Opinion by: Ahmad Shadid, founder of O.xyz and co-founder of IO.ne
Not a single week passes by without a new artificial intelligence startup coming out of stealth.
With a slick interface, clever prompts and an OpenAI key powering the back-end, these ventures often boast seed valuations that make even a veteran chip designer blush.
Behind the gloss sits little more than “prompt arbitrage.” Most of today’s so-called “AI companies” are just thin packaging layers without defensible technology.
The company pays a few cents to ask a proprietary model a question, then charges users a few dollars for the same answer and pockets the difference. That margin lasts only until the platform decides to rate-limit the traffic, raise prices or change its terms of service.
That fragility is invisible to most users, but it’s lethal to the sector’s long-term credibility. When the gatekeeper pivots, thousands of copy-and-paste apps will vanish overnight, taking investor capital and customer data.
The great API purge
What comes next will be a reckoning: We will have witnessed the “Great API Purge” by 2027, a moment when the platform landlords reclaim their territory. They will implement 10x price hikes and draconian usage quotas, obliterating 70% of today’s AI startups overnight.
The only ventures left standing will be those that built their foundation on the bedrock of decentralized infrastructure.
An industry built on rented compute cannot call itself infrastructure — it is merely UX theater.
Rented compute is a single point of failure
Reliance on centralized APIs introduces several systemic risks. First comes cost volatility: A sudden fee hike for the GPT-4o endpoint can easily double some projects’ operating expenses.
Next is supply risk: GPU shortages have forced several leading providers to throttle throughput for smaller customers during peak demand. Finally, licenses can be revoked. A simple policy update can bar entire content categories, turning once-viable writing tools into empty screens.
Related: Bitcoin miners gambled on AI last year, and it paid off
Each risk traces back to the same bottleneck: control of the inference pipeline. That choke point mirrors the early days of online payments, when Visa and PayPal could freeze accounts at will. Finance solved that problem in 2009 with Bitcoin. AI now faces its own Satoshi moment.
Decentralized AI echoes Bitcoin’s breakthrough
Bitcoin separated money from any single issuer by distributing consensus…
Click Here to Read the Full Original Article at Cointelegraph.com News…