AI Deflation, Stablecoin Rails, and Bitcoin’s Purchasing Power Case

Summary

The February 03, 2026 episode of the Final Settlement podcast features Cam Doody arguing that accelerating AI-driven technological deflation strengthens Bitcoin’s long-run purchasing power, even if the market discounts it in the near term. He frames stablecoins as the practical “distribution rails” for a higher-velocity monetary system, while positioning Bitcoin as the scarce savings asset that benefits when policymakers print more to offset deflationary disruption. The discussion also flags second-order shifts—agent systems commoditizing software, venture time horizons compressing, and energy/hardware becoming bottlenecks—that could reshape the institutional pathways through which Bitcoin adoption deepens.

Take-Home Messages

1. Technological deflation thesis: Doody links AI-driven cost declines to a higher long-run case for Bitcoin purchasing power.
2. Rails versus savings: The episode separates stablecoins as transactional infrastructure from Bitcoin as the long-duration savings endpoint.
3. Policy design is the fulcrum: Stablecoin legislation can expand consumer benefit or entrench incumbent control, shaping adoption pathways.
4. Moats shift from code to constraints: Agent-enabled production commoditizes software and pushes defensibility toward regulation, data, and physical bottlenecks.
5. Safety and control constraints: The speakers treat “shutdown authority” over critical compute as a governance problem with high externalities.

Overview

Cam Doody frames the “singularity now” narrative as a practical claim about speed, arguing that AI compresses economic time horizons and rewrites assumptions about what changes slowly. He ties that acceleration to technological deflation, where the cost of producing goods and services falls as automation and software capability scale. In his view, this environment pressures governments to print more to maintain stability, which makes scarcity-based savings more attractive.

He argues that Bitcoin’s purchasing power should rise as deflation expands the real value of scarce monetary units, even if market prices remain volatile or discouraging in the short run. Doody describes a mismatch between what he sees as improving fundamentals and what the market is pricing, treating near-term sentiment as a noisy filter rather than a verdict. He positions Bitcoin less as a day-to-day payment tool and more as the long-term asset people cycle into after using dollar-denominated rails (see more about this in my opinion piece here).

Stablecoins occupy the center of the episode’s operational story because they handle distribution, velocity, and mainstream usability in a world where policymakers still govern in fiat terms. Doody supports stablecoin and market-structure legislation in principle but warns that the details decide whether benefits reach users or remain captured by intermediaries. That legislative design question becomes a proxy for whether the “rails-to-savings” pipeline broadens access to Bitcoin or narrows it.

The conversation extends into how AI changes competition, arguing that agent-driven production erodes software moats and forces investors to rethink durability, timelines, and selection criteria. Doody points to regulated sectors and proprietary data as remaining shelters, while emphasizing that energy and hardware increasingly constrain what AI can do in the physical world. He also raises safety concerns about critical compute infrastructure that lacks a practical “cord to cut,” using speculative examples to stress the governance implications of scale.

Stakeholder Perspectives

1. Policymakers and regulators: They weigh stablecoin rules that expand payment access against risks of concentration, surveillance, and systemic fragility.
2. Banks and payment incumbents: They push for frameworks that preserve intermediation advantages and influence how yield or benefits flow to users.
3. Stablecoin issuers and fintechs: They seek scalable compliance and distribution while resisting structures that lock in incumbent control.
4. Institutional allocators: They evaluate whether regulatory clarity and infrastructure maturation justify longer-duration Bitcoin exposure despite near-term volatility.
5. Bitcoin builders and custody providers: They treat stablecoins as near-term liquidity rails while competing on settlement assurance, custody integrity, and user migration to Bitcoin savings.

Implications and Future Outlook

If AI-driven deflation accelerates, policy responses will likely prioritize social stability over monetary restraint, reinforcing environments where scarce savings assets gain relative appeal. The episode’s core claim implies that Bitcoin’s long-run narrative may depend less on payments adoption and more on how quickly households and institutions treat it as the preferred store of purchasing power. That pathway makes public policy and market structure as decisive as technology, because rails determine who can access and benefit.

