Artificial intelligence (AI) has been trending for a while: more so over the past year, thanks to the launch of OpenAI’s ChatGPT interface. Viewed for years as a far-fetched, futuristic technology, today, today it has seeped into many industries, including the fledgling cryptocurrency market.
To elaborate, AI is shaping tech on a global level, providing users with new powerful tools capable of producing a sustainable and inclusive future and tackling a wide range of pressing challenges like pandemics, natural disasters, and global public health.
When it comes to the crypto sector, AI can be utilized in a range of ways: from analyzing market data and making predictions to preventing money laundering and other illegal activities to improving the security of blockchain-based smart contracts.
In this article, we will look at how the development of AI has transformed the crypto/blockchain sector lately.
Use cases galore
Automated trading and predictive analysis
Among other sectors, AI has revamped the crypto trading ecosystem. It provides users with powerful tools such as predictive modeling, trading bots, portfolio optimization, risk management, and sentiment analysis, so they can make more informed decisions while automating their trading activities to a high degree.
Some platforms using this technology include Nexo, a digital asset platform that deploys the power of AI to optimize and automate its crypto lending services. Another example is Altrady, an AI-powered trading terminal that provides clients with advanced technical analysis, backtesting, and automated trading strategies. Lastly, CryptoTrader.tax uses AI to help traders calculate their taxes on crypto trades, while UpBots offers clients AI-driven trading strategies to create personalized trading methodologies.
Smart contracts can be viewed as computer programs capable of performing predefined actions when certain conditions are met. In this regard, AI can streamline certain parts of the contract and ensure that all associated parties agree with one another.
To elaborate, as AI has the capacity to analyze large amounts of various data to identify patterns, it can be leveraged to improve the efficiency and cost-effectiveness of smart contracts, and even predict and prevent fraud in financial transactions. Smart contracts can be programmed to automatically trigger specific actions — such as freezing or canceling a transaction — when they detect suspicious activity based on the predictions made by their underlying AI models.
Security and compliance
AI can increase the security of the crypto and blockchain ecosystems in several ways. As we noted above, systems powered by this technology can sift through large amounts of data to detect and prevent fraudulent activities, such as money laundering, hacking, and phishing attacks. Not only that: these platforms can also be used to monitor blockchain networks and detect unusual patterns of activity that may indicate a security breach.
As mentioned earlier, AI is extremely useful in automatically analyzing smart contracts for vulnerabilities or errors that hackers could exploit. Lastly, AI can monitor and protect the network from various types of cyber-attacks and other malicious activities (such as DDoS intrusions).
Forta is a decentralized monitoring network that actively harnesses the power of AI and machine learning to detect threats and anomalies associated with DeFi, NFT, blockchain governance, bridges, and other Web3 systems. It does so in real time, allowing to locate problems before they become unmanageable.
Basic content creation and coding
While in the past, blockchain companies needed to rely on an army of coding experts and content creators, the introduction of AI has changed the game. For example, today, platforms like ChatGPT are making it easy to elucidate complex topics with the touch of a button.
Besides that, they can create basic code (across many different languages, including Rust, C++, Solidity, etc.) in a matter of seconds, lowering the chance of human-based errors and helping firms minimize their overhead costs.
The advent of AI-driven personalization has radically affected the video game market in recent years. To this point, AI can be used to customize in-game experiences. A noteworthy example of this is Farcana, a blockchain gaming project that marries AI, virtual reality (VR), DeepTech, and BCI to draw from players’ physical stats and playing styles and create an individual, immersive experience.
Another example worth noting is Sensorium Galaxy: an AI-driven digital metaverse that uses artificial intelligence technologies to power life-like NPCs, including historical figures, which can seamlessly play their assigned roles and even have complex, unscripted conversations with the users.
As we head into a future driven by AI-centric systems, it stands to reason that this nascent technology has the potential to revolutionize the crypto sector in a big way, especially in terms of how digital assets and their associated ecosystems are managed and secured.
Therefore, moving forward, it will be interesting to see how AI affects the efficiency, transparency, and security of this market while also creating new opportunities for growth — and innovation.