Blockchain and AI are the two most disrupting technologies even when we speak about them individually. But what will happen when we combine them? They will radically change many industries, boosting their productivity up to a new level.
They will emphasize the advantages while smoothing up each other's flaws. AI tools will become even more powerful while becoming censorship-resistant. At the same time, artificial intelligence can make blockchain’s smart contracts even more “smarter” by teaching them to react to complex triggers.
And it’s just the beginning of how decentralized blockchain tools will change everything: from healthcare to the logistics industry, from agriculture to intellectual property usage. Are you already interested? Read this article to sort everything out with Defiway!
Fundamental Understanding of AI and Blockchain
AI plays an essential role in modern data processing. AI services can automate many tasks like research, data cleaning, classification, and more. AI tools are great for pattern identification, which is crucial for blockchain projects.
They save time, removing mundane tasks from an expert’s schedule. Businesses can make better data decisions in less time and under the same budget.
Blockchain is a decentralized technology for transparent and tamper-proof data recording. It’s almost impossible to delete or change information in blockchain.
Each block is encrypted and has a reference to the previous one. That’s why it is called the “ endless chain of blocks”. This immutability is crucial for blockchain, making it the perfect system for recording important information such as financial transactions, medical records, and property ownership.
In blockchain AI-based services can be used for many tasks, including but not limited to:
- Data cleaning. They identify and remove errors from data sets to maintain high data accuracy.
- Feature extraction. AI algorithms help to identify the essential features in a data set. It will improve machine learning models’ research accuracy.
- Classification. AI services can automatically classify data into various categories. It benefits spam filtering, fraud detection, and medical diagnosis processes.
- Clustering. AI-based tools can group similar data points to enhance customer profiling and market segmentation.
- Recommendation systems. AI services can classify clients’ needs and recommend services that perfectly fit them.
AI-based blockchain tools can be used in supply chain management, giving insights to boost the logistics process. It can become an integral part of healthcare to ease patient care. Decentralized AI services can even validate property rights: intellectual or physical.
The Synergy of AI and Blockchain
A mix of AI technologies and blockchain tools can boost data integrity since blockchain is a tamper-proof register, and AI tools rely on accurate data. No one can single-handedly change or remove data from the blockchain. It is vital for crypto machine learning services, as they rely on accurate and reliable data to make precise predictions.
Blockchain can track the data history, trace the source, and identify potential problems. It improves AI prediction accuracy and helps prevent fraud in blockchain-based systems.
Another aspect of this synergy is the enhanced data security. Blockchain uses cryptography to secure its data, making it almost impossible to hack. AI models often handle sensitive data, so high-security levels are crucial to them.
AI tools can identify patterns and trends in the chosen network. It will benefit the industry in many ways. Investors will see potential trends and can invest in them more, and general users will get access to lending and investment tools that help them build their wealth.
Artificial intelligence in blockchain services also can be used to detect fraud and other suspicious activities. It will protect users and businesses from potential harm. AI can be used as a risk assessment tool to help businesses make informed decisions about their blockchain usage.
Another example of this synergy is compliance tools. AI can help businesses comply with regulations governing blockchain usage. It can help to avoid penalties and ensure that businesses are operating legally.
Real-World Applications of AI and Blockchain Convergence
As I said before, these technologies can benefit each other. In this section, I want to provide down-to-earth examples of their synergy.
In supply chains, crypto machine learning tools can track the goods' provenance and their movement up to the end user. Blockchain records data in a tamper-proof way, and AI tools examine the delivery processes, showing ways to make it more efficient. That way you can be sure about product authenticity. It also enhances your real-time tracking.
Those tools will also benefit financial services as blockchain and crypto are already used in recording and running financial transactions. AI tools explore patterns to detect fraud, phishing schemes, and other criminal activities.
In healthcare, a blockchain is used to store patient data. AI algorithms can analyze it and compare this data to other patients’ records, helping doctors predict health conditions. It can help them to cure illnesses at the early stages, saving money for patients.
This synergy can even complement intellectual property usage! In this situation, blockchain will act as a secure and tamper-proof register. While AI can track if others use copyrighted content or try to plagiarize it.
In the land and car ownership industries, blockchain can make data more transparent and secure. At the same time, AI tools can track property ownership, possible goods deterioration, and when it would be better to replace details with brand-new ones.
AI-based blockchain tools can benefit even the energy sector. They can become a part of managing solutions. AI algorithms can find usage patterns and improve the working process, positively influencing the grid’s efficiency and reliability.
Benefits of Integrating AI with Blockchain
As you see, this integration benefits many industries. First of all, it will enhance data security. Blockchain is a decentralized technology that can protect data from unauthorized access and tampering. AI tools can analyze it to identify patterns and anomalies.
