Exploring the Potential of Blockchain Technology with Artificial Intelligence

The future of cryptocurrency has been called into question following the recent filing of lawsuits by the US Securities and Exchange Commission against Coinbase Global Inc. and Binance Holdings Ltd.

As digital assets face increasing regulatory pressure and other market headwinds, they have also been pushed aside as the latest technology fad. When OpenAI launched its ChatGPT bot in November, it paved the way for the practical use of artificial intelligence. Since then, AI has caught the attention of founders and investors – the same people who fueled the crypto boom.

Artificial intelligence may have stolen the limelight, but some crypto enthusiasts say it could provide new opportunities for the blockchain industry.

“You may actually see a situation where AI is kind of a catalyst to rush back into blockchain,” said Adam Struck, founder and head of mutual fund Struck Crypto, which has been diving into AI since the launch of the ChatGPT bot.

Blockchain technology can bring more transparency and decentralization to artificial intelligence, which can be very opaque when it comes to the data used to train models, says Alex Felix, director and chief investment officer at Crypto VC firm CoinFund.

Recently CoinFund supported Tools for Humanity. A crypto startup founded by OpenAI’s Sam Altman that raised $115 million shows a real use case for crypto in artificial intelligence, Felix said.

Tools for Humanity, which developed a digital currency called Worldcoin, created a small ball that scans people’s eyeballs to create a unique ID for the individual based on the blockchain, giving them a digital “certificate of identity” that, when combined with Worldcoin, can also be used to facilitate secure payments.

“For us it started with, where is the world going with artificial intelligence? And the way to solve it was crypto,” said Tiago Sada, Product Manager at Tools for Humanity.

Felix compares the current AI craze to crypto’s initial coin offering boom in 2017, when investors rushed to snap up random crypto tokens, many of which were scams. But he said this time it’s easier to test new projects and determine if someone has deep enough AI.

“It’s harder to feign credibility because the constituencies are so small,” Felix said.

Just as blockchain can bring more transparency to artificial intelligence, the technology can strengthen crypto by improving the ways digital asset platforms sort data, protect data and interact with users, according to some crypto advocates.

Hackers have been able to steal millions of dollars from blockchain protocols. Artificial intelligence bots can limit the number of cyber attacks plaguing decentralized finance, according to Struck.

“You can essentially do very, very large amounts of so-called pen testing or penetration testing when these bots are simulating attacks,” he said, adding that this testing could uncover vulnerabilities in smart contract code that hackers can manipulate to get money.

Bots can also be used to monitor content to filter out spam and scams on messaging platforms such as Telegram, Discord, Signal, WeChat and WhatsApp, Struck said. While such a benefit is not limited to crypto, it is important to an industry where many scams originate on social media.

“So many users are focused on these messaging apps,” he said.

In addition to protecting investors from scams, many industry players are seeing other ways for AI to make it easier for users to interact with crypto.

Solana Labs, which developed the Solana blockchain, launched the ChatGPT plugin in May “to make the user experience better so people can better understand what’s happening on the blockchain,” said Tal Tchwella, Solana Labs product manager.

Crypto has been criticized for being too heavy for ordinary consumers, but the ChatGPT extension guides users through blockchain transactions in a conversational way.

In a virtual demo, Tchwella showed how a customer can connect their crypto wallet and ask the bot to show them non-repairable tokens they can afford or a specific collection. After browsing the options, customers can ask a bot to help them buy an NFT. The bot then generates a QR code that customers can scan to complete the sale.

“AI is going to impact every region, every sector, every industry, and we’re just trying to embrace that,” Tchwella said.

Still, other crypto companies have been hesitant to fully jump on the AI bandwagon, citing its potential dangers. Derivative exchange Bitget stopped the ChatGPT integration because users were concerned that they were receiving misleading information and false facts in their queries.

Tools for Humanity has been praised for its eye-scanning technology and questioned whether the sensitive biometric data it collects is truly protected.

Although The Graph, an indexing protocol, has been leveraging artificial intelligence and machine learning for more than two years to make blockchain data easier to search and access, it does not want its GRT currency to be classified as an AI token, according to Tegan Kline. CEO of Edge & Node, the startup that created the platform.

Unlike other crypto companies that have moved quickly into AI to capitalize on the hype, he said Edge & Node wants to be known first and foremost as a blockchain startup because AI still has “difficulties,” including how the technology makes it difficult to tell what’s true online .

In the meantime, “Many people are incorporating AI into their sales pitches to attract more venture capital funds,” Kline said.