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The Problem With AI On The Blockchain
The Blockchain Sector @ 2023-01-03
The Blockchain Sector provides information relating to emerging financial technologies. It should not be considered financial advice. Disclaimer below.
There is no such thing as AI on the blockchain. Many start-ups claim to be using AI on the blockchain, but a basic understanding of these two technologies shows that they do not work well together.
Artificial intelligence and machine learning systems rely on big data. The process of machine learning involves analysing large amounts of data to find patterns and develop algorithms that can classify future data. This process requires a lot of data and a lot of computation on that data.
In contrast, blockchain technology is designed to handle small amounts of data efficiently. It is difficult to store large amounts of data on a blockchain because of the difficulties in sharing that data across a decentralized network and the large amount of network traffic required to process data.
This is why it is unlikely that machine learning algorithms could be successfully implemented in todays decentralized blockchains. While AI may have some applications in the blockchain sector, such as fraud prevention and optimization, it would have to be implemented by a central party rather than on the blockchain itself.
In 2023 there is no way to have enough data on a truly decentralized blockchain to train machine learning algorithms or do anything with machine learning computation on-chain. This is why I am always sceptical when I hear about AI being used on the blockchain or the amalgamation of AI and blockchain technologies. I would recommend further due diligence to make sure the founders are not just using buzzwords for the sake of it.
I have been in the industry since 2017 and have never seen any successful use of machine learning executed on-chain no matter what ChatGPT says
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Disclaimer: Not a financial advisor, not financial advice. The content I create is to document my journey and for educational and entertainment purposes only. It is not under any circumstances investment advice. I am not an investment or trading professional and am learning myself while still making plenty of mistakes along the way. Any code published is experimental and not production ready to be used for financial transactions. Do your own research and do not play with funds you do not want to lose.