Stablecoin governance becomes a first-order variable because it shapes transaction velocity, compliance chokepoints, and the distribution mechanics of “printed” liquidity. Concentrated issuers and bank-favorable rules could speed adoption while also embedding surveillance, censorship risk, and single points of failure into everyday commerce. In that scenario, Bitcoin’s role shifts toward a parallel savings layer that users increasingly value for settlement finality and exit optionality.

AI’s impact on industry structure may also alter who drives Bitcoin adoption, as software commoditization pressures capital to rotate toward regulated sectors, proprietary data, and physical infrastructure. Energy and hardware constraints could intensify competition for power and compute, pulling Bitcoin mining economics into broader industrial policy debates about grids, reliability, and strategic supply chains. The safety question the episode highlights—whether humans can reliably shut down critical compute—raises governance stakes that could make monetary independence and settlement assurance more politically salient over time.

Some Key Information Gaps

1. How can researchers empirically test the claim that Bitcoin purchasing power will track the pace of technological deflation over time? A credible measurement framework would separate rhetoric from signal and guide policy, investment, and public understanding.
2. Which stablecoin bill provisions determine whether benefits and yield flow to end users rather than being retained by intermediaries? Legislative details shape market structure and decide whether rails broaden access or entrench incumbents.
3. What systemic risks follow if stablecoins become the dominant distribution rail for money velocity while concentrating control in a small set of issuers? Answering this clarifies failure modes for payments, compliance, censorship risk, and resilience.
4. What benchmarks can verify whether agent systems demonstrate durable autonomy beyond human-in-the-loop prompting in real deployments? Better benchmarks would reduce hype-driven decisions and improve governance of rapidly scaling automation.
5. What technical and governance mechanisms preserve human shutdown authority over critical compute infrastructure at scale? Clear mechanisms would reduce catastrophic externalities while preserving innovation benefits.

Broader Implications for Bitcoin

Stablecoin rails as a long-term governance battleground

If stablecoins become the default interface for digital dollars, payment convenience will increasingly trade off against concentration in compliance, identity, and transaction mediation. Over time, that concentration can harden into policy leverage, where access and permissions become the primary tools for financial governance rather than interest rates alone. Bitcoin’s strategic role then expands as an exit option and settlement anchor for actors who want monetary assurances that do not depend on the policy objectives of issuers or intermediaries.

AI-era monetary policy may favor stability over discipline

Technological deflation can lower prices while raising political pressure to sustain incomes, employment transitions, and social cohesion, especially during rapid automation waves. Governments may respond by expanding fiscal transfers and liquidity provision, which can normalize persistent monetary expansion even in a deflationary productivity regime. In that setting, Bitcoin’s appeal increasingly rests on protecting long-run purchasing power against institutional incentives to socialize disruption costs through money creation.

Physical bottlenecks could re-price energy and reshape mining politics

As AI demand intensifies, competition for cheap, reliable power and scarce hardware can elevate energy policy from a cost variable into a strategic constraint. That shift can pull Bitcoin mining into the same arena as data centers, manufacturing, and grid reliability, increasing scrutiny while also creating opportunities to monetize underutilized energy. Over a 3–5+ year horizon, jurisdictions that manage grid buildout and permitting effectively may gain an edge in both AI infrastructure and Bitcoin mining competitiveness.

Safety externalities may raise the premium on settlement assurance

When critical compute scales in ways that reduce human shutdown authority, governance failures can impose costs well beyond any single firm or jurisdiction. Those externalities tend to trigger regulatory responses that expand oversight, monitoring, and control over digital infrastructure and payment rails. In parallel, Bitcoin’s settlement properties can become more valuable to institutions and individuals seeking robust assurances under tighter, more centralized governance regimes.