How Do Blockchain and Artificial Intelligence Collaborate?
Emerging in the relatively distant year of 2008 blockchain quickly overturned the entire world of traditional finance, reshaping the familiar system for many. A new space called Web3 began rapidly forming, based on decentralized protocols and crypto, capable of creating more convenient conditions for life. Technologies related to cryptocurrencies and blockchain have forced a reevaluation of trust principles in financial systems and a reassessment of security parameters, including digital security.
In the year 2024, a new significant update is on the horizon — the integration of artificial intelligence capabilities with blockchain functionality. Where will this interaction lead humanity? What examples already exist?
Are Blockchain and AI incompatible?
For a long time, it was believed so, which is evident from the fact that it took about 15 years from the emergence of blockchain until its integration with AI.
When it comes to conflicts in the operation of these two technologies, the following arises:
- Blockchain is transparent and slow, while AI is fast but closed.
One of the main principles of blockchain operation is the transparency of the chain. To prevent anyone from interfering with the system’s operation and clandestinely altering any of its blocks, all actions and data remain in open access. This increases users’ trust in the technology.
- Decentralization.
Blockchain was initially created in opposition to centralized platforms in the traditional financial system, where all power is concentrated in the hands of one controller. In the new system, management was distributed among all participants in the process, making the work more democratic.
- Expenses.
Regarding AI and machine learning, the process is quite expensive and resource-intensive. Only large corporations, which happen to value centralization more than a democratic approach, can afford it. After all, they want to be rewarded for their investments and services, something decentralization cannot provide.
Unpredictable AI versus Strict Blockchain
AI learns quickly and constantly requires “feeding”; it often relies on personal user data. Frequently, the information on which artificial intelligence learns is taken from the network or personal accounts, which users may not appreciate, especially when they find out that their data has been borrowed without their knowledge. Moreover, it’s not always possible to predict exactly what information AI will need.
In contrast, blockchain operates strictly, predictably, and transparently. Integrating AI into it would pose a threat to security and confidentiality. Due to the continuous development of technology, by 2023, experts and developers found a way to combine artificial intelligence and blockchain. This gave rise to new, quite interesting solutions that are now coming into effect.
AI-Based Smart Contracts
Smart contracts are special algorithms capable of automating the process of executing conditions and agreements in the blockchain. They provide parameters of reliability, transparency, autonomy, and decentralization — all fundamental aspects of the technology.
Creating smart contracts has eased the life of those who had to manually verify all the conditions of an agreement and its execution. It saved a lot of time and resources, but it still fell far from perfection. Smart contracts poorly adapt to changes, malfunction, and sometimes fail to handle tasks. Periodically, their operation requires rechecking.
Artificial intelligence, due to its functionality, can monitor the activity of smart contracts and improve it. With the introduction of this new technology, smart contracts will be able to perform more complex tasks.
GPT-3’s Capabilities
The past year vividly demonstrated how simple and user-friendly ChatGPT is, and how many small tasks it can handle. While it mainly learned to write texts, developers are confident it can do much more. Let it enter the blockchain, and it will quickly enhance the generation of content needed for transactions.
For analytical platforms, such a solution will be indispensable. Complex models will break down into simpler ones, and blockchain will become understandable to a larger number of users.
Increased Computing Power
The functionality of AI allows for less effort to be spent on task execution, meaning more tasks can be accomplished with the same capacities. For blockchain, this is invaluable since accumulating large amounts of data reduces power and creates certain problems. Artificial intelligence can relieve the system and adapt to process new data volumes.
Transparency
The point that hindered the integration of AI and blockchain is finally addressed. The “mystery box” will become transparent when AI technologies start working in a chain. Users will be able to control everything AI learns and the basis on which it builds its knowledge.
Vitalik Buterin About AI and Crypto Collaboration
Vitalik Buterin, co-founder of Ethereum (ETH), has recently articulated compelling prospects for integrating artificial intelligence within the realm of cryptocurrencies. He has introduced a novel perspective on the collaborative potential of AI and blockchain, outlining four noteworthy approaches. The following delineates these four methods through which AI and blockchains can form synergies:
1. AI is the leader. In this scenario, AI actively engages in processes where the primary source of input emanates from a protocol involving human participation.
2. AI as a companion in gaming. Envision AI aiding users in comprehending the intricacies of the cryptocurrency domain, ensuring clarity in all signed agreements and transactions.
3. AI establishes governance rules. This approach involves AI directly collaborating with blockchains and decentralized autonomous organizations (DAOs) to dictate governance protocols.
4. AI as the ultimate objective. Creating networks and DAOs with the overarching goal of supporting and utilizing AI in the future becomes the focal point of this strategy.
Vitalik Buterin’s insights underscore the potential for a symbiotic relationship between AI and blockchain technologies, presenting innovative avenues for their collaborative integration within the crypto space.
Conclusion
The year 2024 heralds a new era of possibilities as artificial intelligence and blockchain functionalities unite. While challenges persist, the strides made in combining these technologies open avenues for further exploration, innovation, and, ultimately, an optimistic outlook for the evolution of our technological landscape. The ongoing progress in the Web3 space shows us how these advancements will continue to shape and enhance the quality of human life.
If you want to learn more interesting facts about crypto then don’t forget to check out our blog! You might like our articles “Privacy Coins: from A to Z” and “The Impact of Crypto on Unbanked Populations”.
