Explain the combination of encryption and AI: relationships, use cases, and the future

Author: Reflexivity Research

Translation: Vernacular blockchain

Recently, the AI industry has become a hot topic for both good and bad reasons. While you may already be aware of OpenAI’s recent controversy and may have explored the capabilities of existing AI technologies, you may not have thought deeply about how AI interacts with blockchain-based systems. In this week’s report, we’ll cover some of the existing applications that try to make the most of AI and blockchain technology, as well as some information about these applications and the development of the AI industry in the coming years.

1. What is Artificial Intelligence (AI) and what does it have to do with cryptocurrency?

Before diving into the specifics and more technical details of the project, let’s cover a little bit about the basics of AI technology and how talented teams and individual developers in the industry have led us to where we are today.

Let’s talk about the already familiar ChatGPT, the core technology of ChatGPT and other consumer-facing chat-based models is the so-called large language model (LLM). These sophisticated AI techniques are basically a combination of deep learning techniques/algorithms and very large datasets that work together to create an AI model capable of predicting and summarizing knowledge.

LLMs combine deep learning algorithms and large datasets to predict and summarize knowledge.

The user’s interaction with LLMs uses natural language processing, and many LLMs are designed for this purpose. Users ask questions in natural language, and chatbots use technology and training data to provide the best answers possible.

LLMs are built on neural network models known as transformers and are adept at predicting text and understanding the meaning behind words. As a result, chatbots such as ChatGPT have been a huge success, almost sparking an AI revolution. The possible relevance of these models to cryptocurrencies and blockchains will be discussed below.

2. How can cryptocurrencies help enable AI applications?

The cryptocurrency industry is a topic that is widely discussed on a daily basis in the news, mainstream media, and on other social media platforms. Starting with a white paper written by Satoshi Nakamoto in 2008, the industry has grown into a $1.5 trillion market, and the world’s largest financial institutions are at risk of a range of ETF approvals or rejections.

It is often difficult to describe the inherent advantages of blockchain technology to outsiders, mainly because the financial industry is already very mature and smooth in most developed countries. Outside of the United States, as in the United States, the role of permissionless ledgers for financial transactions is easier to explain, because there are still corrupt financial institutions and governments. Currencies around the world continue to depreciate, and the majority of the world’s population still lacks access to banking infrastructure, which is often seen as a secondary problem in the United States.

Cryptocurrencies are a way for banks to be unbanked, a technology that offers individuals the opportunity to become overseers of their own financial operations, a revolutionary change that should not be underestimated. The inherent features of blockchain, such as transparency, security, and decentralization, can greatly facilitate the storage, sharing, and utilization of AI data. The combination of the two is a great way to reduce data manipulation or misuse.

One strong prospect is in the area of data management and security. AI systems require large amounts of data to learn and improve. By leveraging blockchain technology, this data can be shared securely and transparently across different platforms and stakeholders. Not only does this ensure data integrity, but it also opens up new avenues for collaborative AI research and development, breaking down data silos that often hinder innovation. The integration of AI with blockchain creates legitimate decentralized autonomous organizations (DAOs). Governed by smart contracts and powered by AI algorithms, these DAOs can operate independently, make decisions, and execute transactions without human intervention. However, in the history of cryptocurrency, the management of DAOs has not been perfect, as human emotions and financial incentives often obscure the original purpose of DAOs. Implementing AI systems can transform industries by automating processes and reducing the need for middlemen, increasing efficiency and reducing costs.

Another promising area is the use of blockchain to incentivize the generation and sharing of AI data. Through tokenization, individuals and organizations can earn rewards to facilitate the provision of valuable data to AI models, creating a more collaborative and inclusive AI ecosystem. DeFi is also a potentially huge beneficiary of AI, with the potential to create so-called decentralized AI (DeAI). This approach could democratize AI technology by enabling individuals and small entities to access AI tools and services that were previously only owned by large companies. The convergence of cryptocurrencies and AI has the potential to transform many aspects of our digital lives, not only making AI more pervasive, but also more secure, transparent, and perhaps even more efficient. So, let’s take a look at the current workings and capabilities of the AI industry.

4. Break the opaque barrier of artificial intelligence

Comparing cryptocurrency’s sweeping overhaul of the financial system with the intelligent revolution of artificial intelligence systems, we can find some very relevant similarities and make a case for combining the two.

Currently, many AI companies like OpenAI, Google’s Deepmind, Anthropic, and many others conduct their research and operations behind closed doors.

5. Current opportunities in cryptocurrency and artificial intelligence

Now that we’ve covered some of the basics about the synergy between AI and cryptocurrency, we can take a closer look at some of the leading projects in this space. While most of these projects are still actively working to launch their networks, gain a loyal user base, and attract the attention of the broader crypto community, they are all at the forefront of the industry and are good representatives of this rapidly growing field.

