Author: O.xyz CEO Ahmad Shadid, CoinTelegraph; Compiled by Baishui, Golden Finance
The saga of DeepSeek clearly shows that cheaper AI models can provide breakthrough advantages. DeepSeek challenges traditional investment with low-cost, high-performance technology. However, its rise also brings serious risks.
The most worrying thing about such models is data privacy and security issues.The fact that such advanced models can be developed at a fraction of the standard cost does promote innovation and investment prospects, but at what cost?
Even if cost-cutting AI models democratize AI development, they may also create dangerous vulnerabilities. A recent Cisco study found that DeepSeek's R1 model had a 100% attack success rate. Simply put, the model failed to block any harmful prompts. Why is security put on the back burner during such innovation?
DeepSeek sparks AI boom in China
DeepSeek developers claim that its R1 chatbot costs only a fraction of competitors such as OpenAI. Industry insiders called this the biggest AI chatbot event since November 2022. Microsoft and Amazon Web Services quickly moved to support DeepSeek.
This progress also comes with risks. DeepSeek's AI model stores user data on servers in China.
OpenAI expressed its concerns about DeepSeek in a letter to the US government. The 15-page letter emphasized that DeepSeek's progress, especially its R1 model, is narrowing the United States' lead in the field of artificial intelligence.
From a financial perspective, DeepSeek's announcement caused global panic.Tech stocks fell sharply. Nvidia, the leading chipmaker, fell nearly 17% in a single day. Investors reassessed the cost and competitiveness of the AI industry. Market value losses amounted to hundreds of billions of dollars.
As risk sentiment spread, shock waves quickly spread to other areas such as cryptocurrencies. The rapid and hasty response itself is a key problem. If AI developers want to take advantage of this low-cost development trend, we may see more models like DeepSeek emerge, sacrificing user privacy for rapid deployment.
Spillover effect on cryptocurrencies
The DeepSeek incident reveals a more worrying trend in the crypto industry. Cryptocurrencies are increasingly closely linked to technology stocks. When DeepSeek made headlines, the crypto market was not immune. Bitcoin, the most well-known digital asset, fell below $100,000.
Analysts also pointed out that the six-month rolling correlation between Bitcoin and the Nasdaq Composite Index rose to about 0.5. This shows that when technology stocks fall, risk assets such as Bitcoin will also fall. Therefore, future developments that hurt the mainstream tech market will also affect the crypto market.
Critics, including Jean Rausis of Smardex, insist that DeepSeek's technology is fundamentally "not related to Bitcoin". However, the widespread market panic means that any shock in the tech sector will be quickly transmitted to the crypto market. Many Bitcoin miners have entered artificial intelligence data center operations, and the stock price has fallen by 13%-18%. This decline has increased the overall uncertainty of the market.
Another worrying issue is the increasing number of scams. Some DeepSeek-themed or even fake AI-themed tokens have emerged and attracted investors' attention. New investors have little knowledge about trading on decentralized exchanges and identifying stock price pumping or pump and dump schemes.
Security risks that cannot be ignored
Security researchers pointed out that the DeepSeek R1 iOS app uses outdated encryption technology. These flaws put users at risk of cyber attacks and data leaks.
Such cost-cutting may make the system vulnerable to manipulation and abuse. The potential for low-cost AI models to serve the interests of foreign governments casts a shadow over their adoption.
Such security risks require urgent attention from businesses and regulators. U.S. officials are concerned about sensitive consumer data being stored on servers in China. Regulators may impose stricter data protection standards to maintain market confidence. Industry experts also debate the long-term impact of DeepSeek. Some argue that its cost-effectiveness could boost the entire AI field.
They see lower training costs as an opportunity to drive innovation and increase competition. This could lead to wider adoption of AI tools and lower costs. But security flaws remain unresolved. Cheaper models could put users at risk of data breaches and cyberattacks, overshadowing potential benefits.
What's next?
As regulators and industry leaders step in to examine these issues, the future of AI depends on how we manage these security risks. As we push for innovation, we must demand higher standards for data protection.
The case of DeepSeek reminds us that breakthroughs in efficiency must be accompanied by strong safeguards. The choices made now will determine the future of AI and consumer data protection. The debate over cheaper, faster, but riskier technology is far from over and will continue to shape the tech and crypto worlds for years to come.