13.9.2024
In the rapidly evolving digital landscape, two technologies are becoming increasingly important: artificial intelligence (AI) and distributed ledger technology (DLT). Recently, large language models (LLMs) such as ChatGPT in particular have drawn the public's attention to the enormous potential of AI. At the same time, the crypto and NFT markets, which are closely linked to DLT, seem to be trapped in an endless bear market, negatively impacting interest in the technology.
It would be short-sighted to view these technologies as competitors. Instead, this blog post shows why, for what and how AI and DLT are used synergistically to create innovative solutions to the challenges of our digital future. While both technologies are already making impressive progress on their own, their true potential lies in the combination of their strengths.
This blog post sheds light on how AI and DLT together create added value and which specific use cases benefit most from this synergy. We will investigate how the analytical capabilities and predictive power of AI can be optimized through the secure, transparent, and immutable database of DLT, and how, conversely, AI enables intelligent use and evaluation of the data stored in DLT. In all cases, the strengths of both technologies complement each other: The analyticalability and predictive power of AI is optimized by the secure, transparent and immutable database of DLT. At the same time, AI enables intelligent use and evaluation of the data stored in DLT.
Artificial intelligence includes systems that can make decisions independently and based on data. It is used in a wide variety of areas, from traffic control and sustainable business models to process optimization in public administration. DLT, on the other hand, is particularly suitable for the management of transaction and process data, such as those generated in register management. Once data and transactions have been stored in a DLT network, no one can change or delete them afterwards. Due to the decentralized nature of the networks, they are also very robust against attacks on the infrastructure used.
The combination of AI and DLT creates unique opportunities for innovative solutions. On the one hand, the immutable nature of the data and its source in a DLT network provides the perfect basis for AI-supported analyses on secured data. On the other hand, these data structures can also be used to register the parameters used (e.g. the prompt) and the resulting answers of the AI in an unchangeable way, including the human originator (or better: client?), in away that can be validated by everyone at any time.
GIGO, means "Garbage In, Garbage Out", is not only considered a general phrase in IT, but is also well known as aprinciple among all scientists who work with model systems. In AI, in which the models are generated entirely from the training data, this connection is even tighter. The training data of an AI model completely influences which weightings and correlations are assumed by the model and thus essentially the later results when using the model. Causalities are generally not recognized by an AI model, so they should be specified in the training data, e.g. by annotation. DLT provides an immutable and transparent database on which AI algorithms can be trained. This increases the reliability and traceability of AI decisions.
AI can optimize the creation and execution of smart contracts on DLT platforms by analyzing complex terms and automatically adjusting contract clauses. Of course, security must never be ignored, because after deployment, a smart contract can no longer be changed and executes all transactions exactly as defined in its code. It is advisable to have a smart contract reviewed by specialists before deploying.
The combination of AI-supported anomaly detection with the decentralized structure of DLT networks can identify, defend against and document security risks at an early stage. The AI benefits from the immutably stored and validatable data inthe DLT network, whose originator can be clearly identified. This means that neither the input parameters nor the anomalies documented by the AI can be deleted or changed.
When integrating AI and DLT, companies face some typical challenges that need to be overcome:
The implementation of both technologies requires highly specialized expertise. Already the selection of suitable AI technologies (e.g. LLM, NeRF, Reinforcement, own LORAs, own GPTs, own models, ...) and DLT networks (e.g. Etherium, Solana, Polygon, IOTA, ...) significantly determines later results and should be specially adapted to the present and future requirements. Companies like Phygicon offer valuable support through their expertise in AI and DLT strategies and partnerships with other specialists. Their consulting services and tailor-made solutions help to overcome the technical hurdles.
The use of AI and DLT must be in line with local and, where applicable, international data protection regulations. Especially in such new and thus judicially uncertain topics, this task is not always easy. Phygicon's experience in developing regulation-compliant solutions can be invaluable here. They not only support the implementation of privacy-by-design approaches, but also have the right contact persons in the partner network for cooperation witht he few specialized lawyers and regulatory authorities.
DLT networks in particular face challenges in scaling. When designing a new DLT, you are basically faced with a trilemma of security, scalability and decentralization. For example, Bitcoin is a DLT with maximum security and maximum decentralization, but at least on Layer 1 completely without being able to scale. There are some attempts to partially solve the trilemma, but to date no one has succeeded in designing a DLT that fully meets all three requirements at once. Phygicon's expertise in the development of scalable blockchain solutions can help companies at designing efficient and future-proof systems and will take all their requirements into account when selecting a suitable DLT network.
Linking existing systems with new AI and DLT solutions can be very complex. Regardlessof whether you run your IT on premise, in the cloud, in a monolithic database or by means of containers and microservices - the integration of a new functionality must be as seamless as possible. It is a great advantage if a broad knowledge of legacy systems, interface technologies and requirements is available. Phygicon's holistic approach, many years of experience in system integration ina wide variety of infrastructures and an established partner ecosystem offer the best prerequisites to make coping this challenge much easier.
The shortage of skilled workers especially in the young fields of AI and DLT is another hurdle. Phygicon offers not only consulting and development, but also training and workshops to support companies in the further training of their employees.
Overcoming these challenges requires a strategic approach and often external expertise. Companies like Phygicon, which specialize in the intersection of AI and DLT, can be valuable partners here. They offer not only technical know-how, but also strategic advice to exploitthe full potential of these technologies.
The combination of AI and DLT holds enormous potential for innovative solutions in a wide variety of areas. From combating fake news to streamlining administrative processes and promoting sustainable energy systems, the synergy of these technologies promises to significantly improve and shape our digitalfuture.
In order to fully exploit this potential, continuous investment in research and development as well as the promotion of interdisciplinary cooperation are essential. At the same time, ethical and regulatory frameworks must be created that enable innovation while ensuring the protection of individual rights.
The future lies in the intelligent linking of AI and DLT. Companies, research institutions and public institutions that investin these technologies at an early stage, understand them and use their synergies for themselves and their customers will be ahead of the curve in the digital transformation in the future. Kickstart or accelerate your journey today by making an initial free appointment to discuss your specific goals!
