Combination of Blockchain, AI Could Create Massive Synergies

  • Rajarshi Mitra
    ⭐ Features

    Blockchain and AI are two of the hottest topics in computer science, and it turns out they have quite a symbiotic relationship

Combination of Blockchain, AI Could Create Massive Synergies
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Blockchain technology and artificial intelligence are two of the most interesting and disruptive technologies out there. While they are both extremely innovative, they have their own flaws. This is why people are now bringing these two amazing technologies together to create some interesting use cases. So, before we continue, let’s understand what these technologies are.

Blockchain technology

A Blockchain is, in the simplest of terms, a time-stamped series of immutable data records that are managed by a cluster of computers not owned by any single entity. Each of these blocks of data (i.e. block) are secured and bound to each other using cryptographic principles (i.e. chain).

The main advantage of this system is obvious. There is no central authority or single point of failure, and the system is created to be as democratic as possible.

Artificial intelligence

Artificial Intelligence is intelligence that is defined by machines. As Wikipedia puts it:

“AI research is defined as the study of "intelligent agents:" any device that perceives its environment and takes actions that maximize its chance of successfully achieving its goals.”

The main advantage of AI is the sheer amount of flexibility it provides. In a normal system, you need to put in each and every line of code for a machine to act in a certain manner. However, via AI, you can enable the machine to react to any changes in its perceived environment.

So, now that we have defined what both these technologies are, let’s see how they can complement each other.

First, let’s look at how AI can help solve some of the Blockchain’s problems.

How AI helps Blockchain: Mining wastage

Proof of Work mining is incredibly wasteful. Miners spend $400 mln worth of electricity annually on mining. If that doesn’t put things into perspective, then imagine this: Bitcoin mining consumes more power than the entire country of Portugal! While the proof-of-work system is secure, the fact remains that it is power wastage for the sake of power wastage.

AI has already shown that it can be used to control the amount of energy wasted. DeepMind AI has already been deployed to reduce the energy wasted in Google Data Centers by a whopping 40 percent.

How AI helps Blockchain: Blockchain scalability

Everybody knows that the biggest problem that Blockchain technology is facing is scalability, or to be more accurate, the lack of it. Bitcoin manages only seven transactions per second while Ethereum does a little better at 20.

AI can help Blockchain take scalability to another level via features like Federated Learning. Federated Learning is what Google is using to make your smartphones smarter. It is a machine learning technique that allows your phone to learn directly via your input without having to send your data to the cloud.

Since it provides immediate improvement to performance and user experience, you end up saving a lot of time. This same method can be used in Blockchain technology to propagate data without spending a lot of time waiting for individual nodes to come to a consensus.

Now, let’s look at the other side of the equation. How can AI improve its functionality via Blockchain technology?

How Blockchain helps AI: Big data 

AI is extremely hungry for big data and needs a constant flow of it. Back in 2001, Microsoft researchers Banko and Brill did an interesting study. They found out that for an algorithm, the more data you feed it, the less error-prone it will be. In fact, the error rate will fall exponentially if enough data is used. This was further highlighted in 2007 when Google researchers Halevy, Norvig and Pereira published a paper titled “The Unreasonable Effectiveness of Data.”

Fine, so if you feed your AI more data, you will make it smarter. What’s the problem here?

The problem is in storage. The storage demands of AI are extremely impractical when it is in operation. It can eat all the data that it wants but that data needs to be stored somewhere. The architecture of the Blockchain itself solves this problem. The Blockchain is decentralized and encourages its participants to engage in secure data sharing. There doesn’t need to be a centralized entity to store the data anymore.

How Blockchain helps AI: Avoiding centralization

Speaking of centralization, since AI needs a lot of big data, a corporation can simply “own” an AI by feeding it their data. Connecting an AI with the Blockchain will make sure the data is fed from a decentralized entity.

How Blockchain helps AI: Data trails

The Blockchain is a completely transparent open ledger. Anyone can look at the data inside and anyone can trace that data to its very beginning. Having access to that level of data traceability puts a lot of accountability on the participants involved. This can help in two major ways:

  •      Byzantine/Malicious actors may want to sabotage the AI by feeding it useless data. Having a transparent system where anyone can trace the data all the way to its originator will make sure that people are discouraged from doing so.


