Artificial Intelligence models will soon be combined with Blockchain frameworks to enable automated decision making and a greater scope for creating intelligent financial products. Blockchain provides secure storage of digital monetary assets, while AI allows seamless sharing of data and insights from these networks. The cyber threat landscape is constantly evolving, which means that enterprises are adopting these merger technology trends.
By Karim El Chenawi, CISO, John Doe Invest
Today, we’ll look at how Artificial Intelligence and Blockchain will dominate the technology industry, their various use-cases, and how companies can succeed in staying protected from multiple threats by taking advantage of these trends. Enterprises over public blockchains favor private blockchain networks, and AI models can classify, analyze, and gain insights from financial data. Together, blockchain AI will form a collaborative learning model that assures the trustworthiness of data being shared, ensures its integrity, and makes it convenient for users to extract and share insights, thus ensuring that transactions and the information associated with them are thoroughly validated. Microsoft researchers are working towards making considerable advancements in the Blockchain AI domain to make their innovations more accessible to everyday devices, apps, and IoT networks.
Future of Artificial Intelligence
Investments in Artificial Intelligence technologies are expected to rise by $97.9 billion by 2023, and since the COVID-19 pandemic, the valuation of the AI industry has grown. AI will become increasingly prevalent as organizations will work towards automating day-to-day processes from the supply chain to core business functions. AI will also play a significant role in adopting Cloud technologies by enterprises in 2021, and AIOps providers will help business leaders improve their decision-making processes.
Artificial Intelligence is one of the fastest-growing domains that deal with intelligent machine learning models to automate repetitive tasks and mimic human cognitive thought patterns when analyzing and processing them. With RPA and Deep Learning, organizations will use AI to solve global challenges and foster a data-driven culture that emphasizes producing sustainable deliverable models.
Blockchain Industry Outlook
Blockchain is a decentralized technology used for storing and transacting digital assets by both individuals and organizations. BaaS (Blockchain as a Service) is an emerging technology trend used by start-ups and enterprises to develop cloud-based digital products/services. Federated blockchains are rising in popularity, and the industry outlook shows that “stable coins” will reach an all-time high as a driving force for the top cryptocurrencies in 2020. According to the Blockchain as a Service Market, the market size for BaaS is estimated to reach a valuation of USD 15,455 million by 2023 and grow at a CAGR of 90.1% throughout the forecast period.
How Blockchain Works
Blockchain features multiple blocks and uses three key elements:
- Data contained within the blocks
- Nonce, a 32-bit whole number
- Hash, 256-bit number
Every time data is input into blocks; a nonce is generated. The nonce is tied to a Hash which is used for locating these blocks. The mining process is what’s referred to as accessing blocks in a chain and withdrawing the cryptocurrency. Over 4 billion nonce-hash combinations make it impossible for hackers to guess the unique nonce and find the relevant block. Every block in a blockchain references the previous block, which means miners have to go through all the blocks to find the ‘golden nonce.’ Changes in blocks must be accepted by all nodes in the network before the currency is mined successfully and withdrawn.
Benefits of Combining AI and Blockchain Technologies
Industry leaders in healthcare, finance, government, etc., such as Synapse AI, Ocean Protocol, Enigma, and Numerai, are exploring combining AI and Blockchain to disrupt the technological landscape. Many businesses are already experiencing the benefits of enhanced scalability, traceability, increased efficiency, lower running costs, and smoother operations by simply blending these two tech trends.
Greater Transparency and Increased Security
Blockchain is a type of distributed ledger that offers users more transparency on their digital transactions. Changing a single record would mean making changes to subsequent documents, and this is what makes Blockchain technology so powerful. Only a shared copy of the ledger is distributed to participants in the network. When Artificial Intelligence is combined with blockchain, it results in the creation of “smart contracts.”Smart contracts contain code that executes automatically to simplify business transactions and ensure that pre-defined criteria for agreements are met before crypto trades take place. They are used for making intelligent digital financial arrangements such as insurance policies, legal contracts, crowdfunding agreements and are considered a reliable medium for the exchange of Ethereum. Essentially, by leveraging AI and blockchain, smart contracts take out the middle-men for forming agreements between parties and make trades a lot more seamless.
Smart contracts write down the terms and conditions of agreements between buyers and sellers directly into the code. SingularityNET is a platform that provides hardware and software services through AGI tokens in exchange for adding AI services by users.
