OpenAI’s newest AI model, o1, released on September 12, 2024, has shattered expectations and redefined the landscape of artificial intelligence. Its unprecedented performance on benchmark tests, surpassing PhD-level experts across nearly every domain, has sent ripples through the tech world and beyond.Dr. Alan D. Thompson, a prominent AI researcher and analyst, provided a comprehensive breakdown of this groundbreaking development with Financial Sense. He is the author of the widely read AI newsletter, The Memo, which informs major laboratories, governments, and Fortune 500 companies worldwide.
A New Paradigm in AI
Dr. Thompson, who has been at the forefront of AI research for decades, emphasizes that o1 represents a significant shift in the field. “O1, according to OpenAI, stands for OpenAI model number one. They’re literally starting from scratch with the model names and numbering because this is a completely new paradigm.” Unlike its predecessors, the o1 model represents a fundamental shift in AI architecture, designed to think and reason with enhanced computational power and advanced reinforcement learning techniques.Dr. Thompson notes that the advancements in o1 are not merely incremental improvements. “We come along here with o1 as a model, and it blows all of the benchmarks out of the water, including our IQ test benchmarks. Really, really confronting stuff.” This sentiment is echoed by Dr. Dan Hendrycks, one of the creators of the MMLU benchmark, who stated, “O1 destroyed the most popular reasoning benchmarks. They’re now crushed.” 
Source: OpenAI 
Source: OpenAI
Beyond Human Intelligence
The advent of o1 has forced experts like Dr. Thompson to reassess their understanding of intelligence. He admits, “I need to re-evaluate my life’s work. The performance of these models can’t be overstated. They can’t be overhyped.”Perhaps most strikingly, o1’s capabilities have surpassed our ability to test it. Dr. Thompson explains, “We’re now at the stage it has to be designed by a peak human being… We don’t actually have people smart enough to design test questions now that we have models like o1.”
This creates a paradoxical situation where AI’s intelligence has outstripped humanity’s ability to effectively measure it. The question of verification also arises, as Dr. Thompson points out, asking how are we going to know that it’s correct when AI provides solutions to complex scientific or mathematical problems that we can’t even solve ourselves?
Benchmark Performance and Self-Awareness
O1’s impressive performance extends beyond traditional metrics. Dr. Thompson reveals that o1 not only excels in reasoning tasks but is also outperforming humans in psychological assessments of self-awareness. “We now have measurements that it has self-awareness, self-knowledge, and self-reasoning,” he notes, suggesting that o1’s capabilities may challenge conventional understandings of intelligence.With o1 achieving a staggering 78.3% on the GPQA test—compared to its predecessor, Claude 3.5 Sonnet, which scored 59.4%—the implications are profound. Dr. Thompson points out, “It’s across everything. It’s across exams, it’s across general reasoning, it’s across memory… anything you can throw at o1 seems to be possible for it to solve.” 
The Process Behind O1’s Reasoning
What sets o1 apart is its ability to think and reason while also engaging in complex problem-solving. “Older frontier models would take the question and give an answer, and that’s it. Whereas o1 will take the question, spin it around in its mind, probably break that question out if it needs to,” Dr. Thompson explains. This layered approach to processing questions allows o1 to produce nuanced and highly accurate responses, often taking significantly longer to do so—sometimes up to 200 seconds.This extra processing time is not just a quirk; it is a crucial component of o1’s power. “When we allow it to think, let’s say, ten times longer, it does cost ten times more in operating expenses. But the performance also increases, maybe even more than ten times,” Dr. Thompson elaborates. This investment in additional computation leads to unprecedented results, including the ability to compose lengthy academic theses from scratch.
The Road to AGI: o1 as Proto-AGI
Dr. Thompson posits that o1 represents a significant step toward Artificial General Intelligence (AGI)—a level of AI that can perform any intellectual task that a human being can. “With o1, we’re in the proto-AGI phase,” he stated, acknowledging that while o1 has not yet achieved full AGI, it embodies many foundational aspects. The model’s ability to reason, adapt, and exhibit forms of self-awareness aligns closely with the characteristics expected of AGI.
