Published Date : 19/10/2025
If AI and crypto are not speculative bubbles, we could be in big trouble. What if the trillions of dollars invested in these technologies turn out to be sound investments? The disruption could be epic and catastrophic.
A lot of speculative manias are just fun for a while, and the last ones in lose their shirts, like the tulips of 1635 and the comic book and silver bubbles of the late 1980s. Sometimes the losses are so great that banks go broke, leading to a frozen financial system, recession, and unemployment, as in 1929 and 2008. And sometimes the thing being speculated on is real and worthwhile, but people just get carried away and pay too much for it, like the internet bubble in the 1990s.
What we haven't seen much of are speculative manias where the first investors win because there isn't a bust. What if the double digital bubble of the mid-2020s — artificial intelligence and crypto — goes down in history as the first big one of those?
Somewhere between $3 trillion and $6 trillion has been invested in building AI infrastructure and software, and this has been responsible for almost all US economic growth over the past year. The top 10 American AI companies have provided most of the US stock market's gains over the past two years and are now valued at $35 trillion, almost half the total market. Meanwhile, there are 20,000 cryptocurrencies worth $5.8 trillion, of which Bitcoin represents more than half. The total cash in the AI and crypto bets is more than a quarter of global GDP; it's probably the greatest technology investment boom/bubble in history.
If it collapses, as many predict, that would be bad, possibly very bad if it doesn't stop soon. But if it doesn't collapse at all, it could be catastrophic. AI will justify the investment in it by both replacing and enhancing human workers, as well as from subscriptions and advertising. ChatGPT and the others are definitely useful tools, but when they're used to make fake videos designed to fool us into voting for a crook, or fake nude videos of an unsuspecting classmate, or provide the answers to an exam, that's not so good. And that's without the potential that some AI experts worry about, of AI becoming self-aware and self-perpetuating, and deciding to eliminate Earth's human beings.
More mundanely and pressingly, since the launch of ChatGPT in 2022, the share of online articles written by AI, as opposed to human beings, has gone from less than 10 per cent to 52 per cent — that is, there are now more of them than human-written ones and it's still rising. Estimates of permanent unemployment resulting from AI range from 10 to 50 per cent. Let's get one comforting idea out of the way for a start: it won't be zero. Companies are already laying people off because of AI and they are being rewarded by the share market for doing so, which means they're going to keep doing it.
The weavers who lost their jobs when mechanical looms took over in the industrial revolution weren't the ones being employed in the factories. The writers, drivers, and call centre staff who lose their jobs this time won't get jobs as computer operators or software coders. Economic historians call the period between 1790 and 1840 the
Q: What is the double digital bubble?
A: The double digital bubble refers to the massive investments in artificial intelligence (AI) and cryptocurrencies, which have collectively attracted trillions of dollars and are responsible for significant economic growth and stock market gains.
Q: What are the potential consequences if AI and crypto are not speculative bubbles?
A: If AI and crypto are not speculative bubbles, the potential consequences could be profound, including massive job displacement, societal upheaval, and a productivity-driven GDP boom that could lead to significant economic and social changes.
Q: How much has been invested in AI and crypto?
A: Between $3 trillion and $6 trillion has been invested in building AI infrastructure and software, and there are 20,000 cryptocurrencies worth $5.8 trillion, with Bitcoin representing more than half of the total value.
Q: What is the 'Engels Pause' and how does it relate to AI?
A: The 'Engels Pause' refers to a period in British history between 1790 and 1840 when working-class wages stagnated and unemployment rose due to technological advancements. It is used to illustrate the potential for a similar period of economic and social disruption caused by AI.
Q: What are the potential risks of widespread AI adoption?
A: The potential risks of widespread AI adoption include job displacement, the creation of fake content, and the potential for AI to become self-aware and self-perpetuating. Additionally, the anonymity provided by cryptocurrencies can facilitate scams and money laundering.