Smart Blockchains

How AI and Blockchain will Interact

The Current Landscape

There seem to be two main areas of computer science that have been dominating the news headlines lately. The first is artificial intelligence. Every day it seems like people are finding new ways to get computers to behave like humans. While frightening, artificial intelligence will transform life in ways people are only beginning to imagine. The second is blockchain, which first took form as bitcoin. Blockchain based technology solves a number of game theoretic problems in existing computer networks to create a platform upon which value, not just information, can be exchanged between trustless parties.

Together, these two fields attract more money than one could fathom. Every venture capital and investment firm is heavily invested in the two, and the hype only seems to be growing. While undoubtably a huge bubble, there is something very meaningful underlying each. However, it seems like there is very little interaction between the two, partially because of how new and emergent they are. Here, I try to outline how I think artificial intelligence and blockchain will interact in the coming years.

What AI Can Do

Artificial intelligence, especially machine learning, is really just about writing programs that process data. The idea is pretty simple: you feed some set of data into a computer, and the computer processes this data to output some decision or insight. Building a machine learning model is about figuring out how the computer should process the the data we input.

Even the most sophisticated artificial intelligence models operate around this basic idea. For example, look at self-driving cars- arguably the most impressive accomplishment of artificial intelligence to date. Cars are first loaded up with a bunch of sensors to collect data. This data is then processed by a computer, and the computer decides what the car should do. Natural language processing happens the same way. We feed in text, along with some basic annotations of what the test means. This information is processed by the computer to build a model. Once the computer is trained, we can feed in new text, and using what it learned from the previous data supplied, the computer can ‘understand’ what the text says.

The potential of artificial intelligence is that computers will be able to analyze better than humans. With all the information we can now track, we have more data to feed into computers. They can process all this data much faster and at higher frequencies than humans, allowing both scalability and accessibility. As the field develops, artificial intelligence models will continue to improve and eventually surpass human ability to process information in many fields, including healthcare, finance, and manufacturing. Given this potential, artificial intelligence will allow scalable, highly cognitive services built through computers.

What Blockchain Can Do

While artificial intelligence is disrupting software from the top down, blockchain is disrupting software from the bottom up- at the infrastructure level.

A blockchain is a decentralized, immutable, and public digital ledger of transactions that is secured through the consensus of the participating nodes. While this is a very technical and convoluted definition, I want to focus more on what blockchain technology can do rather than how it happens. By solving a few challenges in network architecture through cleverly designed incentives, blockchains enable exchanges of digital assets and value, as opposed to just information, between different parties in the network that may or may not trust each other.

What does this really mean? Well, it starts of with the most fundamental conception of value in our society: money. Bitcoin is a blockchain secured network currency designed to replace existing fiat currencies. Why? Well, because blockchain technology is immutable and distributed, centralized parties like corrupt governments or malicious corporations can’t impact its use or supply. Unbound by borders, bitcoin is the first step towards a global currency that can be transferred from country to country without the inefficiencies and limitations of existing financial systems.

For many people who have only seen the headlines, this mean a platform that can be used to commit crime. However, at a macro level it represents a fundamental change in the way that we think about financial access. Because bitcoin and other blockchain networks aren’t dependent on centralized institutions, people will no longer need access to these institutions to have basic financial services that are necessary to improving their lives.

Financial services is the first industry that will be impacted by blockchain, but the principles behind the technology will impact very fundamental parts of the economy, including healthcare, energy, and supply chain management. Given an increasingly connected and globalized society, the ability to exchange value between trustless parties will become more and more important.

The Marriage Between the Two

While the fields of artificial intelligence and blockchain are pretty fragmented right now, the convergence of the two is inevitable. Eventually, we are going to see artificially intelligent agents interact with different blockchains in a fundamentally transformative way.

For a specific example, take a look at the Federal Reserve. Right now, decisions are centralized to a small set on people. These people are incredibly smart, talented, and experienced. But no matter how intelligent, humans are only capable of understanding so much data. Given how much information we know track about the economy- from consumer spending to volatility in the markets- there is no reason we should not be using this data to make better and more effective monetary policy decisions. In the future, one could envision these decisions being driven by an artificially intelligent agent that can process way more data than the dozen or so people currently in charge of making these decisions. But what about blockchain? Well, if current existing assets were tokenized on a blockchain, the agent could use smart contracts to automatically and instantaneously adjust the money supply.

Similar changes will occur for other centralized, decision making institutions. Imagine instead of giving your money to a broker or money manager, but you gave your money to an artificially intelligent powered decentralized autonomous organization (commonly referred to as a DAO). The agent would be in charge of managing investments and assets, which are built on top of a blockchain. The DAO would pool together investments from groups of people who would vote on the parameters and governance of the organization. One could envision the entire financial industry become digital, with assets being built using blockchain technology and decisions being driven by artificial intelligence. Finance, investing- these will no longer be the services of the wealthy, but will become open and accessible to anyone who has access to the Internet.

Quite frankly, it is a long road to this future. To get to this open and accessible world, we are going to experience a lot of growing pains. The institutions that will be dramatically impacted will not necessarily acquiesce to these changes- particularly the ones poised to lose their position of control. There will be conflicts, criticisms, and mistakes. As artificial intelligence and blockchain mature, though, step by step, a society built using them will become more feasible. With the right amount of thought, empathy, and understanding, we can ensure that this new society, which leverages emerging technology, will be equitable and fair to everyone-regardless of origin and circumstance.