Innovation is a moving train that binds blockchain technology and artificial intelligence. With both, entire industries and sectors have seen radical disruption in how things are done and the way forward.
In the last couple of years, AI and blockchain networks have become intricately interwoven. A growing number of base-layer protocols and scaling solutions have either launched infrastructures to support AI use cases or created AI-based tokens.
Nonetheless, the question on everyone’s mind is if this integration is part of a short-fuse hype or we are on the brink of another radical evolution in technology.
In this article, I take a look at the growing relationship between AI and blockchain systems. Even more crucial, I consider the potential for both industries to drive towards a truly decentralized financial future. We also consider some top crypto brands creating the much-needed platform for onboarding AI and key areas of integration.
Understanding AI and Its Relationship with Crypto
Artificial intelligence (or AI) came into the public scene in late 2022 but the industry has been in existence much longer than that. Just like blockchain systems, it was a niche only explored by experts with little use cases.
However, AI has seen a radical change in the past two years. For a short introduction, AI is a computer-based program that is created to carry out human-level tasks. This includes reading, writing, collating and interpreting data, and even doing mundane tasks like carrying boxes in a factory line-up via robots.
AI, especially large language models (LLMs) like ChatGPT and Bard, have gained significant traction due to their ability to perform human-like tasks and process natural languages. AI relies on transformer models, which are a type of neural network that enables the predictions of text and the context behind words. To reach this level of efficiency, AI is a data guzzler. LLMs use deep-learning techniques and large datasets to summarize and predict knowledge, making them ample assistants for executing tasks such as coding, solving math, and presenting concise data around reports.
The integration of AI and trust-minimized systems is exciting and is an area many people are paying close attention to. For now, only a few top blockchain brands are reliant on AI super-agents (nodes in this instance) to usher in a new generation of decentralized finance (DeFi). We explore two of the biggest below.
Ethereum - Smart Contracts and Governance
Ethereum needs no introduction as it has propelled the crypto ecosystem into a decentralized economy. Introducing smart contracts, the Ethereum blockchain is the bedrock of DeFi due to its first-mover advantage (FMA) in this sub-sector and its robust ecosystem. To ensure that it stays at the forefront of every technological innovation, the proof-of-stake (PoS) blockchain is turning its sight to AI. Using the highly potent computer programs, the Ethereum network is exploring their use cases in smart contracts. Using AI, smart contract execution can be duly optimized as it will predict the most efficient pathways, reduce gas fees, and cut down on contract execution time.
AI-driven smart contracts is not the only field Ethereum is exploring though. Decentralized autonomous organizations (DAOs) on Ethereum are also leveraging AI algorithms to track voting patterns and stakeholder preferences. This helps DAOs to propose optimal governance decisions which ensures democratic and effective organizational structure.
Cardano - Enhanced Security and Predictive Analysis
Peer-reviewed blockchain, Cardano, is quickly jumping on the AI trend. The scientifically-based blockchain network is also taking a step in the right direction as it incorporates AI systems in its fight against malicious attacks and platform vulnerabilities.
Using AI, Cardano is able to detect and mitigate potential security risks in real-time making sure that the network is always secure. Hence, dApps on Cardano are always safe knowing that the base-layer protocol is secure and can build out their ecosystems accordingly. Market predictions are also an area AI is being deployed on Cardano. AI-driven predictive analysis can help in market forecast, industry trends, and investor behavior, further enabling data-driven decisions for investors.
How Crypto Enable AI Widespread Adoption
According to a Statista market report, the global AI market is projected to hit $184 billion this year. The US alone is expected to contribute $50.16 billion to that market cap with the fledgling industry projected to hit $826.7 billion in 2030. This will lead to an increase of 28.46% in compound aggregate growth rate (2030) within a seven-year period. The crypto and blockchain ecosystem as a whole has proven itself since its inception in 2009. The decentralized economy is already worth trillions of dollars with even more upside projected for it. Below, we consider some of the unique ways crypto, and by extension blockchain, could fast-track AI mainstream adoption in the coming years.
Data Management and Security Data is the butter and bread of AI and these computer programs require it to execute and complete tasks in a similar fashion as humans. Blockchain technology can help in ensuring that data fed to AI systems are provably true, verifiable, and immutable. The immutability feature of blockchain systems ensures that data fed to AI programs cannot be altered once it is accepted by the community. Even better, blockchain data is transparent making it possible for users to see the information AI systems are operating on.
Incentivization Data sharing and purchase in the traditional tech space is predominantly done on a B2B basis, eliminating the users who are the architects. Blockchain tech, through tokenization, can incentivize the creation and distribution of AI data between individuals and relevant organizations. This way, users get paid for the data they create, fostering a more connected and incentive-aligned ecosystem.
Decentralization AI currently is in the hands of a few centralized entities with the vast resources needed to run them. Blockchain’s ideology of decentralization can easily be deployed in this ecosystem to make it more censorship-resistant and permissionless. Through the use of AI super-agents (or nodes), AI systems can operate separately from the government and other intermediaries. Users can easily run their own AI nodes without relying on a central server to work.
Synergy Breeds Growth AI and blockchain represent the next step in human technological evolution. Both ecosystems could easily benefit from one another in the following key areas:
Optimized Financial Services Ai systems can be plugged into the DeFi ecosystem to automatically analyze vast amounts of market data. This will optimize investor decision-making processes, enhance efficiency and profitability of crypto-facing platforms and decentralized exchanges (DEXes).
That’s not all though. AI can be used in combing through tons of user data needed to filter best candidates in credit rating services. This will help streamline user data and help crypto platforms properly vet users for proper lending services.
Better Security and Compliance The one thing the crypto space has struggled with is the issue of regulatory compliance. While the industry as a whole is stateless and gears towards decentralization, the need for blockchain platforms to be regulated grows by the day due to issues around some bad actors either stealing users’ funds or engaging in fraudulent activities. AI can easily help crypto platforms to stay compliant by monitoring and flagging transactions that are non-compliant with stipulated anti-money laundering (AML) and know-your-customer (KYC) processes. Moreso, AI systems can help in fraud prevention as it can track certain anomalies on a blockchain system to help forestall loss.
Final Remarks
While both seem like two worlds apart, AI and the blockchain ecosystem is constantly coming together to evolve a new technological era. Both have their strengths and areas of weaknesses and the combination of AI and blockchain could play an integral role in ensuring inclusivity, decentralized data access, online identity, fraud prevention, and a more robust twenty-first century for all.
Kommentarer