With its decentralization and anonymity, the blockchain is emerging as a revolutionary technology not only in the financial field, where paying middlemen fees are no longer required, but it is also changing the tech industry and people’s daily lives since it presents itself as a strong record-keeping solution. If you still can’t see for yourself how revolutionary the blockchain is, especially if combined with artificial intelligence, buckle up and let us explain.
- 1 How the blockchain is different from other technologies
- 2 How the blockchain is changing your day to day life
- 3 Most notable innovations
- 4 Conclusion
Despite the hype revolving around blockchain technology and cryptocurrencies for the last two years, the majority of non-tech people still see it as no more than some kind of a virtual currency that is used for trading on the Internet. They have no widespread awareness of how useful the distributed ledger can be in practically any field where authenticity and the establishment of trust between entities is required. Let’s find out then how the blockchain is like no other available technology today.
How the blockchain is different from other technologies
Although online payment systems like Paypal are doing a good job in terms of secure payments and authenticity, relying on a centralized architecture is usually risky and makes users vulnerable since the point of failure is located in one single place. Let’s see how the blockchain solves this issue, among many others.
Blockchain immutability comes from the fact that once data has been written to a blockchain, no one, not even a system administrator, can change it. This provides benefits for auditing. As a provider of data, you can prove that your data hasn’t been altered, and as the recipient of data, you can be sure that the data hasn’t been altered. These benefits are useful to the databases of financial transactions.
In a blockchain, anyone can read and write the data that is stored on the blockchain because it is accessible to everyone in the world. A person can become a member of the blockchain network and can store, send, and receive data after downloading the required software on his or her device. Traditional banks would require several documents and an initial deposit to open an account. Transactions with banks are limited depending on the type of account a user has. With blockchain platforms, creating a cryptocurrency wallet is accomplished simply by signing up. Transfer and even remittances are all possible. The transparency of the blockchain also mitigates corruption as all transactions are tracked and placed in the public ledger.
The blockchain also has an enhanced verification process. This process is achieved by running transactions through one way mathematical equations called hashes. When a new block is created, all of its transactions are hashed (in some cases, hashed many times), producing a unique result. These results are verified by other nodes on the network by rerunning the same mathematical equations with the same inputs, and confirming that the output is an exact match. If the output doesn’t match, that tells the node that the inputs don’t match either, due to an error or fraud and the transaction should be ignored. This process works similarly for validating single transactions as well as new blocks.
The blockchain is decentralized as every participant in the distributed ledger’s network has to carry a local copy of the blockchain. It relies on a peer-to-peer architecture where participating nodes can either send a transaction then wait for it to be confirmed within a block, or simply help in the block’s creation (i.e. mining) by solving hard mathematical equations. This decentralization makes altering the content of the blockchain even harder, meaning that even if a node wanted to change the content of a given block, it has to beat the computing power that has been invested in the creation of the entire existing blockchain.
How the blockchain is changing your day to day life
With the innovation that comes with this blockchain technology, it’s not unrealistic to predict that the distributed ledger could really change our daily lives for the better in the next few years. To touch on this positive influence in different fields, let’s find out about the blockchain’s benefits and how it is integrated in business and professional areas.
How are you benefiting from the blockchain
Our global financial system moves trillions of dollars every day and serves billions of people. But the system is rife with problems; adding costs through fees and delays, creating friction through redundant and onerous paperwork, and opening up opportunities for fraud and crime. 45% of financial intermediaries, such as payment networks, stock exchanges, and money transfer services, suffer from economic crime every year. The blockchain is capable of recording anything of value. Money, equities, bonds, titles, deeds, contracts, and virtually all other kinds of assets can be moved and stored securely, privately, and from peer-to-peer because trust is established not by powerful intermediaries, like banks and governments, but by network consensus, cryptography, collaboration, and clever code. For the first time in human history, two or more parties, be them businesses or individuals who may not even know each other, can forge agreements, make transactions, and build value without relying on intermediaries (such as banks, rating agencies, and governing bodies) to verify their identities, establish trust, or perform the critical business logic — contracting, clearing, settling, and recordkeeping tasks that are foundational to all forms of commerce.
The blockchain has the potential to reinvent any transaction that now requires going through a middleman,. Before the blockchain, buying and selling required an intermediary, a bank or broker who housed your financial data on their servers. When you transfer funds or make a purchase, a banker connects to the bank’s system to record the change. The blockchain replaces this central system with a decentralized ledger of chained records. Each record is connected to the one before and the one after it, yielding a traceable history of every transaction. No record can be deleted and no existing records can be altered.
The greatest obstacle for migrating many services online is the ability to secure the data and verify the identity of the users of that service. Currently, online authentication relies on a password, or on rare occasions dual-factor authentication. The problem with these methods are that passwords are notoriously insecure and dual-factor authentication generally relies on sending a code over SMS or a third-party service. A solution to this problem could be the blockchain. By distributing a ledger among all members of the network, blockchain authentication eliminates someone from maliciously altering the ledger. Every time a “transaction” or block of data is added to the chain a majority of the network must verify its validity. This guarantees the integrity of the ledger. These principles could be applied to transition everything from the electoral process, to state identification cards, to dual-factor authentication and turned into a secure, fast, reliable, and readily available service.
