Artificial intelligence (AI) and cryptocurrency are key emerging technologies. Combined, they boost each other’s potential, reshaping innumerable interactions, including finance and social. In this article, we’ll show you how these technologies may work together to change the world.
Written by: Anatol Antonovici | Updated April 10, 2024
Reviewed by: Mike Martin
Fact checked by: Ryan Grace
Table of Contents
🍒 tasty takeaways
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AI and crypto are a perfect match. A recent report found that most small and medium-sized enterprises (SMEs) viewed AI and blockchain as complementary technologies.
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Blockchain can bring trust and transparency to AI, addressing AI’s ‘black box’ challenge.
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AI can transform many crypto use cases, including DeFi, NFTs, oracles, trading, and compliance.
Summary
| Key Concept | Insight |
|---|---|
| AI & Crypto Synergy | Combining AI and cryptocurrency enhances finance and social interactions through improved transparency and efficiency. |
| Blockchain's Trust | Blockchain technology adds trust and transparency to AI, addressing its "black box" challenge. |
| AI's Transformative Role | AI transforms crypto use cases such as DeFi, NFTs, and compliance, streamlining operations and security. |
| Crypto Evolution | From Bitcoin's launch in 2009 to today's diverse market, crypto has evolved to empower decentralized finance and communities. |
| AI Advancements | AI's growth, from neural networks to ChatGPT, showcases its potential to revolutionize problem-solving and creativity. |
The Evolution of Crypto
The cryptocurrency market ‘officially’ began in 2009 with the launch of Bitcoin (BTC), marking the first use case of the underlying blockchain technology.
Later, Ethereum (ETH), which popularized the smart contract feature, spurred the initial coin offering (ICO) craze in 2017 and eventually paved the way for the growth of the decentralized finance (DeFi) sector.
In about 15 years, crypto has evolved into a diverse market comprising DeFi, non-fungible tokens (NFTs), security tokens, and Web3 apps, among others.
Crypto’s main goals are to democratize finance, enable secure peer-to-peer interactions, and empower communities through decentralized governance.
The Evolution of AI Technology
Unlike crypto, AI’s origins can’t be traced back to a precise date. The technology was conceptualized decades ago by thinkers and scientists witnessing the rapid growth of innovative computing technologies.
Alan Turing, a pioneer of AI, envisioned in the mid-20th century a computing machine capable of simulating any task requiring human intelligence.
AI made a significant leap in the 1990s, with developers building neural networks that mimic our brain’s structure.
The 21st century has seen major advancements in robotics, natural language processing, speech and image recognition, and deep learning.
Source: Dr Paul Marsden
The evolution of AI has culminated with the launch of the ChatGPT chatbot by OpenAI, which reached 100 million users in a record short period.
The goals of AI are to improve problem-solving, streamline automation, promote creativity, and take social interactions to a new level.
AI & Crypto Synergy
Both AI and blockchain play a major role in the so-called Fourth Industrial Revolution (4IR), a term popularized by the World Economy Forum (WEF).
Interestingly, AI and cryptocurrency create a powerful synergy with unpredictable outcomes.
While the WEF calls for a highly centralized global society with AI-powered corporations at the helm, the crypto sector promotes decentralization and community-driven economies. Therefore, the merger between these two major technologies has two vectors of development.
According to a report by the European Investment Bank, the total capital invested in AI and blockchain SMEs is accelerating, reflecting increasing adoption rates.
Source: EIB
A recent report by Casper Labs found that most surveyed businesses regard blockchain and AI as complementary technologies.
Source: Casper Labs
How Can Blockchain Help AI?
Today, AI technology is dominated by a few corporations, such as Microsoft, OpenAI, Facebook, IBM, Google, and Amazon.
This raises serious concerns, as corporations could exploit AI features at the expense of communities, widening the inequality gap and concentrating more power into a few.
Solving the Black Box Problem
There is also the so-called black box problem of AI, which refers to a lack of trust and understanding of how AI algorithms reach a conclusion. For example, OpenAI hasn’t disclosed any information about how its large language model works.
