Convergence of Blockchain, IoT, and AI – Part 2
The anonymity afforded by blockchain opens up the floodgates for illegal activities. Communications for terrorism, child pornography, and financial fraud are just some of the abuses that we’ve witnessed so far.
AI can assist in improving security and identifying illegal activities. Researchers have proposed to utilize AI to leverage data analytics to minimize the risk of illegal activities on the chain as a result of anonymous transactions.
AI tech gains from the large amount of existing IoT data as AI algorithms use the data for learning. Larger the amounts of data used to train the AI algorithm, better the performance.
One of the primary restrictions of IoT is in recording and managing massive amounts of data. The administration of data should be made more scalable by a confluence of tech, fusing AI and blockchain.
Detractors of blockchain technology opine that blockchain systems lack scalability owing to the utilization of energy consuming consensus mechanisms to authenticate transactions, e.g. proof-of-work consensus.
However, there are several alternative energy efficient consensus mechanisms, for example, proof of stake or proof of authority that can improve scalability. As a matter of fact, the increased energy consumption will soon be an artifact of the bitcoin network. Together with blockchain, AI can assist further increases in scalability.
In summary, blockchain tech can enhance data management of IoT devices owing to transparency, trust, honesty, immutability, privacy, and security features.
In conjunction with AI, it can address prevailing limitations of IoT data.
Authentication via a blockchain-based identity
In addition, blockchain tech can be utilized to verify IoT network participants and can enhance trust by handling the identity of IoT devices. Identity management could be a reference to individuals and companies, however, with regards to IoT, also to IoT units and machines.
Blockchain-based identities make sure that transacting entities obtain a digital identity on the blockchain, on the basis of their physical identity. On the basis of such an identity, transactions between one person and an organization, but also between a person and a machine, or between two machines can be processed efficiently – with quick transaction speeds and minimal transaction costs.
Another benefit of blockchain tech is that the immutable history of the digital records and identity is hard to forge. Reliable identity of things can be achieved with the help of blockchain technology.
Automatization via smart contracts
Apart from data and identity administration reasons, the confluence of the three innovations by using blockchain, IoT, and AI jointly can be very exciting for the automatization of business processes.
A vital aspect connecting the usage of these three innovations is smart contracts.
Smart contracts indicate a set of electronic promises, in a protocol that immediately executes the terms of the contract. In programming lingo, smart contracts can be compared to the “if-then” functions that define particular actions if a certain event takes place.
In layman’s terms, smart contracts are the primary connector between the three emergent technologies, AI, IoT, and blockchain technology.
As companies and organizations the world over are reluctant to use crypto assets, smart contracts are not presently being deployed in industrial organizations.
Another restriction is the increased volatile price of crypto assets. For example, if a smart contract is executed in Ether, then the receiver faces an increased exchange rate risk.
Even stablecoins will not resolve the issue due to being unregulated.
Additionally, organization’s accounting and IT systems are configured in and function with fiat currencies like Dollar and Euro.
As a consequence, it is a hassle for organizations to convert the stablecoin into their system-based currency. This costs both man hours and monetary resources.
A blockchain-based cyber dollar would enable dollar denominated smart contracts. Owing to a digital blockchain-based dollar, fresh business models could pop up: completely autonomous gadgets taking decisions by themselves with the help of AI and pulling off economic survival on their own leveraging blockchain for economic transactions while initiating a profit center logic at the device level.
There are various advantages to the DLT-based electronic dollar:
- Micropayments for IoT gadgets could have reduced transacting fees that are needed for the evolution of IoT.
- Additionally, all transactions denominated in this blockchain-based digital dollar would be featured in ERP systems and would as a result, be available for invoice and accounts purposes.
- Converting to fiat currency would become pointless, therefore saving expensive resources.
- Also, such an electronic fiat currency would be compliant with present regulations.
Use case: The combined potential of AI, Blockchain, and IoT.
The monetization of IoT gadgets can be diversified by combining blockchain tech with AI and IoT.
Let’s take a jukebox that has an identity based in blockchain, which functions with a blockchain-based dollar.
As a result, the jukebox becomes a fully autonomous entity operating by itself. Via smart contracts, payments can be made to the jukebox, making it switch on and play music. The jukebox will play music once a person makes a payment – a person, an organization, or even public administration. As the jukebox has its own digital wallet, it is its own profit center.
As all the jukeboxes are on the blockchain, they will record data, with regards to their use, performance, and downtime. AI could use this data and enhance the network’s maintenance.
It could indicate a more frequent maintenance of jukeboxes which are often used and quickly deploy maintenance crew if errors occur.
Also, AI can smoothen the maintenance process by enhancing the ordering procedure of replacement parts for the network or by assisting to predict the number of replacement parts needed more accurately. This assistance would eventually result in reduce down time on the network.
AI, Blockchain, and IoT, can be used together in multiple dimensions.
A prediction can be made that a confluence of these emergent technologies will occur as business models, services, and products will reap several advantages from the conjunction of these technologies.
These could be broadly applied to various autonomous entities like machines, cars, trucks, cameras, and other IoT enabled gadgets. They could transact finances on their own and use AI and data analytics for decision making as autonomous agents of the economy.
Blockchain has advanced by leaps and bounds over the course of the previous ten years. Limited scalability and inefficiency were the two traditional criticisms of blockchain.
EOS has taken care of such issues, as is competitive with a progressive transacting system with regards to the number of transactions per second.
On the other hand, other obstacles will have to be surpassed. General Data Protection Regulation (GDPR)’s right for data (to forget it) or interacting with legacy systems are examples of such problems.
Blockchain technology will evolve and grow past these restrictions, just like how it moved past its efficiency and scalability issues.