How merging AI with Blockchains can lead to Decentralized Finance and the Fourth Industrial Revolution.
The Internet. Loss of Privacy & Cybercrime.
Thirty years ago the rise of the internet started to change our lives forever. We use it to share pictures, music, movies, our daily life with all around us. We started to exchange valuable data. Data has become powerful. But all these data is now controlled and stored by a handful of powerful companies. We have given away our privacy and data for free. With the loss of control over our data and privacy, we also see the rise of cybercrime, hacking, phishing, copyright infringement, the theft of data and passwords, and the spreading of fake news for political gain. It’s estimated that the economic cost of cybercrime exceeded $600 billion / year globally in 2017. Experts say that in 2021 cybercrime may cost $ 6 trillion.
Financial crisis 2008.
The last financial crisis of 2008 was a wake-up call for the whole world. Powerful banks and insurers all over the world collapsed. Lehman Brothers went bankrupt. Merrill Lynch, AIG, Freddie Mac, Fortis and many more on the European continent had to be rescued. Millions of people suddenly lost their money, savings, jobs and homes. We began to realize that banks were the real owners of our money! Even to date governments and regulators still fail to push through all the needed reforms to protect consumers and the system from this reckless behavior.
Blockchains and the new (crypto-) economy.
Since a few years a new technology named Blockchain promised more transparency, security, speed and efficiency. The first Blockchain entered the public after the financial crisis of 2008 and produced the cryptocurrency Bitcoin. A new “economy” was born; the crypto-economy. More than 10 years later, we see almost 1,500 new cryptocurrency projects and platforms pretending to be more sophisticated, more secure and faster. They have found new ways to raise and trade funds for their projects with an ICO, STO or IEO. Projects running on different kinds of protocols, leading to thousands of new coins in a completely unregulated jungle of crypto-economies.
Cybercrime. Fraud. Market manipulations.
It’s no wonder that the rise of unregulated crypto-economies led to the explosive growth of fraud and digital heists duping investors and project owners. According to the Q4 Cryptocurrency Anti-Money Laundering report by CipherTrace , criminals stole a massive $1.7 billion of cryptocurrency in 2018. Reuters estimated that criminals have stolen over 980,000 Bitcoins from exchanges since 2011. Today, those stolen coins would be worth more than $3.5 billion.
On January 2018 the Tokyo-based cryptocurrency exchange CoinCheck lost 500 million NEM with a total value of $550 million at the time of the hack. On August 5, 2019 Reuters reported that North Korea stole $ 2 billion in fiat- and cryptocurrency to fund their weapons of mass destruction programs. Sophisticated cyberattacks on banks and cryptocurrency exchanges were being used.
Blockchains and Mass adoption. Too complicated. Not user-friendly.
More than 1,500 projects running on different protocols that are not interchangeable make mass-adoption of cryptocurrency and blockchains very difficult to realize. For example, ERC-20 created coins can only be used and traded on Ethereum-based platforms and exchanges. And most protocols have their own exchanges and wallets that only accept their coins. Banking, trading or doing business on the Blockchain is still very risky and complicated for a lot of users, even for the seasoned crypto-community and investors. It’s not user-friendly.
Transparency versus Privacy.
Transparency and too much open-sourced coding (needed to build trust and safety into blockchain networks) make it easy for bad actors and hackers to manipulate and hack a blockchain platform. Too much transparency is also conflicting with the new European Privacy Rules (GDPR).
GDPR- The European Privacy Law and Rules.
In Mid 2018 the European Union enacted the General Data Protection Regulation (GDPR), designed to protect the data of those living in the EU. The GDPR mandates individuals to have full access and control over the use and maintenance of their own data and the right to be forgotten (!). This means that the GDPR clashes directly with the blockchain because of its immutable nature, while both share the same goals: the protection of data. But there’s one big difference: the GDPR puts user’s control and visibility of their data at the forefront. And breaching the GDPR will lead to a heavy fine of €20 million, or 4% of the global revenues!
Touted as a world-changing technology, blockchain is still at its infancy and not the new panacea. It still has huge security problems, it’s easy to hack, hard to scale and too complicated for “the man on the street”. It needs improvement….
What if we think outside the blocks and use the power of another new technology, Artificial Intelligence (AI)? And what if we combine AI with Blockchain?
Artificial Intelligence (AI)
Blockchain and Artificial Intelligence are two of the hottest technology trends right now. They have the power to disrupt existing business models. In the blockchain encrypted data is stored, time-stamped and distributed in a decentralized, immutable ledger. AI uses Big Data for analytics, decision making and to perform tasks in a more intelligent and efficient way. Combining these technologies will lead to more efficient processing of data and boost the efficiency of blockchains.