1. Bittensor, a network of decentralized AI models:

Bittensor is a popular decentralized AI network project. The goal is to democratize the AI space by creating multiple decentralized commodity markets or “sub-networks” that will allow it to rival large mega-corporations such as OpenAI. The network is governed by miners and validators, miners submit AI models and receive rewards, and validators ensure model accuracy. Users interact with the network through validators and get answers by distributing the output of the miners.

Unlike other institutions, Bittensor relies on a decentralized mechanism for model development and uses a unique Yuma consensus structure to allocate resources to different subnets. This structure aims to improve the quality of AI models and promote the decentralized application of AI technology.

2. Akash, an open-source supercloud platform:

The Akash Network is an innovative, open-source supercloud platform designed to buy and sell computing resources in a secure and efficient manner. At its core is a reverse auction mechanism where users can bid on computing needs and providers compete to provide services, often at a significantly lower price than traditional cloud systems. Akash is based on reliable technologies such as Kubernetes and Cosmos, ensuring a secure and reliable application hosting platform. It uses the YAML-based Stack Definition Language (SDL) definition infrastructure, enabling users to create complex deployments across multiple regions and providers.

Akash also offers persistent storage solutions that ensure that data is retained even after a reboot. Overall, Akash Network is a decentralized cloud platform that offers a unique solution to the monopolistic nature of current cloud service providers.

3. Render, a platform that expands access to computing resources:

The Render network leverages unused GPU cycles to connect content creators who need computing power with providers who have available GPU resources. This is made possible by blockchain technology, which ensures the safe and efficient processing of GPU tasks, including AI-powered content creation and optimization. The Render network supports AI-related tasks, providing artists with AI tools to generate resources and enhance digital artworks, while managing art collections and optimizing rendering workflows. This ecosystem, based on RNDRToken, facilitates the trading of rendering services and opens up new possibilities for creative expression and technological innovation in the digital media sector.

4. Ensyn, a decentralized computing platform: Gensyn is an AI and cryptocurrency project focused on solving the computational challenges and resource constraints of modern AI systems. The project aims to overcome the huge resource constraints required to build foundational AI models by creating a decentralized blockchain protocol that makes efficient use of global computing resources.

Gensyn’s background shows that the computational complexity of AI systems has exceeded the currently available compute supply. For example, training a large model like OpenAI’s GPT-4 requires a lot of resources, leading to huge obstacles. Gensyn’s solution is to create a decentralized protocol that connects and validates off-chain deep learning work, addressing challenges such as verification of work, market dynamics, and privacy.

The protocol rewards participants for contributing computational time and performing machine learning tasks, and validates the work done using a variety of techniques. Gensyn’s goal is to build a transparent, low-cost machine learning computing marketplace that democratizes access to AI resources.

5. Fetch is an open platform in the field of AI economy:

Fetch is an AI and cryptocurrency project that aims to change the way the economy is conducted. At its core is an AI agent that autonomously connects, searches, and transacts. Fetch enables traditional products to be AI-capable, and has also launched the Agentverse service to simplify the deployment of AI agents. Through large language models (LLMs), Fetch has built a proxy service platform that provides search and discovery capabilities to enhance the effectiveness of AI agents.

At the same time, the platform also provides escrow services and an open network to facilitate the integration of blockchain technology with proxy addressing. Fetch’s combination of AI proxy and blockchain technology opens up new possibilities for automating and optimizing various processes.

6. Summary and outlook

The integration of artificial intelligence and blockchain technology represents important advances in both areas. This combination is not just a fusion of two cutting-edge technologies, but a transformative synergy that redefines the boundaries of digital innovation and decentralization. The integration potential explored in projects like Fetch.ai, Bittensor, Akash Network, Render Network, and Gensyn demonstrates the great possibilities and significant benefits of combining the computing power of AI with a secure and transparent framework for blockchain.

Looking to the future, it is clear that the convergence of AI and blockchain will play a key role in shaping various industries. From improving data security and integrity to creating new models for decentralized autonomous organizations, this convergence promises more efficient, transparent, and accessible technologies. Especially in the DeFi space, the emergence of decentralized artificial intelligence (DeAI) is likely to democratize AI technology even more, breaking down barriers that have traditionally favored large enterprises. This could lead to a more inclusive digital economy, where individuals and smaller entities can take advantage of AI tools and services that were previously inaccessible.

This integration of technologies can solve pressing challenges in both areas. Blockchain solves the problem of data silos and huge computing demands in the field of artificial intelligence, while AI can also improve blockchain efficiency, automate decision-making processes, and enhance security. Continuing to explore and capitalize on these synergies is critical to driving innovation in the digital space, which will help both areas grow for the benefit of society as a whole.