Stocks vs. Bitcoin in the AI era: Which will survive the next 50 years?

Key takeaways

• Stocks may survive AI disruption if they adapt quickly to changing technological and economic demands.

• New businesses spurred by AI, such as robotics, biotech or space, are expected to drive growth, and the stocks mirroring such advances will have a better chance of surviving the innovation turmoil.

• Periods of disruption should be expected as AI reshapes labor and markets; therefore, the next few years are for adaptation to the new technology.

• Bitcoin’s future rests on proving itself as a true store of value but also transitioning into a medium of exchange. AI can facilitate this, mainly by impacting scalability and transaction processes.

• As a decentralized system, Bitcoin is not affected by internal politics, whose human element could disrupt its operations. It only has to stay up-to-date with the new tech to remain relevant.

Nobody has the means to predict what will happen within the next 50 years, especially not in a financial market that is influenced by so many external factors.

However, analyzing the current status of AI and its impact on fintech sectors such as Bitcoin and stocks, it’s possible to understand what would be the best investment choice between these financial tools.

The purpose of this article is to help you make more informed decisions and understand if Bitcoin or stocks is a better choice for you in the future.

Stocks or Bitcoin: Which will survive the AI revolution?

AI will accelerate innovation and efficiency in several industries, sectors and aspects of our lives, surely advancing improvements in tech like Bitcoin in terms of efficiency and, hopefully, scaling. But how about stocks? Is their investment concept a thing of the past? Let’s find out a little bit more.

What is the case for stocks?

The world’s first stock market took shape in Amsterdam in 1602 with the founding of the Dutch East India Company. What began as a marketplace for trading company shares soon became a model for raising capital and investing. By the late 17th century, London had developed its own trading hubs, while New York’s exchange would not emerge until 1792, spreading the model across the Atlantic.

Stocks represent ownership in companies, and the stock market is where investors buy and sell them. Stock values fluctuate based on company performance and market conditions, including the ability to adapt to technological changes like AI.

Stocks of businesses that embraced technological advancements over the centuries have survived economic cycles, wars and disruptions that technology brought along. Without the benefit of hindsight, the same seems likely for companies betting on AI.

Specifically, companies that apply AI through automation, data analytics and new business models are likely to succeed.

Historically, market indexes like the S&P 500 have delivered approximately 7%-10% annualized returns over decades, adjusted for inflation. The index tracks the performance of 500 of the largest publicly traded US companies and is widely used as a benchmark for the overall stock market.

Compared to the S&P 500, Bitcoin’s (BTC) performance has been exceptionally higher, as shown in the table below:

What is the case for Bitcoin?

Bitcoin is a relatively new invention, created in 2009 by the pseudonymous Satoshi Nakamoto.

The project was introduced in a white paper detailing a peer-to-peer electronic cash system using blockchain technology.

The case for Bitcoin goes beyond the investment tool or store of value conception. Its proposal includes a true monetary revolution, which challenges gold and other financial tools.

Its decentralized design resists central control and the inflation common in fiat systems. With a fixed supply capped at 21 million coins, Bitcoin’s scarcity appeals to those seeking protection against monetary debasement.

Furthermore, blockchain’s transparency and security align well with AI’s need for verifiable data.

Over the years, Bitcoin has established itself as both a store of value and an alternative currency, while still pursuing its original goal of becoming a widely used medium of exchange.

How AI affects stocks and the stock market

The next 50 years could challenge the survival of the stock market as an institution due to “artificial intelligence speeding up innovation cycles, making public companies inefficient investment vehicles,” as predicted by analyst and investor Jordi Visser.

Stocks have been around a long time, but AI-driven disruptions leave little room for complacency, and companies that fail to adjust risk falling behind. This is especially true for tech giants like the FAANG stocks (Facebook, Amazon, Apple, Netflix and Google). While they are among the biggest investors in AI, these companies will still need to keep pace with rapid developments and adopt them effectively.

AI will also have an impact on the stock market, from quickly analyzing huge amounts of data to predicting market movements and automating decision-making processes, for faster and more efficient operations. AI will have an enormous impact on the way investors approach trading and investment strategies.

Overall, AI will likely boost corporate innovation but also widen the gap between adaptable and stagnant firms.

How AI affects Bitcoin

Visser sees Bitcoin as a better future investment and compares it to gold, which has endured for thousands of years.

Beyond its role as a store of value, Bitcoin is well-placed in the future of finance. The combination of AI and blockchain may disrupt traditional financial systems, bringing more capital and participants into the digital economy.

AI is expected to improve Bitcoin security and trading strategies, improving crypto trading through automated tools, enhanced data analysis and market pattern prediction. All these changes may also trigger better system efficiency.

Bitcoin mining will also benefit from AI in terms of efficiency and better resource allocation by predicting optimal times for mining activity to reduce costs and maximize output. System maintenance will improve as AI can detect existing or upcoming failures, thereby increasing its overall reliability.

However, Bitcoin faces regulatory risks, scalability issues and volatility, which may deter risk-averse investors who generally prefer more predictable and stable investment tools such as stocks.

The convergence of AI and blockchain could trigger a new era for Bitcoin, nurturing broader adoption by creating a more intuitive and secure ecosystem, giving it an edge over stagnant stocks.

Which will survive the next 50 years?

Looking 50 years ahead is practically impossible. Both Bitcoin and stocks have unique strengths and weaknesses, and their future ultimately depends on economic, technological and societal changes.

Stocks will likely endure if they adapt to AI-driven economies. Investors can mitigate risks of individual company failures by putting money into diversified portfolios, like index funds, which appear more secure. Stocks in robotics, biotech, space and AI may perform better than less tech-driven assets.

The advent of quantum computing is often discussed in relation to Bitcoin’s security model, though most experts agree the risk is still theoretical and distant. Combined with AI, its impact could be positive or negative depending on how the technology evolves and how the Bitcoin network adapts. Mining centralization might also be a concern if only a few entities gain early access to advanced quantum-AI systems.

On the other hand, the combination could be advancing Bitcoin security and network optimization by improving transaction processing, wallet security or blockchain analytics, enhancing Bitcoin’s efficiency and user experience. As long as the Bitcoin community stays ahead of the curve with quantum-resistant upgrades, the net impact could be positive.

As decentralized finance gains traction in investments, Bitcoin also enhances its competitive edge over gold. By doing so, it is emerging as a superior store of value and encouraging traditional markets to shift funds to digital finance.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.