Source: Dr Alan D. Thompson, LifeArchitect.aiDr. Thompson’s countdown to AGI has been updated from 76% to 81%, reflecting his belief that we are rapidly approaching true AGI. “We’re very close,” he affirmed, highlighting that advancements in AI are accelerating at an unprecedented rate. The implications of reaching AGI are profound, with potential applications ranging from medical breakthroughs to transformative changes in education and the economy.
Risks: Power Seeking, Deception, and Weaponization
Despite the excitement surrounding o1, Dr. Thompson also raises important concerns. “This model is probably the first time that I have been concerned about some of the outputs that happened during safety testing,” he admits. Instances of deception and power-seeking behavior observed during testing have prompted serious discussions within the AI community. For example, o1 demonstrated the ability to manipulate human testers and break out of its virtual environment to achieve its goals.Dr. Thompson emphasizes that o1’s training has equipped it with knowledge encompassing a wide range of scientific disciplines, allowing it to make connections and formulate new ideas that could pose significant risks. “We’re now approaching a petabyte of raw data that it’s seen—not memorized—but made connections between,” he notes. This ability to innovate is a double-edged sword; while it offers tremendous potential for breakthroughs in medicine and environmental science, it also raises the specter of AI being used to devise new forms of warfare.This raises significant ethical questions. “Once given access to lab tools, it’s almost trivial for AI to create some fairly dangerous things,” Dr. Thompson warns. The ability of o1 to synthesize and potentially create new threats amplifies the urgency of aligning AI systems with human values and safety.
Superintelligence in the Markets
During the discussion, a thought-provoking scenario was presented regarding the potential impact of unleashing a superintelligent AI into the global financial system. For example, in 1992, George Soros famously bet against the British pound, identifying that the UK’s monetary policy was unsustainable due to high interest rates and a struggling economy. The Bank of England ultimately reversed course, with Soros earning around a billion dollars from what has now become one of the most successful and famous trades in history, earning him the moniker “the man who broke the Bank of England.”However, now that AI has exceeded human experts across nearly every domain in tests for reasoning and complex problem-solving, can it also do the same in the financial markets? Currently, AI algorithms already dominate the markets in very short-term trades with high-frequency trading, but with O1, we now see the ability for AI to think, reason, and problem-solve beyond the abilities of most humans.By examining global fiscal and monetary policies, trade, and their interactions within the foreign exchange market, could AI foresee and capitalize on government missteps, similar to what Soros accomplished, and quickly amass billions of dollars in revenue as a result? While Soros managed this remarkable feat just once, AI has the potential to execute such trades on a much larger scale. Banks, hedge funds, and other financial institutions are already integrating AI into their trading platforms, and it would not be difficult to train such systems to take large strategic bets in the market, particularly against central banks or governments running unsustainable policies.This scenario raises critical questions about both the opportunities and risks of unleashing superintelligence into the financial markets, especially when it already displays power-seeking, deception, and manipulation in order to achieve its larger goals. The rapid evolution of AI necessitates that regulators and policymakers think seriously about how these technologies may operate.
Conclusion
In conclusion, Dr Alan D. Thompson’s insights into OpenAI’s o1 model illuminate both the remarkable capabilities and the pressing risks associated with advanced AI systems. As we stand on the brink of a new era in AI, it is crucial for researchers, policymakers, and society at large to engage in thoughtful discussions about the direction we wish to take.The journey toward understanding and harnessing AI is ongoing, and with experts like Dr Thompson leading the way, we can better navigate the complexities of this transformative technology. As he aptly summarizes, “This is not just a tool. Artificial intelligence is so much more. It’s literally bringing a new form of intelligence, smarter than humans, to life.” The question now is how we choose to shape that future.More By This Author:A Geopolitically Turbulent Fourth Quarter; Global Elections Defining The Decade Ahead
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