Blockchain technology paired with artificial intelligence promises to do wonders. How?
Artificial intelligence has paved the way for numerous innovations that make our life convenient. From Siri to Alexa, it now enables us to do more with less. Manufacturing companies have robots that automate carrying a load, smartphones have virtual assistants to help users do routine tasks, and more; courtesy artificial intelligence.
What was once an experiment to replicate the human brain in machines “ artificial intelligence –has now flourished into a full-fledged domain. The rate at which artificial intelligence is growing in the industry is phenomenal. AI is expected to grow to $126 billion in 2025.
Similarly, blockchain technology and cryptocurrencies have evolved fast in the industry, such that cryptocurrencies are competing with fiat currencies. Both technologies offer tremendous benefits for mankind and promise to make life better. But do they also benefit each other? Well, to know that, let’s see how artificial intelligence is making an impact on blockchain technology.
Cryptocurrency trading
Since the introduction of Bitcoin in the industry, cryptocurrencies have gained large traction among investors. The growth of cryptocurrencies in the past few years has been phenomenal, such that market capitalization now is over $399 billion. In 2017, the value of a Bitcoin increased to $20,000. Following the success of cryptocurrencies, numerous new cryptocurrencies have been introduced including Tether, Ethereum, Litecoin, etc have been introduced in the market. The advent of cryptocurrencies alone has pushed the blockchain industry to grow by leaps and bounds.
As investors’ interest increase in cryptocurrencies, blockchain technology will gain further prominence. Artificial intelligence is playing a major role in this. AI trading bots are helping traders to avoid slippage and perform accurate technical and fundamental analysis to make better trading decisions. Many traders have reported reduced losses and increased profits.
Blockchain security
Crypto exchanges have suffered serious cyberattacks. Further, cryptocurrency scams have been deterrent to the adoption of cryptocurrencies among investors. According to a report, nearly $9 million is lost to cryptocurrency scams every day. Though blockchain security is inherently formidable, protecting users from fraud is a concern in the blockchain industry and cryptocurrency communities.
Artificial intelligence offers a solution to curb this problem. How? Blockchain attacks are usually time-sensitive and the first response to the attack is critical to how the attack will pan out. Given the time-sensitivity of attacks, most crypto exchanges have been unsuccessful at safeguarding themselves against attacks. AI-based cybersecurity systems can identify threats in real-time. These AI-based systems can understand the nature of the threat, and prevent future attacks too.
AI systems inherently learn, so these systems will improve themselves with every threat and have the ability to detect patterns and become better at identifying and protecting against threats.
Bitcoin mining
Bitcoin mining is an energy-consuming process. Every time a transaction happens on a blockchain network, it requires miners to verify the transaction. This verification is consumed a lot of energy by utilizing multiple graphic processing units.
To conserve energy, AI-based chips are used. A few companies have created AI ecosystems that allow miners to share and economize their computing power. This increased the profits considerably and bitcoin mining became more efficient. Bitmain, a blockchain development company, uses AI chips in application-specific integrated circuits.
Conclusion
Blockchain technology comes with its limitations. Nonetheless, it’s one of the best innovations of the decade. Artificial intelligence presents itself as an opportunity for blockchain to mitigate its limitations, if not overcome its limitations completely. As both technologies progress, we may find more use cases of artificial intelligence for blockchain.
