The blend of artificial intelligence and decentralization has yielded unique tools and solutions that can transform the world. AI can reduce latency in decentralized networks, while blockchain can address some of AI’s issues, such as preventing unauthorized data tampering.
Considering these benefits, developers are starting to leverage the two technologies to create AI-based coins, which are recognized for being more versatile, as automation is smarter and faster. The best cryptocurrency utilizing artificial intelligence should employ superior safety measures, as well as recognize its own limitations due to the novelty of this technology sector.
AI blockchains supporting these tokens have the potential to take data security and integrity to the next level. Moreover, fraud detection will be more efficiently enforced, which is a prominent issue in the ledger community. Therefore, let’s explore what AI-based blockchains can do and what some known examples are.
What’s the definition of an AI blockchain?
While defining an AI blockchain shouldn’t have limits, since this is an evolving industry, some features best describe them:
- They’ve got a distributed ledger technology where transactions are transparent;
- They operate with smart contracts to automate tasks;
- They work with AI algorithms (machine learning and deep learning models) to analyze data;
- They are interoperable with other systems or platforms;
- They benefit from AI’s advanced data management and the blockchain’s encryption;
How can AI and blockchain benefit organizations?
Using AI with blockchain and cryptocurrency could enhance companies’ operations and bring us closer to Web3 by offering:
- Data security and privacy due to continuous monitoring of anomalies;
- Improved decision-making as AI generates predictive analysis or detects future trends;
- Greater transaction transparency in addition to AI interpretation;
- Reducing dependency on intermediaries and lowering operational costs;
- Detecting suspicious activities in real time and strengthening fraud prevention measures;
How can AI-based blockchains be more accessible?
Considering their challenging technology and complex browsing, these networks are still working to become accessible and available for the regular user. This is made possible through the development of decentralized applications that incorporate AI tools and blockchain-based features.
Some high-tech companies have already approached this issue through different features, such as the following:
- The subscription-based model supports dApps, offering users access to advanced analytics and AI-driven insights for a recurring fee. Such an example is in SingularityNET, a blockchain hosting AI services such as NLP on a subscription basis;
- The decentralized marketplace model offers services of trading digital assets with the help of AI analytical insights. OpenSea is one of the most prominent decentralized exchanges that’s starting to explore AI capabilities;
- A tokenization-based economy involves earning or spending tokens for a service, as well as getting incentivized for network participation. Axie Infinity uses this system to power up its play-to-earn gaming ecosystem, in which AI improves engagement;
How can AI-powered blockchains improve real-world industries?
Although they require more research and development, blockchains and decentralized apps using AI have the potential to bridge the gaps between traditional technologies and Web3. Firstly, these tools are most useful in decentralized finance apps, as they efficiently analyze data such as social behavior and transaction history, allowing the AI to reduce biases and support increased accessibility.
Another useful use case involves analyzing real-time data in supply chain management. The AI feature can detect inefficiencies in supply chains and help companies improve their logistics and optimize delivery timelines. For instance, IBM’s Food Trust leverages both technologies to improve food supply chains and reduce waste.
Of course, the most important improvement AI-powered blockchains can offer is in the healthcare sector. This can support patient data privacy, as healthcare providers can securely share sensitive data on blockchains, while the AI department can enhance diagnostic accuracy.
What are the challenges AI blockchains face?
The intersection of AI and blockchain presents challenges from both perspectives. On one hand, scalability remains an issue in blockchains, since balancing the increasing number of users with speed and efficiency requires specialized optimization. However, the use of AI can counteract it by improving the management and processing of data. This is possible because the machine learning analyzes transaction patterns and predicts when network congestion is likely to occur. In return, the blockchain can allocate resources efficiently during that timeframe.
On the other hand, blockchain can be used to manage transparency, immutability, and accountability in AI. Moreover, a decentralized network could be efficient in licensing data to the AI provider under certain terms and conditions. With blockchain, AI may no longer be guilty of unjustified actions due to biases.
Do current legal frameworks limit the use of AI-powered blockchains?
Regulations around AI and blockchain are still underdeveloped, considering their complexity and newness. Unfortunately, governments are not yet sufficiently engaged in this matter, even though decentralized systems could improve traditional ones.
Nils Andersen-Röed, Global Head of FIU at Binance.com, believes that “Despite advanced privacy tools, every crypto transaction leaves a trace – a crucial asset for modern law enforcement. As crypto crime grows more complex, global cooperation and strong public-private partnerships are not optional, but essential.” Therefore, AI and blockchain require better enforcement and more awareness.
Financial institutions must manage the following in AI regulation:
- Defining reasonable boundaries for companies using it;
- Knowing what to regulate, a one-size-fits-all approach is unsuitable;
- Deciding who regulates AI and what methods are used;
Therefore, AI requires a new law framework from scratch, which takes time to build and must be continuously adapted, as the technology evolves over time. On the other hand, blockchain guidelines also must tackle:
- The nature of transactions on the ledger;
- The jurisdictions issuing tokens;
- The smart contracts’ ability to automate operations;
Additionally, there are only a few recommended settlements for blockchain and AI. As both solutions develop and merge more, governments will have to approach things differently.
Final considerations
AI-based blockchains are on the rise, as they can significantly improve real-world industries by improving data sharing, predicting stock market movements, and even ensuring privacy and control over networks. However, each technology goes through different challenges that companies are learning to tackle. Nevertheless, the sector would flourish more with an intuitive and thorough legal framework. As blockchains driven by AI transform the app development landscape, companies will want adaptable, scalable solutions to stay ahead of the curve. The nandbox app builder provides a no-code platform that makes it simple to create, modify, and deploy apps rapidly, whether you’re investigating decentralized technologies or incorporating AI features into your mobile apps. When paired with the know-how of a software development firm, nandbox enables businesses to confidently and nimbly embrace the next wave of digital transformation.