AI and Finance
Algorithms for financials can be trained to detect, analyze and prevent fraudulent transactions, money laundering, suspicious activities and market manipulations in an early stage. AI helps to automate processes and accelerate transactions. AI will boost the development of new financial products for consumers and investors: products that help investors and consumers to make the right investments or products that provide personalized suggestions for financial products. According to a research by Accenture the projected market value of AI in 2035 will be $ 8.3 trillion.
AI and Healthcare
Artificial Intelligence will play a big and important role in our lives. Artificial Intelligence saves lives. From patient monitoring, CT- and MRI- analysis, virtual nursing assistants to robotic surgeries, AI provides doctors new diagnostic- and therapeutic tools to deliver their patients the best care. The possibilities of Artificial Intelligence are basically endless.
Data Integrity. Bad Data makes Blockchains useless and dangerous.
Blockchain is decentralized: blocks that contain details such as data, transaction dates and links to the previous blocks, are distributed to various computers on the network. But there is still no one who controls the quality of data that will be stored in the blockchain: once you put data in the blockchain it’s impossible to remove or to change it (!). So the quality of data that you want to store in the blockchain is very important. To put it simply, you don’t want bad, corrupted data stored in the blockchains forever. Bad data could ruin the quality of the whole ecosystem of interconnected accounts, businesses and services. AI could help to address these issues for the blockchains.
Solution. AI + Elastic Blockchains.
To solve the above mentioned problems, AIXEUS Labs is developing the new AIXEUS Protocol / Operating System (OS) that combines the power of AI with Elastic Blockchains. In this Protocol AI is the “Master”, that controls the Blockchain (“Slave”) in the distribution of categorized and encrypted data. This will lead to a new and powerful OS that makes the Web, Banking, Trading and Business more decentralized and where the user controls all his own data, his own assets and intellectual property.
The AIXEUS — OS and platform are built around the user. It has a modular framework where Decentralized Digital Apps (DApps) can be installed that serve all kinds of industries. To keep bad actors away, the whole ecosystem is only accessible for verified users that passed the KYC (Know Your Customer) — and AML (Anti-money Laundering) verification process. See fig.1.
The AI-engine generates the SmartBots, SmartContracts and SmartSensors. They collaborate and interact with each other to verify, categorize and “train” data, to add extra security layers, to accelerate the speed of transactions and data, to increase efficiency and to lower the cost.
The AIXEUS Consensus Protocol prevents the re-processing of data that was already verified. The result is the creation of unique sets of Smart, Verified and Encrypted Data (SVED). The SVED is being made ready for the distribution across the Blockchains. The OS will give back power to the user and with the European GDPR in mind, the user decides what happens with his own SmartData. Here the Elastic Hybrid Blockchains kicks in to encrypt, timestamp and distribute the SmartData. The user has now full control over its own privacy and data. The user even controls the right to be “completely forgotten” in the ecosystem without affecting the integrity of the ecosystem and Blockchain! In a conventional blockchain this will make the blockchain invalid because any change to data will lead to a change of the hash.
AIXEUS — OS and Decentralized Finance (DeFi).
The infrastructure of our current financial markets is centralized. It lacks transparency, it prevents fair and open access and it is vulnerable to censorship and manipulation. Key factors that has also led to the last Financial Crisis of 2008. In Decentralized Finance (DeFi) the underlying infrastructure is decentralized by blockchains in order to create more transparency, openness and easier access to financial markets, no matter your geological location, your status, age, etc. With DeFi everyone with an internet access has access to new financial markets.
DeFi, Private Banking and Cashless Trading. The Next Industrial Revolution.
We have learned lessons from the last financial crisis of 2008 and the flaws of current blockchain platforms in the new crypto-economies.
To make DeFi a reality and a success — without having the above mentioned disadvantages of the current blockchain platforms — a new DApp (Decentralized Application) named RAIDEX, will be developed that runs on top of the AIXEUS — OS. See Fig.2.
The RAIDEX DApp creates an ecosystem for Private Banking and Cashless Trading where users have full control over all their assets, funds and data. An ecosystem where digital services (Data, etc.), fiat currency and digital (crypto-) assets are created, issued and traded without third parties. An ecosystem for the unbanked: where 2.5 billion people with no bank account can create their own private bank account and do their daily financial services and business. Where users can trade services, data of value and assets without cash, or raise funds, lend and borrow money from peers, the crowd or banks. One hub where users have the opportunity to invest and trade in companies, stocks, commodities, coins, data, etc.
RAIDEX bridges the real economy with the new crypto-economy. It supports a wide range of global, national, local and crypto-currencies that can be traded between the traditional — and the crypto-economies. The possibilities are endless.
Within a few years we will see the full convergence of Blockchain, AI and cryptocurrency disrupting Financial Industries and the Web. This will lead to the exponential rise of Decentralized Finance, the Decentralized Web and applications and platforms that will serve industries where data is critical: medicine, legal, real estate, energy, science and many more. It will pave the way for the Fourth Industrial Revolution!