  •      When the bots interact with each other, having a clear audit trail of all the data will help improve machine-to-machine interaction.

Blockchain + AI examples

We have already seen some exciting implementations of Blockchain and AI. One of the most interesting products of this communion is Augur. Augur is a trustless, open-source, decentralized oracle and prediction market platform built on the Ethereum Blockchain. The Augur AI uses the “wisdom of the crowd” or the “collective intelligence” of the masses to make accurate predictions.

Blockchain + AI: Symbiotic relationship

As we can see, the relationship between AI and Blockchain can be extremely intriguing. They seem to be capable of a truly symbiotic relationship with one entity making up for the other’s weaknesses. With platforms like Augur, we have already gotten a mere glimpse of what this collaboration is capable of. However, we have only just scratched the surface, more research definitely needs to be done. We could be on the cusp of something truly special here.

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Question of the Day: Can Stablecoins Accelerate Cryptocurrency Adoption?

  • Yuri Molchan
    ⭐ Features

    Stablecoins show hardly any volatility compared to Bitcoin and altcoins, many are hoping that they will be able to bridge new crypto economy and regular fiat money

Question of the Day: Can Stablecoins Accelerate Cryptocurrency Adoption?
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Bitcoin, the father cryptocurrency, emerged in hope that it will remove all intermediaries in electronic commerce that cut off their share of payments. BTC was perceived as a P2P way to replace fiat cash in an electronic format, which would enable one party to pay another without any financial institution or payment platform which would demand its share of a transaction as a reward for its services.

What is wrong with Bitcoin

For quite a while Bitcoin was performing the way the crypto community expected. But the situation changed later – BTC rate became weaker, thus bringing down its financial and economic reliability, when it gets to be used as a regular means of payment.

You cannot have a currency that would cost like a British castle today, a gram of gold – tomorrow and a pack of French fries the day after.

At that point practical fintech minds came up with an idea of creating something which would become a breakthrough in the universe of crypto – a so-called stablecoin.

Will stablecoins solve the volatility problem?

Technically, stablecoins are protected from the volatility roller-coaster that Bitcoin and other cryptos love to ride. They are programmed to keep their prices stable and investors now are largely attracted to this new type of digital assets.

Stablecoin does not show any volatility in its monetary value, since it has a fixed connection to an asset it is pegged to. The major goal of using stablecoins is taking the best from decentralized crypto coins and combining it with a constant value. Thanks to it, stablecoins can be used as a reliable means of trade.

Asset-pegged stablecoins

Asset-backed ones get their value from an asset as can be understood from the name. An asset provides the necessary value to a coin, as well as the necessary legitimacy.

A great example of an asset-pegged stablecoin is Tether (USDT). In spite of a series of scandals at the end of last year, it remains the most popular stablecoin in the crypto market.

Recently, it has partnered with the Tron Foundation to launch a Tron-based stablecoin.

Other examples are TrueUSD (TUSD), USD Coin (USDC), the Gemini Dollar (GUSD), and the Paxos Standard (PAX). They are all pegged to the USD.

Crypto-backed stablecoins

Some digital coins work in a similar way to fiat-backed ones, however, they are pegged to collateral crypto. That means that crypto assets that ensure the value of such stablecoins are stored in a wallet similar to escrow.

A good example of a crypto-pegged token is Maker, which is ranked 16 on CMC.

Algorithmic stablecoins

Even though, stablecoin can be interesting at first thought but the way they are built goes against the principle of decentralization that crypto coins have as a foundation. Thus, many crypto fans and evangelists are positive that stablecoins must be linked towards not a centralized asset but a computer algorithm which takes value from a balance between supply and demand.

Basis is now considered the most promising algorithmic stablecoin of all.

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Can stablecoin ensure smooth future for the crypto industry?

The primary goal of all crypto assets was and remains to come up with virtual asset that would be liquid enough and not vulnerable to market volatility. From this point of view, stablecoins are a dream of all crypto fans and evangelists of a decentralized economy.

Apart from the potential to conduct crypto transactions smoothly, experts believe it can bridge the two worlds – fiat and crypto, bringing them a mutually beneficial coexistence. However, that may take time.

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