Most notable innovations
The first and most famous blockchain platform. Launched in 2009 by the anonymous Satoshi Nakamoto, blockchain technology was directly involved in making Bitcoin the most valued cryptocurrency to date.
The Bitcoin blockchain maintains the transaction records made by the different participants in the Bitcoin network. It also relies on the proof-of-work principle in order to prove the authenticity of the records. Bitcoins can be used to buy merchandise anonymously. In addition, international payments are easy and cheap because Bitcoins are not tied to any country or subject to any regulation. Small businesses may like them because there are no credit card fees. Some people just buy bitcoins as an investment, hoping that they’ll go up in value.
- Freedom in payment: With Bitcoin it is very possible to be able to send and receive money anywhere in the world at any given time. You don’t have to worry about crossing borders, rescheduling for bank holidays, or any other limitations when transferring money. You are also in total control of your money. There is no central authority in the Bitcoin network.
- Control and security: Bitcoin allows its users to be in control of their transactions in order to help keep Bitcoin safe for the network. Moreover, merchants cannot charge extra fees on anything without being noticed. They must talk with the consumer before adding any charges. Payments in Bitcoin can be made and finalized without one’s personal information being tied to the transactions themselves. Also, due to the fact that personal information is kept hidden from prying eyes, Bitcoin protects against identity theft. To ensure the safety of your money, Bitcoin can also be backed up and encrypted.
- Information is transparent: With the blockchain, all finalized transactions are available for everyone to see. However, personal information is hidden, only your public address is visible. Not only that, but anyone at anytime can verify transactions in the Bitcoin blockchain. Bitcoin protocol cannot be manipulated by any person, organization, or government. This is due to Bitcoin being cryptographically secure.
- Very low fees: Currently, there are no fees, or very low fees at the most, with Bitcoin payments. Users might include fees in order to process the transactions faster. The higher the fee, the more priority it gets within the network and the quicker it gets processed. Digital currency exchanges help merchants process transactions by converting these bitcoins into fiat currency. These services generally have lower fees than credit cards and PayPal.
Unlike Bitcoin, Ethereum was designed to be much more than a payment system. It is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud, or interference. At its simplest, Ethereum is an open software platform based on blockchain technology that enables developers to build and deploy decentralized applications. “Smart contract” is just a phrase used to describe computer code that can facilitate the exchange of money, content, property, shares, or anything of value. When running on the blockchain, a smart contract becomes like a self-operating computer program that automatically executes when certain conditions are met.
- Ethereum smart contracts always execute as written: Contracts of all types are written to be enforced and honored, however when the centralized model of having a contract written and managed by a lawyer or needing to be enforced by a judge or legal entity, the confidence that a contract will work as expected is not always there. There’s a confidence to be had when a business doesn’t need to worry that their operations will execute as expected within the confines of their DAO (Distributed Autonomous Organization) or smart contract network.
- ICOs and DAOs: Recently there has been an emergence of a new kind of crowdfunding, an Ethereum-based DAO can crowdfund millions for their gold-backed currency Dapp. Not only are ICOs able to raise much needed capital to operate and grow their business in a very short time, but they are able to do it purely through Ethereum’s network by issuing tokens. The logistics of raising capital of any kind or being an investor in a startup can be daunting, and there are many barriers to even getting started. With a DAO crowdsale, a Dapp can easily raise the funds they need and also set up a board to vote on proposals based on the number of tokens distributed without the need of lawyers, banks, or accredited investors.
- Automation and low to no cost: Conceptually, an Ethereum-based DAO could conceivably be designed to operate at zero cost because it can essentially execute an entire array of business functions automatically. With Ethereum, there would always be at least some costs associated with operating a DAO because of the gas costs associated with executing a smart contract. However, those costs would be minimal compared to the overhead of offices, employees, and infrastructure associated with running a centralized version of that business.
The invention of Bitcoin in 2008 symbolized the advent of cryptocurrency. The succeeding years witnessed a dramatic growth in blockchain technology. The introduction of Ethereum paved the way for supporting complex business behaviors with cryptocurrencies. The overall momentum of development, however, is now facing a series of key challenges. These include:
- Slow transaction speed
- Programming barriers of smart contracts
- Lack of security in smart contracts
- Inflexibilities in managing and updating blockchains
Designed to be the new generation blockchain, MATRIX leverages the latest artificial intelligence technology to resolve the challenges mentioned above. The fusion of the blockchain and AI technologies enables MATRIX to build a revolutionary cryptocurrency, which supports a significantly boosted transaction speed, superior accessibility to general users, enhanced security against malicious attacks, and highly flexible operations.
The challenges facing today’s blockchains have to be resolved before the idea of cryptocurrency can really become a reality. With artificial intelligence technology, which has received an unprecedented growth in the past decade, it provides out-of-box solutions to address challenges. MATRIX is designed to be an intelligent chain that unleashes the potential power in blockchain technology. Let’s take a look at the major benefits of MATRIX.
