a16z: Three ways encryption technology will transcend encryption itself by 2026

Author: a16z crypto

Compiled by: Felix, PANews

1. The predicted market size is larger, the coverage is wider, and the level of intelligence is higher.

—Andy Hall, Cryptocurrency Research Advisor at a16z, Professor of Political Economy at Stanford University

Prediction markets have become mainstream, and by 2026, with their integration with cryptocurrencies and AI, their scale, reach, and intelligence will only increase further, while also bringing new and important challenges to their builders.

First, more contracts will be launched this year. This means access to real-time odds not only for major elections or geopolitical events, but also for outcomes at various levels of detail and for complex, intertwined events. As these new contracts disclose more information and integrate it into the news (which is already happening), they will raise important social questions, such as how to balance the value of this information and how to better design it to be more transparent and auditable—and cryptocurrencies can precisely address this.

To handle the massive volume of contracts, new methods are needed to reach consensus and resolve issues within those contracts. While centralized platforms are important for determining whether events actually occurred (how to confirm this), their limitations have been highlighted in controversial cases such as the Zelensky "suit incident" and the Venezuelan election market. To address these extreme cases and help expand prediction markets into more practical applications, new decentralized governance and LLM oracles can help determine the truth behind disputed outcomes.

AI has opened up new possibilities for oracles beyond LLM (Limited Ledger Metrics). For example, AI agents trading on these platforms can search for global signals to gain short-term trading advantages, thereby revealing new worldviews and ways of predicting future events. Beyond acting as sophisticated political analysts capable of querying insights, these agents' emerging strategies can also reveal new information about the fundamental predictors of complex social events.

Will prediction markets replace opinion polls? No; they will make opinion polls better (and information from opinion polls can be passed on to prediction markets). As a political scientist, what excites me most is how prediction markets can work in tandem with rich and dynamic opinion polling systems—but it will also rely on new technologies like AI, which can improve the survey experience; and encryption, which can provide new ways to prove that poll/survey respondents are not bots but real people, etc.

2. This year, encryption technology will provide a new foundational tool for industries beyond blockchain.

—Justin Thaler, member of the a16z cryptography research team, Associate Professor of Computer Science at Georgetown University

For years, SNARKs (cryptographic proofs that verify computation without re-performing it) have been used primarily within the blockchain space. The overhead is simply too great: proving a single computation can require a million times more work than directly running the computation. This might be worthwhile if the cost is shared by thousands of validators, but it's impractical in other situations.

But that's about to change. This year, the overhead of zkVM provers will drop by about 10,000 times, with a memory footprint of only a few hundred megabytes—fast enough to run on a mobile phone and cheap enough to run anywhere.

A 10,000-fold increase could be a remarkable number, partly because high-end GPUs offer approximately 10,000 times the parallel throughput of laptop CPUs. By the end of 2026, a single GPU will be able to generate proof of CPU execution in real time.

This promises to realize a vision from an earlier research paper: verifiable cloud computing. If you are already running CPU workloads in the cloud—because your computational power is insufficient for GPUs, or you lack the expertise, or for historical reasons—you will be able to obtain cryptographic correctness proofs at a reasonable cost. The prover is already optimized for GPUs; your code requires no optimization.

3. Witnessing the rise of "pledged media"

—Robert Hackett, a16z Cryptocurrency Editorial Team

The traditional media model (and its so-called objectivity) has long shown cracks. The internet has given everyone the right to speak, and more and more operators, practitioners, and builders are beginning to engage in direct dialogue with the public. Their views reflect their interests in the real world, and surprisingly, audiences often do not choose to disregard them because of these interests, but rather respect them because of these relationships.

The new development here isn't the rise of social media, but rather the emergence of cryptographic tools that allow people to make publicly verifiable commitments. As AI makes generating limitless content cheap and easy (claiming anything, whether the opinions or identities are real or fictitious), relying solely on the opinions of the masses (or bots) is no longer sufficient. Tokenized assets, programmable lock-up periods, prediction markets, and on-chain historical records provide a more solid foundation for trust: commentators can express opinions and demonstrate consistency between their words and actions. Podcasters can lock up tokens to show they aren't speculatively hyping or "pump and dump." Analysts can link predictions to publicly settled markets, thus establishing auditable track records.

This is the rudimentary form of what I understand as "pledged media": media that not only endorses stakeholder beliefs but also provides corresponding proof. In this model, credibility comes neither from word-of-mouth nor from unfounded assertions; rather, it comes from having a pledge that allows for transparent and verifiable commitments. "Pledged media" will not replace other media forms but rather complement existing ones. It provides a new signal: not just "Believe me, I am neutral," but "This is the risk I'm willing to take, and you can verify the truthfulness of what I say."

Related reading: a16z's 8 major crypto industry trends predicted for 2026: the rise of privacy blockchains, the transformation of trading platforms, etc.