As the digital evolution progresses, various innovations have emerged across all sectors. Blockchain technology and artificial intelligence (AI) are two hot phenomena dominating the tech space at the moment.
Blockchain technology has garnered massive attention and adoption in the last few years through its concept of decentralization. Across key sectors like finance, healthcare, sport, entertainment, and many others, Blockchain technology has challenged traditional systems.
On the flip side, artificial intelligence promises enhanced decision-making, advanced analytics, and efficiency. However, one major selling point of AI is automation which helps to simplify tedious tasks.
To a noticeable extent, both innovations have independently revolutionized numerous industries. The integration of blockchain technology and artificial intelligence is swiftly redefining the utility, scalability, and accessibility of cryptocurrency and other decentralized network innovations.
Still, one key question keeps surfacing: Is artificial intelligence driving more utility for cryptocurrency and blockchain or is it just a mere convergence of similar innovations with superficial overlap?
How AI is driving more utility for cryptocurrency and blockchain-based innovation
One key area AI has helped improve utility for cryptocurrency and blockchain solutions is through smart contracts automation. While smart contracts are designed to execute tasks on their own, how they operate on binary logic often limits their efficiency and increases vulnerability.
With the support of AI, smart contracts can become useful beyond decentralized finance and be usable in real-world data analysis, insurance, traditional finance, and even logistics management.
Meanwhile, cryptocurrency trading is at the core of blockchain innovation where AI has created a new utility stream. Trading bots are now powered by AI, allowing them to process voluminous data including social media sentiment, news, and on-chain movements.
By that, AI trading bots can seamlessly predict price trends and carry out trades in a matter of seconds. Today, new projects are flooding the crypto space with many variations of trading bots with unique approaches and offerings.
Away from trading, AI has also proved useful with market transparency by empowering on-chain analytics platforms. Top on-chain outlets like Nansen and Arkham now use AI to categorize addresses, discover fraudulent transactions, and simplify heavy blockchain actions.
This innovation aside from aiding investors to protect their assets and improve their confidence in the sector, also aids regulators and compliance teams to keep tabs on malicious activities in the blockchain space.
Shortcomings
By far, the increasing connection between AI and blockchain has offered some promising glimpses. Nevertheless, the marriage between the two innovations isn’t without challenges.
Currently, scalability is one of the issues that has blurred the relevance of blockchain innovations and artificial intelligence. Till now, blockchain technology is still struggling with throughput as most decentralized networks often crumble under heavy traffic.
AI models are also computationally intensive, which mandates significant innovation for layer 1 protocols and off-chain computation methods when combining the two. Likewise, there are ethical concerns about how AI models carry out autonomous decisions on-chain leading to questions about accountability and transparency.
Still, governance frameworks for AI-powered DAOs and smart contracts are underway. To ensure more accountability from AI agents, there is a need for a vast oversight system.
Another major shortcoming of the synergy between blockchain innovations and AI is data privacy and security risk. AI depends on a huge database, containing sensitive personal information, while blockchains are mostly public.
The immutability of blockchain technology makes it impossible to delete or modify private data on it. If not well managed, the combination of blockchain technology and AI can lead to the exposure of private data.
Conclusion
Beyond any reasonable doubt, AI is generating more utility streams for crypto and blockchain innovations. AI boosts blockchain offerings by enabling them to become more accessible, responsive, and intelligent.
With decentralized AI economies, personalized web 3 experience, fraud detection, and automation in the DeFi space, the integration of the two innovations is establishing a strong foundation for the next era of virtual innovation.
Despite the landmark achievements both industries have recorded so far, there is still more to come. To attain the full height of this potential, both the crypto and AI communities must work together to address existing challenges.
Issues surrounding technical, ethical, and governance must be properly corrected. If corrected, the combination could lead to a new epoch of a more intelligent, secure, and democratized internet.
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