AI is starting to increase in popularity with new technologies pushing the boundaries of what’s possible. Machines are now able to mimic human intelligence, to a point, as algorithms are being developed to allow machines to complete tasks that would usually be done by humans. AI’s ability to make complex decisions and complete tasks on a wide spectrum has made people consider using it to essentially do work for them.
When it comes to Blockchain, it initially gained prominence as a technology for cryptocurrencies like Bitcoin. It consists of a chain of blocks that each contain a record of transactions. These transactions are transparent and traceable, which enhances trust between users of the technology. However, it is highly secure and resistant to tampering so you know that your transactions are safe.
The combination of AI and the Blockchain has changed the way we buy, sell and manage properties, as it changes the dynamic of real estate. In this article, we will explore the world of Blockchain and how AI is shaping the Blockchain landscape as the new technology on the market. We will also take a look at the future of AI in Blockchain.
Enhanced security
Security can be significantly enhanced with the use of AI in Blockchain. To secure data, Blockchain technology relies on cryptographic techniques, as this makes it difficult for unauthorized users to access. This can also be used for crypto recovery. AI can add an extra layer of protection, as it allows for proactive surveillance that can notice any abnormal or strange behavior that could negatively affect your Blockchain.
AI can also help prevent any frauds and scams by identifying any behaviour that is deemed to be fraudulent. It achieves this through several methods:
- Malware detection: If your Blockchain network is infected with malware it can compromise the security of it. AI can detect and identify this before it happens.
- Threat prediction: Historical data can be used by AI to predict any potential threats. It will look at any past cyber attacks so that it can learn how to deal with them in case it arises again.
- Behaviour analysis: Any sudden changes to user behaviour can be picked up on by AI, so if sensitive information has tried to be accessed, AI will be alerted to this.
- Authentication enhancement: Biometric authentication enhances the security of Blockchain technology. It allows users to be recognised through ways that are personal to them, such as their face, fingerprint or voice.
- Smart Contract Security: Many Blockchain applications need smart contracts. AI can take a look at these contracts to explore if there are any weaknesses.
Smart contracts optimization
AI can execute and make smarter decisions to make the Blockchain process more efficient. However, this does rely on the accuracy of predetermined conditions. Enhanced monitoring, predictive analysis, automated error handling, natural language processing and scalability are all ways that AI can monitor and manage smart contracts and make sure everything is correct with transactions.
The use of AI can also reduce contract disputes and errors, as it offers innovative solutions to mitigate any issues that might arise. The tools and methods that reduce these errors include smart contract auditioning, risk assessment, conflict resolution, data verification and smart legal contracts.
Supply chain management
AI has the power to identify patterns, detect abnormalities and optimise processes to improve supply chain management. This means that supply chain managers are able to gain valuable information about their Blockchain transactions, which allows better management, reduced downtime and the seamless moving of goods.
Using AI in Blockchain can introduce real-time tracking and traceability of transactions. Delays and lack of visibility is a constant issue for traditional supply chains, but the combination of AI and Blockchain is able to eradicate these issues. The AI algorithms put into place are able to analyse what is moving through the Blockchain with the use of sensors and GPS devices that provide real-life information.
Identity Verification
To make your Blockchain more secure, you could use AI-powered verification methods. The AI algorithms can add an extra layer to the already secure Blockchain system. Biometric authentication, smart contracts for verification and decentralised identity are ways that AI can improve the identity verification process.
The combination of AI and Blockchain can also mitigate the threat of identity fraud and theft. These threat mitigations include:
- Immutable records: Once verified and recorded, identity data cannot be altered or deleted without permission from the network. Unauthorised changes are then avoided.
- Enhanced privacy: AI gives users greater control over personal data. It can identify who can access this information so that sensitive data is protected.
- Real-time verification: Fraudsters will find it more difficult to use stolen data if real-time verification is required beforehand. Suspicious activities can be flagged by AI technology.
- Cross-border verification: Cross-border transactions are made more secure and efficient with AI in Blockchain. This can be of benefit to international trading options.
Asset tokenization
Physical assets are seen as digital tokens on the Blockchain with the use of asset tokenisation. The identification, valuation and management of these tokens is enabled by AI algorithms with precision. These algorithms analyse various factors to determine how much each token is worth, which ensures that a broader range of investors can have access to high-value assets. Investors can also have a clearer view of their assets and holdings based on real-life data being monitored by AI.
Global accessibility, fractional ownership, enhanced security and smart contracts are significant advantages of AI-powered asset tokenisation when it comes to liquidity and accessibility. More people from a wider variety of locations are now able to participate in the market, eliminating geographical boundaries.
DAOs
DAOs rely on Blockchain technology to make decisions without centralised control and AI plays an important role in this. Smart contract optimisation, decision support, predictive analytics and dynamic governance are ways AI is helping ensure efficient and effective decision making.
AI can provide valuable insight to DAO members by analysing data from multiple sources. This minimises the risk of errors, and well-informed decisions are made. Here are some of the benefits of DAOs in Blockchain:
- Decentralisation: Instead of relying on the decisions of one person, such as a CEO, a DAO can decentralise authority across a much larger number of users.
- Participation: A DAO can encourage token holders to cast votes, burn tokens or use tokens in the best way to help the entity.
- Publicity: Votes are cast via the Blockchain and made viewable to the public. This will discourage acts against the community.
- Community: Having a DAO in place can encourage people from different places to come together for a sole cause. Token holders can then interact with anyone no matter where they are.
Interoperability
Interoperability, also known as cross-chain integration, refers to the ability of different Blockchain networks to communicate with each other. AI technology helps with finding the common ground needed for the interaction and sharing of information. It can decipher language to establish a way of communicating that everyone can understand. This enhances how efficient data transfer is and it ensures cross-chain transaction security.
This is important because it enhances liquidity, improves scalability, decentralises personal finances and reduces transaction costs as a whole.
Forecast trends
Being able to forecast trends and market behaviour can be done through predictive analytics. It predicts market prices, optimises the supply chain, detects fraud and analyses customer behaviour. AI will look at and examine historical data of cryptocurrencies and Blockchain assets, and then recognise the patterns to predict the future and forecast price trends.
AI can enhance the complex decision making processes involved with Blockchain projects by providing data-driven insights. It assists with the following:
- Scalability planning: AI has the power to analyse network data and predict when scaling solutions are required. This keeps the Blockchain running efficiently.
- Tokenomics design: Designing tokens by analysing the market is assisted by the use of AI. It means that they can then be distributed fairly.
- Risk assessment: Assessing the risks of a project is essential when starting a Blockchain adventure. AI can evaluate historical data to predict any risks.
AI’s Future in Blockchain
It is expected that we will see a deeper integration of AI and Blockchain with virtual reality, which should lead to the creation of virtual worlds like the metaverse. This will provide new opportunities for investors and an enhanced user experience. This can then lead to a further growth of decentralised finance, which will be driven by AI-enhanced security and cross-chain integration.
Having AI in Blockchain can also lead to a rise in Central Bank Digital Currencies (CBDCs). These offer possibilities for programmable money, automating payments and reshaping the financial landscape. This can lead to more businesses adopting Blockchain for their operations, as it can streamline their process while adding extra security.
We should also expect a legal and regulatory evolution as the Blockchain and AI continue to grow and develop. There should be more actions against unregistered cryptocurrency products, which will add legal clarity to Blockchain developers.
Read Also: Blockchain and Identity Verification: A New Age of Security and Transparency
