right? Um, now what is causing what is causing the explosion in people interacting with AI in a way that is akin to a type of companionship. I've listed three forces that are converging to produce that. Obviously, one is agentic AI. Number two is wallet growth.

It's hundreds of millions of wallets across all the different chains, right? at least half a billion, right? Um, and then of course the creator economy, but I would actually add a fourth to this which I feel is the most important actually by far and it's the the way that we live our lives. We spend certainly I do and probably almost everyone in this room. We spend more and more of our day in the digital world every day, week after week, month after month, year after year.

It just increases without bound, right? Um more and more time at our computer, more and more time being internet first rather than outside touching grass or whatever as they say. There's an explosion in people working at home. there's uh an increasing untapped, unfilled need for human connection that is manifesting itself in a variety of ways all around the world. And we've seen this for years, right?

We've seen that from people talking about for at least a decade how young people in in Japan were were young men especially were not they were kind of choosing to opt out of the rat race and the problems that caused. Um, there's a phrase called tongping. Uh, sorry about butchering the pronunciation, but the Mandarin phrase which translates to laying flat, which kind of describes a fairly similar phenomenon. We all have seen the charts about the way in the United States that interactions between males and females have changed drastically, right? People aren't having sex.

like there's a lot there's a lot going on and a lot of that is a is a story about connection and you know loneliness frankly so I would add that as the fourth for fourth force that is converging uh to create a really tremendous need for for uh for AI companions and um and of course you can you can already start to imagine that uh crypto could play a big role in this story. Uh the as an example recently uh as we all know the the fifth major version of chat GPT came out and as some of you may have seen one of the initial decisions was to kill version 40. they decided you just we're going to just scrap that and everyone's on five. Now, you may also have seen that that decision was almost immediately reversed. And uh I'm not sure though what's really kind of interesting and hasn't been talked about as much is why that happened.

The main reason why that happened is because when people developed these deep interactions with chat GPT uh 40 some of them as already companions giving them giving it a name and things like that and some just more a feeling of check GPT40 really knows me really gets me. that was uh not persistent with the change to check TPD5. So people felt that they were losing this relationship that they had whether it g whether they gave it a name or not. And so the the push back was so intense. People were really really mad.

They felt like Sam Alman had just like killed their friend is like a actual statement that people were saying that you they took away my friend. And there were so many of these people that were so really really mad about this that they basically had to immediately very high users uh in terms of time spent and things like that that they basically immediately had to roll this back. It was absolutely an AI companion story that caused that decision to be reversed almost immediately. Um, so you can start to imagine already uh as I was saying that crypto crypto plays a role in this story because if there's one thing that crypto people won't shut up about, it's having control of your things, right? It's having sovereignty.

It's having ownership of all kinds of things in the digital world. And related to that, you might be starting to think about what are the related privacy considerations. And again, we can we can start to imagine that that could be a crypto story. It could be a very it's very very easy to start imagining AI sovereignty being able to have control of your creation, someone that you view almost as a person. It should be easy to start thinking well the type of information that I'm giving to these LLMs it's fundamentally different than the type of information that Google has which is already extremely powerful as we know.

So for me, for example, I mean, I would feel more comfortable with people having maybe two years of my internet his search history versus like a couple weeks to chat TPT. Like my internet search history, you could embarrass me, but my chat TPT, I mean, you could get in my head, you know what I mean? Like you could really you could you could probably make me te I don't know. It's gets very personal, right? The way the way we give information of these things.

Uh so the point is that a lot of the tremendous value that we're creating when we talk to an AI companion comes from its memory because comes from what it's learning about us over time or a digital twin for example its ability to represent us as an extension of us in the digital world comes from the rich store of information that we give it. Right? So immediately that becomes very much a privacy consideration which again I would suggest crypto is kind of uniquely positioned to play a part of to give an example right in my view and again as we discussed this is all very early stage so things could play out in a number of different ways but in my view in terms of digital twins AI companions and things like that one of the obvious next things that will happen is that these things will become social. Well, if I have a digital twin, if I have an AI companion that is is basically me, an extension of me in the digital world, I want certain people to be able to have certain types of information and I want to control that in a very granular way and I want to have a lot of comfort around privacy. I don't want, you know, Sam Alman to know even more about me.

No offense to Sam, but we all like privacy. We're we're crypto people, but many I think you get. But anyway, so the point is it's very easy to think about, well, okay, so all of the these rich stores of information, maybe that's encrypted blobs, maybe it's Arweave, IPFS, something like that. Very granular privacy position uh uh privacy protections. Perhaps that's an onchain story.

when my family uh interacts with my digital twin, they get certain types of information. A stranger, on the other hand, might only get, I don't know, my workout plan, something like that. So, um it's hard obviously to talk about a very rich and deep topic and only 15 minutes. I probably absolutely could keep going for an hour or two, but I hope I did uh kind of provoke some thinking today about where we're headed with respect to digital twins, AI companions, and such and uh and the way that we interact uh in the digital world with respect to LLMs and how it is so fundamentally different, especially qualitatively different uh from other types of interactions we have such as a mirror Google search engine or something like that. Okay, thank you.

Good morning and I hope everyone has a great day. Thank you.