The Convergence of AI and Blockchain: What’s the deal?

This article wants to give a flavor of the potentialities realized at the intersection of AI and Blockchain and discuss standard definitions, challenges, and benefits of this alliance, as well as about some interesting player in this space.
By Francesco Corea, Decision Scientist and
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It is undeniable that AI and blockchain are two of the major technologies that are catalyzing the pace of innovation and introducing radical shifts in every industry. Each technology has its own degree of technical complexity as well as business implications but the joint use of the two may be able to redesign the entire technological (and human) paradigm from scratch.

This article wants to give a flavor of the potentialities realized at the intersection of AI and Blockchain and discuss standard definitions, challenges, and benefits of this alliance, as well as about some interesting player in this space.

I. Setting the stage

 


Image Credit: 4zevar/Shutterstock

I have been talking and writing about AI since a while now, so I will not waste any time defining what it is and what is not (if you want to know more about it, you can check my explanation or a brief history of AI).
However, I never touched upon blockchain and cryptocurrencies so far, so I will dedicate this first block to describe what it is and how it works.

A blockchain is a secure distributed immutable database shared by all parties in a distributed network where transaction
Image Credit: Phonlamai Photo/Shutterstock

Although extremely powerful, a blockchain has its own limitations as well. Some of them are technology-related while others come from the old-minded culture inherited from the financial services sector, but all of them can be affected by AI in a way or another:

  • Energy consumptionmining is an incredibly hard task that requires a ton of energy (and then money) to be completed (O’Dwyer and David Malone, 2014). AI has already proven to be very efficient in optimizing energy consumption, so I believe similar results can be achieved for the blockchain as well. This would probably also result in lower investments in mining hardware;
  • Scalability: the blockchain is growing at a steady pace of 1MB every 10 minutes and it already adds up to 85GB. Satoshi (2008) first mentioned “blockchain pruning” (i.e., deleting unnecessary data about fully spent transactions in order to not hold the entire blockchain on a single laptop) as a possible solution but AI can introduce new decentralized learning systems such as federated learning, for example, or new data sharding techniques to make the system more efficient;
  • Security: even if the blockchain is almost impossible to hack, its further layers and applications are not so secure (e.g., the DAO, Mt Gox, Bitfinex, etc.). The incredible progress made by machine learning in the last two years makes AI a fantastic ally for the blockchain to guarantee a secure applications deployment, especially given the fixed structure of the system;
  • Privacy: the privacy issue of owning personal data raises regulatory and strategic concerns for competitive advantages (Unicredit, 2016). Homomorphic encryption (performing operations directly on encrypted data), the Enigma project (Zyskind et al., 2015) or the Zerocash project(Sasson et al., 2014), are definitely potential solutions, but I see this problem as closely connected to the previous two, i.e., scalability and security, and I think they will go pari passu;
  • Efficiency: Deloitte (2016) estimated the total running costs associated with validating and sharing transactions on the blockchain to be as much as $600 million a year. An intelligent system might be eventually able to compute on the fly the likelihood for specific nodes to be the first performing a certain task, giving the possibility to other miners to shut down their efforts for that specific transaction and cut down the total costs. Furthermore, even if some structural constraints are present, a better efficiency and a lower energy consumption may reduce the network latency allowing then faster transactions;
  • Hardware: miners (and not necessarily companies but also individuals) poured an incredible amount of money into specialized hardware components. Since energy consumption has always been a key issue, many solutions have been proposed and much more will be introduced in the future. As soon as the system becomes more efficient, some piece of hardware might be converted (sometimes partially) for neural nets use (the mining colossus Bitmain is doing exactly this);
  • Lack of talent: this is leap of faith, but in the same way we are trying to automate data science itself (unsuccessfully, to my current knowledge), I don’t see why we couldn’t create virtual agents that can create new ledgers themselves (and even interact on it and maintain it);
  • Data gates: in a future where all our data will be available on a blockchain and companies will be able to directly buy them from us, we will need help to grant access, track data usage, and generally make sense of what happens to our personal information at a computer speed. This is a job for (intelligent) machines.