How AI can Empower Blockchain

If there are two buzzwords we have been hearing over and over the past few years, it is AI and Blockchain. The beauty of blockchain and AI is that they have been facilitating and empowering all other domains. So an interesting question is: How can AI empower blockchain, and what can they do together?

AI is an umbrella term, and within it are many different technologies. Of them, some are more suited to using blockchain than others. 

What includes AI technology?

AI is an amalgamation of many different technologies. Let’s take a look at:

• Machine Learning:  According to IBM, 

“Machine learning is a branch of artificial intelligence (AI) and computer science which focuses on the use of data and algorithms to imitate the way that humans learn, gradually improving its accuracy.” 

• Deep Learning: Deep Learning uses neural networks which attempt to replicate a human’s mind. Deep learning models can analyze complex data and make decisions based on patterns learned. 

• Natural Language Processing (NLP): NLP enables models to understand and interpret human language and support use cases of speech recognition, chatbots, etc.

• Computer Vision: Computer Vision uses AI to interpret visual data. It can recognize and detect objects and faces, and extract meaningful information. 

• Reinforcement Learning: The process of trial and error in AI to learn from the decisions made. This process is more commonly known for use in optimization problems and games.

AI’s biggest dependency: Data

As can be seen from AI’s different domains, the biggest dependency of AI is data. The accuracy of the models of the AI first, and foremost, depends on the data available. Finding large and clean enough data is one of the biggest challenges of a good AI model. An excellent example of this is ChatGPT, which can achieve the use case because of the incredible amount of data it has been trained on.

Blockchain - A Data Fortress

Blockchain realistically is a data structure, and each block of the blockchain stores data. Depending on the implementation and application, different blockchains hold different data in their blocks, including but not limited to transactions, metadata, smart contracts, etc. This makes blockchain a data mine, with data stored from millions of users from worldwide. 

Because blockchains are decentralized, the data is readily available to everyone. Still, the point to note here is that since blockchain offers anonymity and security, individuals’ privacy remains intact in blockchain data to train AI models for various Blockchain and AI use cases. Thus, blockchain is not a data mine but a data fortress. The abundance of data is still secure and does not reveal something on a private and personal level. 

Now that we have seen how blockchain and AI projects correlate, 

What can AI do for Blockchain?

AI technology can empower blockchain technology in multiple ways. The industry can take benefits from AI and blockchain by allowing AI models to deal with complex ideas and the ever-evolving ecosystem. Some things blockchain AI can do include:

• Enhanced trading: As AI for blockchain can compute large amounts of data and draw analysis from it, traders can leverage AI models to identify patterns in the crypto trade market and monitor the different factors. The AI-powered trading systems can execute trades based on actively incoming data, and the existing one. 

• Risk management: Without a doubt, the crypto market is very volatile. In the trading of cryptocurrencies, risk management is of utmost importance. AI can help monitor market conditions, do sentiment analysis of social media platforms, and provide real-time risk assessment by analyzing various factors, thus allowing users to do high-level risk management.

• Fraud detection: AI models can be trained on previous frauds to determine whether something inside the blockchain ecosystem is a fraud. From ICOs to hacking, AI in blockchain can detect anomalies and suspicious activities on the network and flag them to ensure the user does not incur financial losses and keep the stability of the network.

• Improved security: AI models can also be trained to monitor network traffic and detect vulnerabilities and threats. This provides AI and blockchain technology with an extra layer of security. 

• Smart contract optimization: Smart contracts are pieces of code that run on blockchain. AI models can be trained to audit smart contracts and detect if the smart contract has any unseen issues or backdoors. This helps increase the efficiency and stability of the blockchain.

• Market research and sentiment analysis: AI models can be trained to analyze the market by taking input data from social media platforms and articles to assess the public’s sentiments toward blockchain and cryptocurrency, which in turn molds the policies and the value of the cryptocurrency on the blockchain. This not only helps traders but also helps converge to a more stable blockchain.  

We have seen what AI technology can do for the blockchain ecosystem. Let’s review some real-life use cases where AI and blockchain technology can come together. 

What can Blockchain and AI do together?

• Supply chain: Blockchain and AI have been used separately for supply chain use cases. Blockchain allows decentralized supply chain management with transparency and a system where all parties can be involved and have access to the data without the fear of fraudulent contingencies.

• AI models have been used in the supply chain to automate the supply chain by predicting what and when can be needed and auto-manage the supply and demand. Together, they can form a power supply chain management system. 

• Security: As mentioned above, AI can enhance blockchain’s security. Likewise, blockchain can do the same for AI. Together, they can be used in any system where, traditionally, only one is used to bolster security.

• Financial services: The blockchain ecosystem already offers an economic environment, known as DeFi. AI models can bring stability and predictability in DeFi. The trading systems for AI-based cryptocurrencies can become more prevalent than statistical analysis-based trading systems. 

• Healthcare: Storage patient data and automated prediction and diagnosis of their condition can be a massive use case for AI and Blockchain in healthcare. Blockchain technology can store and share patient data and records securely, and AI models can identify recurring patterns, schedule appointments, and analyze the data to provide a better healthcare solution.

These are only possible use cases of when AI technology and Blockchain technology are put together. The sky is the limit for what these two huge domains can do when they are pushed together. We here at Invoblox are always looking for innovative ideas to work on. If you are looking for someone to put your AI and Blockchain picture together for you, we would be happy to lend a hand.