A significant challenge for AI lies in its potential to compromise privacy. Artificial Intelligence (AI) systems depend on vast amounts of data, which could be exploited for identity theft or cyberbullying. There are worries about personal data being utilized to train AI models, the creation of deepfake voices or faces for fraudulent activities, and nations conducting information warfare campaigns.
But blockchain can solve this crisis. A new report suggests that blockchain can catalyze boosting trust and privacy in AI, thereby challenging tech monopolies.
Despite the decline in venture capital (VC) funding this year, the fusion of Web3 and Artificial Intelligence (AI) emerged as a top choice for investors in blockchain startups, capturing more than 11% of the total VC funding in the blockchain sector.
According to a report by Stan Miroshnik at TenSquared (10SQ) shared with CryptoPotato, VC investment in Web3 and AI startups surpassed $637 million in 2023.
This essentially indicated startups working at the intersection of blockchain and AI and developing code writing tools, decentralized data storage, compute infrastructure for AI, content authenticity, privacy, and AI-enabled Web3 security solutions are steadily receiving an increasing share of investor support.
The report found that the number of research publications, patents, and GitHub activity related to blockchain and AI has steadily increased over the past five years, indicating a thriving area of research within the blockchain domain. There have been over 5,600 research publications focusing on blockchain and AI during this period, highlighting the rapid growth of this field.
Similarly, developer engagement in this emerging field has been steadily rising, as evidenced by the increasing number of new GitHub repositories and pull requests.
Furthermore, the value of AI-related tokens has experienced significant growth, indicating a rising interest and confidence in on-chain AI. By December 31, 2023, the market capitalization of the top 15 AI-related tokens had reached $12 billion, marking a 443% increase in 2023, surpassing the 108% growth of the total cryptocurrency market.
The report highlighted that blockchain can serve as a source of reliable data for AI, improving crucial factors such as trust and privacy of data without intermediaries. In turn, AI has the potential to transform decentralized networks and applications and fuel the widespread adoption of Web3 technologies.
Three primary applications of AI to improve the core Web3 infrastructure include –
In the context of DeFi, AI algorithms can play a crucial role in evaluating borrower risk profiles by detecting patterns of fraudulent behavior, including unusual trading activities, high-risk transactions, and suspicious addresses.
AI-powered trading bots and predictive analytics are employed to enhance trading decisions and capitalize on market trends. Additionally, AI can be utilized to analyze real-time market conditions, assisting DeFi platforms in making more informed risk assessments.
Furthermore, AI-driven portfolio management and automated asset rebalancing can be used to optimize on-chain asset allocation and portfolio performance. Lastly, AI-enabled payment infrastructure can allow AI agents to execute payments on behalf of users following predefined rules and strategies.
