Skip to content

The Powerful Relationship Between Blockchain and AI

Words by Quincy Jones & XDC Foundation

Avg. 4 Min read

The power of artificial intelligence (AI) has taken the tech industry by storm in recent months. Years of computer science modeling through machine learning and deep learning have provided the traction for what has become a wide range of AI use cases. Its capabilities are now evident in everyday use, whether giving instructions to a smart assistant like Siri or sitting behind the wheel of a self-driving car. And with supervised and reinforcement learning, conversant AI systems can handle an articulate back-and-forth discussion with a human. The trajectory of AI’s potential impact on our lives seems long and steep.

Blockchain technology provides a unique opportunity for big data to operate like never before. Previously, a subset of private data would have to be gathered over time until it became rich enough for its artificial intelligence (AI) to run insights.

Coinmarketcap recently published a very informative piece about the merging of blockchain and AI. Without getting too much into why AI and blockchain make so much sense together, the article outlines a dozen or so AI projects on blockchain, from generative NFTs to health and wellness applications. But why? Why does the overlap of blockchain and AI present so much promise in the long term? Let’s first discuss the basics of this powerful combination.

Through behavior pattern observations and learning, traditional AI systems analyze all sorts of operations, particularly for financial institutions and financial regulators. These tasks can range from fraud detection, to audits, to live market research, making way for predictive analytics.

Data to an AI is like a knife sharpener to a blade. The more data, the more accurate and precise the results are — similar to the more you sharpen a knife, the easier it is to cut. The difference is AI will have an infinitely sharpening blade that makes it more accurate over time.

As data on blockchain is much more accessible, sharpening this blade becomes a lot easier. On-chain applications generate more user data that AI systems can analyze almost instantaneously. Blockchain can not only extract rich data from smart contracts, it can also pull data from the relationship between one contract and another, or between contracts and users. This allows for data insight on behavioral patterns like we’ve never seen before.

For those worried about privacy, this will not be private identifying data. The data being analyzed will be similar to public market data provided by exchange and regulator agencies for transparency, the way public companies have reporting standards. The big difference is the on-chain aggregate data being reported will be public and automatically produced instantaneously.

When you couple AI with blockchain technology, there is just so much more data readily available. Blockchain and AI would allow financial regulators to conduct live audits and fraud detection. Decentralized applications on a given blockchain network can maintain a close relationship with AI to root out bot users, analyze user activity, generate complex user stats, and conduct in-depth evaluations of third party application activity.

Data is power. As more applications come onto blockchain networks, their activity and growth can be monitored in new, unprecedented ways. It can be analyzed in real time for insights into new companies, allowing for creation of better growth models or increased profitability.

Real time monitoring of an economy, afforded uniquely by blockchain and AI, can provide insight into macroeconomic systems that is simply not possible through other means. Economic growth in an entire industry could be tracked live, allowing economists and lawmakers to craft relevant policy or detect widespread impropriety. Government subsidies could be doled out while AI monitors for fraudulent activity.

There are over 100 projects on blockchain — or in the pipeline — that incorporate AI. Some of these use — or plan to use — AI as a predictor much like traditional AI platforms. These capabilities range from spot stock trading and hedge funds, to disease prevention and diagnosis. Others are simply expanding AI capabilities in a very general sense, and bringing them on blockchain. But down the line, as more data goes on chain, we will see even more exciting, real-time, extremely practical use cases like what I outlined above. These AI capabilities will only be possible on blockchain networks.

When coupled with the distributed ledger of a blockchain network, the possibilities of AI are nearly limitless. And as no one party has a monopoly on subsets of data, not only will the intelligence be richer, but the AI capacities themselves can grow by leaps and bounds through open source innovation. It’s almost impossible to predict exactly what is in the promising future of blockchain plus AI, but I can’t wait to see what it brings.

READ more articles by XDC Foundation community members on Medium.

Other content you might like

#rwa, #XDC, Insights

What Would it Take to See an NFT Revival?

XDC Weekly May 12th - May 18th, 2024

XDC Weekly Apr 28th - May 4th, 2024

We value your privacy

We use cookies to enhance your browsing experience, serve personalised ads or content, and analyze our traffic. By clicking “Accept All”, you consent to our use of cookies.