The Intersection of Crypto and Artificial Intelligence

AI and blockchain are technologies at the forefront of innovation. Both are poised to revolutionize the way we interact with technology, and could have massive implications for industries as varied as healthcare, logistics, and finance. But, perhaps most importantly, both have the potential to democratize access to data and information that was previously unattainable or controlled by centralized institutions.

Artificial Intelligence (AI) is a term that refers to a broad range of technologies that can learn from their environment, make predictions and take actions in order to complete tasks. AI enables machines to see, hear, talk and think like us. AI already powers many aspects of our everyday lives through intelligent personal assistants such as Siri or Alexa and other smart devices such as Google Home.

Blockchain is a distributed ledger technology that enables a decentralized network of computers to maintain an updated record of all transactions that occur on the blockchain. The most well-known implementation of blockchain technology is bitcoin (BTC), which has enabled a “trustless” peer-to-peer financial system without any intermediaries.

AI is one of the hottest topics in tech right now with companies like Google taking center stage in the development of smarter machines capable of automating entire industries. AI is not just for mobile phones: Blockchain and AI are two of the most talked-about technologies of the last few years. The rise of Bitcoin and other cryptocurrencies, as well as companies like IBM Watson, have created a lot of buzz around both fields, but what do they have to do with each other?

The convergence of Blockchain and AI may seem unlikely. After all, AI is all about building intelligent machines that can make decisions by processing data. What does this have to do with Blockchain’s distributed ledgers? It turns out that these two seemingly unrelated technologies can help each other in powerful ways. 

The Convergence of Blockchain and AI 

Artificial intelligence has some profound applications in the world of finance. Machine learning can be used to predict trends in equity markets, for example, allowing investment firms to make trades with high chances of success. However, the finance industry still requires humans for many tasks, including analyzing those predictions and making final trades.

Machine learning is a subset of artificial intelligence that focuses on the development of computer programs that can access data and use it to learn for themselves. Machine learning algorithms build a mathematical model based on sample data so that the computer program can use the model to make predictions or decisions without being explicitly programmed to do so.

The first use case we will explore is how Blockchain can improve machine learning algorithms by providing more accurate data. Machine learning algorithms require large amounts of data for training purposes. However, since many companies strictly guard their data, it is difficult for researchers to obtain sufficient quantities of data.

As time goes on and more computers gain the ability to process data by themselves, we may see entirely automated investment firms staffed only by AI algorithms. This would obviously require a new kind of financial system, one that grants AIs full ownership of their assets and allows them to liquidate them whenever they want. 

The intersection of AI and blockchain is a natural fit. AI has the capacity to enhance machine learning, image recognition and a host of other technologies that are supported by blockchain.

The convergence of blockchain and AI can enable the latter to create and trade financial products in an autonomous manner. It can also make machines more trustworthy, given the immutable nature of blockchain. AI will enable machines to be fair and ethical, which may lead to machines treating humans better than they are treated already.

Blockchain can have a number of applications for artificial intelligence, especially in terms of making AI more efficient and transparent. Using smart contracts, AI applications can be decentralized, running on a network of nodes and increasing their reliability. Blockchain can also increase the efficiency of AI systems by helping them to pool resources while maintaining security and privacy.

The convergence of Blockchain with AI can enhance machine learning by drawing on distributed computing power and huge data sets. Enhancing machine learning will enable artificial intelligence to create and trade financial products autonomously, as well as provide insights which were previously impossible due to data limitations, thus improving financial markets as a whole.

Data contained in Blockchain are known as “Smart Contracts,” which are essentially self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. This allows for a high level of transparency, security, and traceability — characteristics that are not found in traditional contracts stored in databases.

According to Harvard Business Review, 80% of all relevant data will be unstructured (i.e., scanned images, audio files or video) by 2020. By its nature, blockchain is a closed system, typically only allowing data in or out of the network via the network administrator. AI can rapidly and comprehensively read, understand and correlate data at incredible speed, bringing a new level of intelligence to blockchain-based business networks.

AI can also enhance the security of blockchain networks. Blockchain records transactions on a distributed public ledger that’s tamper-proof due to its encryption, but that doesn’t make it hacker-proof. As with any other software system, hackers are constantly working to break into blockchain applications. AI can help secure blockchains by automatically detecting and stopping unauthorized access attempts and other cyberattacks before they cause damage.

AI adds intelligence to blockchains

AI adds intelligence to blockchain by giving decentralized networks the ability to learn from their own data and make decisions based on what they’ve learned — something prior generations of enterprise software were incapable of doing. For example, AI can help companies use decentralized applications (dapps) built on top of blockchain networks to conduct sales transactions or manage supply chains more efficiently.

Blockchain provides an audit trail

Using blockchain to store and distribute AI models provides an audit trail that companies need in order to comply with regulations such as GDPR (General Data Protection Regulation). A large percentage of the world’s data is not in use. One key reason is that it is not organized enough to be usable. Blockchain platforms like IBM’s are built to organize data, and that opens the door for AI to make sense of it. A blockchain platform can also store and distribute AI models, which provides an audit trail for the training and deployment of those models. The original model as well as all updates can be tracked through the blockchain. Blockchain provides assurance that each party using an AI model has access to the most up-to-date version at any given time. It also ensures that models cannot be easily tampered with or replaced without detection.

Blockchain platforms can become a trusted data source for AI systems by organizing and storing large volumes of data from multiple parties in a permissioned or permissionless manner. Once stored, AI systems can run algorithms on the secure, decentralized ledger to identify patterns and make predictions. At an enterprise level, this means that information could be shared more freely between business partners while still maintaining privacy, because they would have a secure, immutable record of who had access to what information.

