Sometimes it’s worth stopping to take a look back at the future.

When we launched this newsletter back at the beginning of April, it was with a promise to track the future before it got built — to figure out who was crafting the landscape we’d all be inhabiting 10, 20 even 50 years from now, and then cover the collision of rulemakers and rule-breakers that will define how it takes shape. Our big initial targets were “the explosive growth of crypto,” “who’s guarding the public interest as the metaverse evolves,” and the rise of AI and other transformative technologies.

Let’s just say we had our hands full.

Crypto went from a huge growth area to a huge scandal story almost overnight, with governments seemingly more engaged every month. We saw regulators, in both the U.S. and Europe, simply say the word “metaverse” for the first time. We saw the White House lay out the country’s first general framework for AI ethics while Europe developed a massively ambitious bill that would govern its development and use by statute, setting up if not a direct competition at least a controlled experiment in how to govern the technology.

We also covered the continuing creep of automation, how tech-world ideology is reshaping American politics, and the ongoing divergences and overlaps between U.S. and European tech policy.

But let’s take a closer look first at what happened this year in crypto, which dominated both the headlines and regulators’ attention, for better or worse — mostly the latter.

You could clearly see two primary, intersecting trends in crypto this year: The regulatory world’s intensifying interest in it, and the industry’s thorough demonstration of what happens in an unregulated financial industry. When this newsletter started, both Washington and the crypto world were abuzz about the potential for a U.S. centralized bank digital currency; various crypto-related bills were taking shape in committee amid a big lobbying push from the industry; Sam Bankman-Fried was making a name for himself as a major Democratic donor and potential counterbalance to conservative tech-world political machers like Peter Thiel.

Today, the landscape looks… quite a bit different, not least due to the unraveling of Bankman-Fried himself. The spectacular collapse of FTX was undoubtedly the biggest story in crypto this year, with major ramifications in Washington — turning off his donation faucet and causing major controversy among the politicians who benefited from it, and slowing the momentum around high-profile legislation he helped push. The fact that FTX’s value disappeared overnight without affecting the overall economy might have been a relief to wary regulators, but the sheer recklessness that caused it has all but guaranteed a tougher attitude toward the industry going into 2023.

When it comes to the metaverse, there’s a lot less live-fire regulatory action — but a lot of industry cash, and therefore plenty of consideration being put into how to run the virtual future. In the newsletter, we spoke to thinkers like the venture capitalist Matthew Ball, Second Life pioneer Philip Rosedale, and this week Ernst & Young’s Edwina Fitzmaurice, all of whom offered their ideas and frameworks for building a virtual world that people might actually want to use.

The idea, it seems, is to figure out how to build a new, 3D version of the internet that will avoid the missteps, conflicts and failures of our current one. But in order to even get there, the technology has to be in place first — and in that light, Meta’s financial struggles amid its expensive metaverse experiment might have been the most significant metaverse news story of the year.

Stealing a little bit — or actually, a lot — of these two technologies’ thunder near the end of the year was the seemingly world-devouring deluge of AI tools that have gone public. Image-generating software like Stable Diffusion and DALL-E, or language tools like ChatGPT, have utterly captured the public’s imagination — and led to serious questions about how the technology could disrupt copyright law, education, the art world, and the very fabric of society itself. Look for more on that in early 2023 in DFD from the Niskanen Center’s Samuel Hammond, author of a pair of trenchant blog posts on the issue.

These are only top-level outlines of the way this year shaped our future (and vice versa), and the pace at which it’s happening is only accelerating. That means the purview of this newsletter is only likely to expand in 2023, from Washington and Brussels continuing to get their arms around crypto, the metaverse, and AI, to any number of technologies not even on our radar yet that could take off (maybe literally).

If our coverage of how those dynamics unfold every day has been valuable to you, we immensely appreciate your time and attention — and invite you to stick with us next year as what was once “the future” becomes reality, and an entirely new future takes its place.

Furthermore, please reach out to us at the email addresses at the bottom of this newsletter: we want to expand this conversion through participating in events, promoting new topics, and connecting with new experts, and we’re very interested in hearing what’s most useful and exciting to you.

This morning’s POLITICO Playbook contained a DFD-friendly crossover yarn for the ages, in case you missed it: Crypto, campaign finance, and “Super Smash Bros.”

Playbook’s authors reported the tale of how the leftist pollster Sean McElwee became embroiled in the FTX scandal, all beginning with some musings about the unfairness of individual donation limits over a round of the aforementioned Nintendo game.

Some months later: “...on Dec. 13, the U.S. Attorney for the Southern District of New York unsealed an eight-count indictment against SBF. The first seven counts, which were about financial crimes, garnered the most attention. But it was the eighth count that turned heads in Washington, alleging a straw-donor scheme in which SBF funneled corporate money to candidates and committees through third parties. And SDNY alleged that SBF had help: SBF ‘and others known and unknown,’ the indictment says, made contributions ‘in the names of other persons.’ In the race to figure out who might have helped SBF make straw donations, McElwee’s name was at the top of the list.”

By then, McElwee had already stepped down as head of his former firm Data For Progress over reports of his gambling on election outcomes and general employee unrest. But the DOJ’s charges represent a whole new kind of trouble, wrapping up yet another liberal group in SBF’s extensive web of alleged fraud.

Better know your world-changing AI tool: The influential AI researcher Murray Shanahan has submitted a preprint of a new paper explaining in surprisingly accessible terms how the large language models that power tools like ChatGPT work.

In particular, Shanahan is concerned with dispelling the premise that an AI bot does anything resembling human cognition: Rather than active communicators, “LLMs are generative mathematical models of the statistical distribution of tokens in the vast public corpus of human-generated text, where the tokens in question include words, parts of words, or individual characters including punctuation marks.”

“They are generative because we can sample from them, which means we can ask them questions,” he continues. “But the questions are of the following very specific kind. ‘Here’s a fragment of text. Tell me how this fragment might go on. According to your model of the statistics of human language, what words are likely to come next?’”

Well, when you put it that way. Still, anthropomorphism as a human impulse remains stubbornly difficult to stamp out, even after a rigorous explanation — after all, aren’t the people most likely to know exactly how a carburetor works the most likely to give their car its own name?

• In case you were wondering: “How to Use ChatGPT and Still Be a Good Person.”
• Some of SBF’s closest associates have pleaded guilty to criminal charges.
• Google is hiring from the blockchain world for its Web3 project.
• How has the NFT industry pivoted after the crypto bust?
• Learn more about diffusion, the tech behind today’s image-generating AI.

Stay in touch with the whole team: Ben Schreckinger ([email protected]); Derek Robertson ([email protected]); Steve Heuser ([email protected]); and Benton Ives ([email protected]). Follow us @DigitalFuture on Twitter.

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