Blockchain can bring trust to AI, transferring decision-making to communities. For example, Bittensor, a rapidly growing blockchain-powered AI platform, envisions a borderless decentralized network of AI and machine learning models.
Elsewhere, data analytics firm FICO and blockchain startup Casper Labs use blockchain to track the process of developing and training AI algorithms.
FICO’s Chief Analytics Officer, Scott Zoldi, told the Wall Street Journal:
"Blockchain can be used to track exactly what data an algorithm was trained on, when, by whom, as well as what other steps were taken to vet and verify that data.”
How Can AI Help Crypto?
The synergy between the two technologies can help crypto in many ways:
- Real-time alerts – AI can be used to analyze transaction patterns and detect suspicious activity in real-time.
- Smart contract security – AI can monitor smart contracts to detect loopholes and weaknesses.
- Smart contract optimization – AI can be integrated into smart contract operations to prevent errors, increase scalability, and improve dispute resolution.
- Authentication – AI can be used for biometric authentication on crypto platforms, e.g., face recognition or fingerprints.
- Automation – AI can streamline and automate many processes during smart contract development, portfolio management, or tokenization.
- Compliance – AI-based compliance solutions can track crypto transactions and users.
The Benefits of AI & Crypto Synergy
The convergence of AI and blockchain technology brings multiple benefits:
- Transparency – AI needs vast amounts of data. Blockchain records transactions and smart contract operations in an immutable and decentralized way, being a reliable data source for AI.
- Data integrity – blockchain offers an audit trail that can be used to prove how data is used by companies. AI models stored on distributed ledgers are more accountable and secure.
- Data security – blockchain represents a decentralized network with no single point of failure. Decentralized AI models are more secure and autonomous.
- Efficiency – merging AI and blockchain enhances operational efficiency and data accuracy. AI can quickly read data and determine patterns, which can streamline crypto operations dependent on data.
AI & Crypto Use Cases
Companies explore blockchain and AI for use cases in traditional industries, such as financial services (TradFi), supply chain management, and healthcare. The crypto industry is leveraging this tech combo for use cases like:
- Blockchain operations
- DeFi
- Oracles
- Crypto market analysis
- Automated trading through AI bots
- NFT creation and analysis
- Predictive analytics
- Tokenization and digital asset creation
- Decentralized cloud computing
AI Crypto Market Today
The AI crypto ecosystem is gradually becoming an independent sector. Its total market cap hovers above $25 billion as of February 2024.
Leading projects include Bittensor (TAO), Ocean Protocol (OCEAN), fetch.ai (FET), the Graph (GRT), SingularityNET (AGIX), Render (RNDR), and Numeraire (NMR).
🍒 What Is Fetch.ai? Is FET a Good Investment in 2024?
AI and crypto represent the next major trend in blockchain, following fast-growing phenomena like DeFi and NFTs. The below chart shows the meteoric growth of AI coins over the past 6 months,
Secure Your Crypto With Self-Custody
When you store your crypto in a self-custody wallet, you don’t have to trust that an exchange is acting in your best interest. This is because you are the only party privy to your private key, or seed phrase.
Here are some additional benefits you get when you choose to self-custody your digital assets with tastycrypto:
- In-App Swap: Trade BTC, ETH, and 1,000+ tokens
- Generate Yield in DeFi: Stake, lend, and become your own market maker
- NFTs: Buy, sell, and view NFTs in-app
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FAQs
AI can be integrated into crypto and blockchain platforms for real-time transaction analysis, fraud detection, smart contract security and optimization, authentication, automation, and compliance solutions.
Blockchain offers a transparent, immutable, and decentralized data source for AI, ensuring data integrity and cutting intermediaries, which reduces costs and encourages a collaborative effort.
AI crypto coins are the native digital currencies of AI-powered crypto projects or blockchain networks focused on AI use cases.
Yes, the AI and crypto synergy is here to stay. This merger is not like ICOs or the metaverse, which has lost ground during the last few years. It has great potential due to the unprecedented benefits it offers.
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Anatol Antonovici
6+ years of experience writing for crypto brands and blockchain firms, including Coindesk, Cointelegraph, Bitcoinist, CryptoPotato, Algorand, and OTCTrade.com