When it comes to the intersection of crypto and artificial intelligence, there are two completely different aspects coming into play:

The use of AI in the financial sector: The big banks have invested a lot of money in AI over the past few years. One example is JP Morgan, which has been involved in AI for several years already. From an investment perspective, a lot of people are trying to figure out what will happen if the big banks start using their own in-house technology to start trading cryptocurrencies with their clients.

The use of blockchain in the AI sector: When you train an AI system using data sets, you need large amounts of high-quality data. And this is where blockchain can help. By using blockchain technology, you can store and distribute AI models as well as track and audit them. If you are working with data sets that can be stored on the blockchain, then AI agents could use that data without accessing sensitive information like names or addresses.

There are several ways in which AI can influence cryptocurrency and blockchain:

1. Faster and better data analysis-Artificial intelligence can be used to analyze market trends and predict changes in the price of cryptocurrencies.

2. Automated trading – AI is also suitable for automatic trading, which can be very useful in periods of high volatility, when it is not possible to analyze the market situation for a long time.

3. Better security of user funds – AI can provide additional protection for users’ wallets against unauthorized access or theft of funds from them.

4. More reliable prediction of market trends- Improve consensus mechanisms – It will be more efficient than PoW (proof of work) or PoS (proof of stake). AI may also be used to match buyers and sellers as well as help in making predictions using algorithms.

5. Using blockchain to store and distribute AI models and enhance blockchain security. A good example of this is DeepBrain Chain, an artificial intelligence computing platform based on blockchain technology developed by DeepBrain Chain Foundation Ltd, a company registered in Singapore which aims to provide computing power. 

6. Reduce transaction costs – The use of AI can help in reducing transaction costs by eliminating intermediaries

7. The combination of both technologies will open the door for new innovations and opportunities for business growth.

8.  Using blockchain to enhance AI training data provenance and veracity.

AI will be used in the blockchain and cryptocurrency world is to enable a whole new set of applications that are not possible without it. For example, an AI-powered autonomous agent can make decisions based on data fed into it. Based on the data, it can buy and sell cryptocurrencies automatically on exchanges or even invest into token sales. Some people have even gone as far as saying that it will be possible for an AI-powered autonomous agent to create its own cryptocurrency, funded by crowdfunding campaigns like ICOs

There are already a number of AI-based applications that use blockchain, and many more on the way. In fact, according to a report from IHS Markit, global revenue for blockchain solutions is expected to exceed $7.7 billion by 2022.

For all of the hype around AI, it’s important to remember that it’s still just a tool. Like any other tool, whether it is a hammer or a computer, the value of AI is in how well it can be used to complete a specific task. It is being used by businesses today in many ways: from IBM Watson analyzing an individual’s data to provide personalized health suggestions, to Tesla’s self-driving cars traversing the highways and byways of America.

Where artificial intelligence (AI) meets blockchain a new world of possibility opens up for both technologies. We are not going to talk about the technicalities of AI and blockchain, but we do want to understand how the two can be used together. Cryptocurrency relies on this technology to work and has successfully been able to provide decentralized financial services to individuals.

Artificial Intelligence has appeared on the market but is not yet well understood by the general population. However, it is used in several areas and this includes crypto-currencies, which also have a similar history to AI.

Despite the high expectations of these technologies, there are risks associated with their use. One of them concerns AI: data collection that could lead to manipulation of users’ tastes based on their behavior. This would allow companies to influence people’s choices. If this data were to be stolen, it would be a leak that could be very damaging to users’ privacy. It should not be forgotten that the user’s personal information is valuable to hackers and they are looking for it through different means.

On the other hand, blockchain technology has problems related to its security, as hackers can take advantage of its vulnerabilities and access users’ confidential information such as passwords or exchange addresses.

AI could be used within cryptocurrency and the blockchain; some of them are currently being explored while others are still mere speculation. Here are some of the numerous ways AI could be used in blockchain and cryptocurrency.

Both AI and Blockchain have various fields where both can be integrated for better results, for example Artificial Intelligence can make cryptocurrency mining more efficient and secure, also AI can be used to predict market prices using sentiment analysis on social media data. So what happens if we use both artificial intelligence and blockchain together?

AI-driven bots that can predict market trends

One way AI can be applied to blockchain is through the development of tradebots. These bots would be able to analyze vast amounts of data and use it to make predictions regarding price movements within the market. Tradebots would likely be far more accurate than human predictions, which will give them an advantage when they buy or sell a specific asset.

However, it’s important to note that these bots will not always be 100% accurate. As a result, their risk management systems should be well designed in order to prevent significant losses from occurring.

AI-driven bots that can mimic human investors

Another application for AI involves the development of autonomous tradebots that act like human traders would. These bots would have their own set of metrics that they use to determine whether or not to buy or sell a certain asset, but they’ll also have access to social media feeds that allow them to see what other people are saying about cryptocurrencies and other assets. This information can easily affect prices in the short term

The problem with blockchain is that it requires huge amounts of electricity and computational power to function. It requires dedicated ASIC miners working day and night who in turn are rewarded with tokens. This sounds like a valid system in theory, but when you look at it closely, you realize that this system causes undue harm to the environment. And it is because of this that AI can come in handy.

The impact of AI on the blockchain industry will be massive, and as is always the case with new technology, there are both concerns and prospects.