AI and blockchain are, separately, two powerful technologies that have revolutionized multiple sectors. While the former uses human-like intelligence to analyze data and carry out complex tasks, the latter is a digital ledger that provides transparency of the information records. Interestingly, AI can enhance blockchain’s capabilities significantly, providing remarkable outcomes.
The synergy of the two holds immense promise, unlocking new dimensions and driving unprecedented growth. According to statistics, this alliance will result in a market size of AI and blockchain of $703 million by 2025 – an increase of 25.3% from 2020. Several industries could leverage the power of the two technologies together, from the government and finance to supply chain and retail.
But how does AI precisely impact the blockchain? We will address this question below, so keep reading.
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AI and blockchain – A dynamic duo that provides improved security
Although blockchain is relatively secure, enabling you to complete a transaction effectively once you buy Ethereum online, it’s worth noting that it’s by no means immune to cybersecurity threats. The digital ledger has some vulnerabilities, such as centralization risks, network congestion, and so on. Fortunately, AI-driven solutions can change that, enhancing blockchain security by spotting anomalies, identifying patterns, and detecting possible threats, among other things. Let’s discuss AI’s impact on the blockchain in more detail below.
Anomaly detection
AI plays a role in detecting anomalies in smart contracts that may point towards a security breach. A smart contract is a self-executing contract that functions based on the terms of an agreement between a seller and a buyer. In general, it is very effective and many consider it a reliable technology.
However, it can sometimes behave differently than it usually does, whether by conducting too many transactions or accessing data it shouldn’t. All these things are red flags that point to an issue that can quickly worsen if action isn’t taken. Luckily, AI can identify this behavior right away, enabling smart contracts to function correctly again.
Predictive analysis
Predictive analysis boosts blockchain’s capacities by foreseeing and addressing potential threats early on. This approach is based on machine learning algorithms that evaluate trends in blockchain’s historical data, thus detecting any possible issue.
For instance, AI can forecast the possibility of a DDoS attack by relying on several indicators, such as network traffic patterns, transaction volume increases, and so on. Simply put, predictive analysis functions like an early warning system that spots threats on time to prevent them from fully materializing and causing more significant problems.
Network monitoring
Network monitoring is another area where AI impacts the capabilities of the blockchain. By spotting and mitigating threats, AI maintains the reliability and integrity of the digital ledger. This happens by continuously analyzing data flow and monitoring traffic patterns, such as frequency, volume, and transaction type.
Security threats will likely evolve further in the future, requiring robust security solutions for decentralized systems. As a result, network monitoring will become an indispensable tool that can be used for early threat detection and mitigation.
Data privacy
Data privacy is likely the most crucial aspect when it comes to the blockchain, using advanced encryption algorithms as a way to ensure the security of the information even before it gets recorded on the network. With its capabilities, AI enhances the data privacy of the blockchain by using data masking techniques like placeholder data to replace sensitive details. This prevents the access of unauthorized users to the data.
Moreover, AI plays a role in de-identifying data through PIII encryption or removal, known as data anonymization. Anonymization is essential to lower the risk of a data leak, or noncompliance incident. Given that data is generated and collected at an increasingly high speed and volume, it’s only a matter of time until all companies are subject to regulations regarding sensitive information. Fortunately, the alliance of AI and blockchain will strengthen data privacy, helping prevent reputation damage and hefty data leaks.
Decentralized identity verification
AI boosts identity verification on the digital ledger by using biometrics – a technology used to identify users through the measurement of physical and behavioral characteristics. This is done through identifiers like facial recognition, iris scans, fingerprints, and so on.
Since each individual has unique biometrics, impersonation is challenging, thus helping keep fraudsters away. Moreover, AI boosts security by combining multiple MFAs, like device authentication and PINs. This gives users more control over their personal data, which helps lower data breach risks.
Network recovery and partitioning
When it comes to blockchain security, AI holds immense power, as it can even prevent security breaches from spreading. This is possible through partitions, which are created to isolate compromised nodes so that they can’t communicate with the other nodes in the network.
Furthermore, AI’s protocols also play a role in attack recovery in the network. Simply put, this involves restoring compromised nodes to a secure state through the application of patches and updates. Once security measures are reinforced, AI ensures isolated nodes are safely reintegrated into the primary network.
Looking ahead: The convergence of AI and blockchain as a transformative force in the tech sector
Undoubtedly, AI and blockchain will come together as a revolutionary force that disrupts technology. This fusion will help turn smart contracts into intuitive entities, optimize blockchain processes, promote inclusivity and fairness, enhance decision-making by detecting frauds and risks, and improve data accuracy.
Such a combination of two impressive technologies opens the door to endless innovation, transforming data ownership so that users can feel more empowered. Although there is a long way to go until the two technologies are fully integrated, it will be exciting to witness algorithm developments that will enhance the power of blockchain, making it a secure ecosystem for different industries. The convergence of AI and blockchain will enhance users’ trust and lower market entry barriers, creating a more efficient digital ledger that serves customers in the best possible ways by offering them a personalized experience.
A world of possibilities lies ahead, and it will be exciting to see how everything unfolds in the tech industry once blockchain and AI unite their forces.