That way businesses can prevent even more potential frauds and other malicious activity. For example, AI tools could identify users trying to use smart contract vulnerabilities.
Another advantage of artificial intelligence in blockchain is the improved decision-making process. Blockchain provides a trusted data source, and AI tools can analyze this information to identify hidden trends and patterns.
You can use this technology to predict customer behavior or identify fraud patterns. Investors can use predictions to find highly promising assets that may go up in price.
This techno-synergy can launch automated smart contracts with AI-driven triggers. They are self-executing contracts that run when both parties agree and meet certain milestones. AI tools automate the agreement process even more and put smart condition-based triggers.
Let’s set a real-life example. AI-based services can trigger a smart contract when a seller reaches a certain price. Imagine you want to buy a gaming laptop with certain specifications for $900-950, but sellers have them for $1200 and more. You can launch a smart contract with the chosen seller. When a laptop gets into the season sale for $930, it will automatically launch the transaction, and you’ll get a dream laptop among the firsts.
Challenges in Merging AI and Blockchain
Behind every single lining, there is a cloud. The main concern in decentralized AI tools is various technical complexities.
Even separately blockchain and AI are hard to implement in most modern businesses. Integration of mixed tools will be even more complex since developers need deep expertise in both technologies. They will need to find effective ways to format, store, and process data in these new services.
Another huge challenge is security and data privacy concerns. Blockchain is a public ledger, so all transactions are visible to everyone on the network. It’s mostly anonymous since both parties share only an account (wallet) number.
However, this info can be used to track and profile users without their knowledge or consent. Especially it relates to healthcare where patients’ data should be confidential.
Scalability issues are the third pain point of artificial intelligence in blockchain. Decentralized networks are limited in their scalability: they can only handle a certain number of transactions per second. It can be a real challenge for applications that need constant access to a high transaction volume like finance trading apps and supply chain tracking services.
Layer-2 solutions, sidechains, and sharding can partially solve this issue. But to mitigate this challenge even more, future developers should create new efficient consensus mechanisms.
And the last challenge we need to overcome is the lack of standards and regulations. Both blockchain and AI are new industries establishing their regulation base. There are no standards for the interaction between industries, making it difficult for different organizations to work together and for developers to build applications. It even scares off potential investors. They are afraid that they will lose money with these risky assets.
Expert Opinions and Insights
Almost all experts agree that it will take a lot of time and money to make decentralized AI tools work, but it is worth it. A recent publication of the International Journal of Production Economics in ScienceDirect provides us with multiple expert options assuring that new technologies will have a huge influence and ensure financial resilience in supply chains.
Other research from US and Chinese scientists shows us how AI-based blockchain tools benefit businesses worldwide. They will boost a digital transformation, increasing demand and customer satisfaction ratio. It all may become true due to the AI’s ability to predict human behavior and set proper recommendations for businesses.
Cybersecurity experts from Magnimind Online Academy support that confidence in this synergy. They say decentralized AI tools can improve agriculture, healthcare, intellectual property, and other industries.
Future Predictions
I see the future of crypto machine learning as bright. A mix of those disruptive technologies has the potential to revolutionize many industries and create new possibilities for businesses and individuals.
However, we should be aware of the risks and develop safeguards to mitigate them. I think that we won’t see mass adoption of decentralized AI tools for the next few years. As of late 2023, blockchain services are only in their early stages, while artificial intelligence hasn’t even surpassed its infancy stage.
We need at least a few years to properly develop both tools separately, build a strong regulatory base, and mix them. Once we’ve done with it, those tools will become common in many industries.
I think that blockchain will play a role in AI democracy. As of now, most machine learning and artificial intelligence services strongly rely on a main server and a single authority. Today those tools are censorship-prone. But blockchain can change it for good, making AI more distributed and censorship-resistant.
But it all will take a lot of time. At least, it will be years. But it can also be even decades.
Wrapping Up
In the right hands, crypto machine learning tools can benefit many industries. In finances, they can improve efficiency and security by advanced fraud detection. In supply chains, these tools improve the transparency and traceability of goods.
In healthcare AI blockchain tools will analyze patient data to improve diagnosis and treatment. AI and blockchain can even improve government services. They can be used in tax return processes. Also, they can predict how politicians’ actions may affect voting.
To reach those goals, we should overcome main challenges such as lack of regulation, scalability, privacy concerns, and possible bias. AI-based systems can be biased, leading to discrimination against certain groups of people.
Once we address those problems, we will see how the convergence of AI and blockchain rapidly accelerates. As these technologies mature, we will see more applications combining the two technologies.
Artificial Intelligence tools can improve network security and automate even more tasks. At the same time, blockchain can partially decentralize AI tools. As for now, those services are severely centralized, which makes them vulnerable to hacking. Blockchain can weaken it by its distributed nature.