Improved Financial Audits
Companies like Walmart enter vast volumes of transaction data into AI systems for review and processing. Blockchain helps in analyzing this information on a datapoint-to-datapoint basis which yields a high level of accuracy. When records are processed in the correct sequence, there is greater confidence in their integrity, reliability, and users don’t have to worry about the possibility of tampering. Blockchains are used in the financial decision-making process by companies and help in the investigation of various transactions, thus preventing duplication, identity thefts, and fraud.
Blockchains consume vast amounts of computing power for managing blocks on “stupid” computers and use hashing algorithms to mine data. When AI is used in conjunction with Bitcoin blockchains, it prevents the need for using ‘brute force,’ approaches for figuring out the combination of characters until one fits in and authenticates the transaction. AI adds intelligent processing for code-breaking blocks and can instantaneously encrypt or decrypt blocks by being fed the proper training datasets.
Businesses focus on reducing costs while sustaining operations in different industry verticals. Blockchain eliminates the need for intermediaries for drafting contractual agreements while AI automates and speeds up data processing. Together these two technological trends reduce the need for paper-based document storage, and since everyone has shared access to records, it makes it easier to view and manage them. There are no discrepancies in these records, and all the information shared across gets fact-checked and validated.
How Blockchain and AI Augment Each other
Blockchain is a technology used for protecting financial data from cyber thefts, and AI helps services make intelligent decisions when it comes to processing requests and ensuring data security. Many industries use a blockchain because of its secure infrastructure and how well it intertwines with machine learning algorithms to process huge volumes of transactions.
AI and machine learning algorithms converging with blockchain would mean businesses are enjoying more excellent encryption, better performance, and precise decision-making. Here is a list of key applications offered by AI and blockchain.
Increased Computing Power
AI helps in boosting computing resources and power when converging with Blockchain frameworks. Blockchain provides the necessary infrastructure, but organizations require enormous computing power to manage data flow in real-time and access records.
Businesses that are hopping onto the convergence of Blockchain and AI are enjoying improved credibility amongst consumers. Brands investing vast amounts into these merger technologies find that they are experiencing greater returns on investments.
Blockchain technology offers tremendous benefits for user privacy, and by converging with AI, it helps prevent illicit digital activities. AI algorithms benefit from getting trained using large datasets and use blockchain to encrypt and optimize business frameworks, thus making transactions or exchanges very secure.
What the Future Holds
As we head towards the future, Blockchain and AI will play a vital role in automating crucial processes across all major industries. Understanding and evaluating the needs of businesses and harnessing enough raw computing power for conducting intelligent automation will be the focus of modern technological evolution. Just as computing power is needed for faster automation, so is a technology like Artificial Intelligence for quicker and more accurate analysis, including deriving insights from large data sets. Organizations are spending upwards of $4.4 billion in 2020 on the blockchain, and global investments are expected to cross $19 billion by 2024. A majority of business respondents report they plan to invest a minimum of $1 million into these distributed ledgers.
Cryptocurrency mining of Bitcoin and Ethereum dominates the Blockchain segment, and many believe that more cryptocurrencies will be mined in the future. Blockchain has the potential to digitize traditional monetary transactions and ultimately make businesses go paperless and virtuous. AI and Blockchain add trust to these transactions and enhance security. Hence companies are increasingly investing capital funds in blockchain AI technology to fuel market growth. The global AI industry is forecasted to grow to $703 million by 2024 at an annual CAGR of 25.3%.
To summarize, the convergence of Blockchain and AI will improve concerns related to user privacy, management, security, and reliability of information shared across IoT systems. Blockchain AI will dramatically address the limitations faced by businesses when streamlining their digital operations and support increased scalability. The more data fed into AI algorithms, the better they become at their work, and the anonymity of Blockchain transactions is what makes combining these two trends so powerful. In the future, companies will be working towards updating legacy systems using these merger technologies and make extensive upgrades to how they store, manage, and share data across centralized servers through Blockchain AI integrations.
About the Author
Karim El Chenawi is an information security specialist with more than 14 years of experience in the online gaming and e-commerce industry. He has profound knowledge of security governance and hands-on experience with corresponding technical details. He is both a specialist and a generalist having had technical as well as strategical roles such as security consultant and Chief Information Security Officer, and he has broad experience of working in a highly regulated environment.
Views expressed in this article are personal. The facts, opinions, and language in the article do not reflect the views of CISO MAG and CISO MAG does not assume any responsibility or liability for the same.