- Automatic generation of smart contracts: Although smart contracts gives blockchains the essential capability to handle scaled commercial behaviors, they need the users to be able to write programs in a given programming language. With MATRIX, no programming expertise is needed any more than for designing smart contracts. The unique code generation technique of MATRIX allows for automatic conversions of abstract descriptions in a smart contract into an executable program. Matrix only requires users to input the core elements (e.g., input, output, and transaction conditions) of a contract with a scripting language. Then a code generator based on a deep neural network is able to automatically convert the script into an equivalent program.
- Secured smart contracts: Smart contract programs may call functions offered by the host system and/or third-party libraries. Also, programs running on different computers in a distributed framework do not provide any guarantee for execution times. Such openness and decentralization is the reflection of the essential spirit of blockchains, but this gives birth to various sources of security threats. In fact, the lack of security is plaguing smart contracts currently. The MATRIX blockchain is equipped with a powerful AI security engine consisting of four major components: 1) a rule-based semantic and syntactic analysis engine for smart contracts, 2) a formal verification toolkit to prove the security properties of smart contracts, 3) an AI-based detection engine for transaction model identification and security checking, and 4) a deep learning-based platform for dynamic security verification and enhancement.
- High speed transactions: Today, all public chains are suffering from the problems of long transaction latency and low transaction throughput. Specifically, it takes over 30 minutes for Bitcoin to finish one transaction, while the transaction throughput of Ethereum is only 10 transfers per second (TPS). In fact, a blockchain depends on a P2P network in order to validate transactions. Since a transaction needs to be broadcasted to all nodes in a network, the overall latency has to increase as long as more nodes are joining the network. MATRIX resolves this problem by dynamically selecting a delegation network in which all nodes are voted as delegates of others. All Proof-of-Work (PoW) processing is only allocated inside the delegation network, which incurs a much smaller latency due to the smaller number of nodes. The selection process is random in the sense that a node is selected with a probability proportional to its Proof of Stake (PoS). The online version of MATRIX will support a throughput of 100,000 TPS.
- Flexible blockchain management: MATRIX is designed to be a highly flexible blockchain. This flexibility is twofold. First, MATRIX offers access control and routing services to allow for the seamless integration of private chains into a common public chain. Such a feature meets the requirements of many industries and government players, while at the same time it allows necessary information to flow from a public chain to a private one and vice versa. Second, MATRIX uses a reinforcement learning framework to optimize its parameters (e.g. consensus mechanisms and transaction configurations) in an evolutionary manner. The optimization paradigm ensures dynamic updating of the parameters for near-optimal performance without the risk of incurring a hard fork.
- Value adding mining: Perhaps the most debatable part of cryptocurrency is the “waste” of energy in the mining computations. Although it is essential to attach social value to the cryptocurrency, the mining process does not make any sense out of the world of digital currency. The problem is even worse now that over 70% of the total computing power around of world is dedicated to mining Bitcoins and others. MATRIX introduces a new mining mechanism which miners to perform a special type of computation. This type of computing plays a fundamental role in numerous big data applications such as gene regulatory networks, clinical diagnoses, video analytics, and structural modeling. As a result, a distributed network of the computing nodes provide the power to solving real-world computer-intensive problems, thus building a bridge between the values in both the physical and virtual worlds.
MATRIX’s design depends on a large number of innovations in both AI and blockchain technology. The table below summarizes the essential technologies behind MATRIX. Thanks to these technologies, MATRIX distinguishes itself from its predecessors and initializes a new generation of blockchain.
|Base protocol||Random clustering-based voting for a network of delegates.
Introduction of a separate control chain.
Evolutionary parameter optimization.
|Reducing transaction latency.
Enabling the interaction between a public chain with private chains, and the deployment of security controls.
Adapting blockchain design to external usage patterns and environment.
|Smart contract generation||Automatic program generation for smart contracts.||Breaking the barrier of programming, and making smart contracts accessible to general users.|
|Security||Formal verification and deep learning based auditing including smart review of contracts, relational review of contract elements, formal verification of contract security, and transaction arbitration.
Credit score-based trusted gateway and proxy including onlineoffline data proxy transfer (ORACLE), credit score of public users, and multichain-based data routing.
Dynamic security verification and enhancement of smart contracts with generative adversarial network.
AI secured custody of contracts.
|Identifying potential loopholes and malicious intentions.
Checking and identifying potential loopholes and malicious intentions.
Maintaining a credibility record for the network.
Ensuring robustness under high-intensity attacks.
Enabling long-term financial derivative transactions.
Transaction data search engine supporting permission-based index, privacy-based user transaction tracking, and smart grouping based on behaviors of multiple users.
|Allowing data exchange and identification of matched contracts for multi-party transactions.
Assisting historical data tracing and data mining.
|Mining||Deep learning as the PoW computation.||Creating universal values from mining.|
As varied as the current available blockchain-based solutions may be, the combination of the distributed ledger technology with artificial intelligence is very promising and aims to take this technology to the next level. We’ll have to wait and see how it all plays out, but the future looks as bright as ever.