Blockchain has the potential to revolutionize data sharing far beyond its recent popularity as a foundational element of cryptocurrency. Blockchain’s peer-to-peer character, with each node validating and creating each transaction can easily disrupt financial technology applications (fintech), healthcare, supply chain management, the Internet of Things (IOT), record keeping and identity management.
It is now over 10 years since Satoshi Nakamoto, an alias for an individual or anonymous group, published the whitepaper Bitcoin: A Peer to Peer Electronic Cash System. Blockchain has captured headlines and won some high-profile advocates, such as Guy Kawasaki, Jack Dorsey, but it hasn’t yet changed the world. Why?
Blockchain has several challenges to overcome in realizing its full potential. These challenges include scalability, data security, interoperability, governance, and the management of personally identifiable information.
Scalability
Bitcoin ranges from 2 to 7 transactions per second (tps), Ethereum ranges from 15 to 20 tps. For a point of comparison, Visa’s credit and debit card network is able to execute at 65,000 tps. At this point, most public blockchains are inefficient for global, mainstream adoption.
Data security
Blockchain technology has proven woefully inadequate to protect against fraud and theft. Mt. Gox, once one of the largest and most successful cryptocurrency exchanges (supporting approximately 70% of all transactions in Bitcoin) announced in 2014 that it had been hacked for approximately three years, with its customers losing 750,000 Bitcoins during that timeframe. In 2016, Bitfinex, one of the most popular cryptocurrency exchanges in the world was hacked, and 120,000 Bitcoins were stolen. In 2018, cryptocurrency fraud and token theft grabbed headlines with increasing and alarming regularity, with Coinrail, BitGrail, Coincheck among just several high profile hacks exposed over the past year.
Governance and interoperability
One of the most attractive features of blockchain technology also presents one of its greatest challenges. Public, fully decentralized blockchains have no central authority or governance structure. Without an ecosystem enabling shared communications, possible if a limited number of multi-use blockchains gain widespread adoption and acceptance, interoperability will be limited and blockchains will continue to serve niche verticals.
Management of personally identifiable information
One of the distinguishing features of blockchain technology is the ability to maintain privacy while providing an inherently valid and permanent record of all records in the chain. This quality has made blockchain well-suited for management of personally identifiable information.
However, even encrypted identification and indirect referencing has raised privacy concerns and potential conflict with data privacy laws and regulations, notably the European Union’s General Data Protection Regulation (GDPR), which allows for a “right to be forgotten” online and in most digital formats. Also, digital privacy and blockchain transactional security impact compliance with financial regulations, such as Anti-Money Laundering/ Countering the Financing of Terrorism (AML/CFT) rules and Know-Your-Customer (KYC) laws.
Now that we’ve covered blockchain’s potential (and potential pitfalls), I wanted to share an example of one company that is trying to address these issues by merging artificial intelligence (AI) with the blockchain. Matrix AI Network (MAN), is a global open-source, public, intelligent blockchain-based distributed computing platform and operating system, leveraging the latest AI technology to deliver on the promise of blockchain. Matrix AI Network was created to make blockchains faster, more flexible, more secure, and more intelligent.
Here’s how:
An easier Blockchain
Matrix AI Network is designing Intelligent Contracts that incorporate natural language programming and adaptive deep learning-based templates to auto-code. In other words, you won’t need to learn code to plan and execute a smart contract. If you simply enter the input, output, and transaction conditions, the program will do the rest. Currently, English and Chinese are supported. In the future, Matrix AI Network is planning to support other languages. The Matrix development team has recently finished a prototype that supports One-Click Token Launch, One-Click ICO, Voting, Insurance, and Auctions.
A faster Blockchain
In 2018, Matrix A Network launched a new public demonstration of its proprietary technology, heralding a new standard in transactional speed and efficiency. “The AI-based MATRIX platform has an ability to process more than 50,000 transactions per second — more than Bitcoin, Ethereum, Ripple, more even than PayPal and Visa! This is because of the fusion of powerful artificial intelligence and the hybrid consensus (PoW + PoS) mechanism of the MATRIX blockchain,” explained Owen Tao, CEO of MATRIX AI Network. “With the PoS-based random clustering, a small number of nodes will be chosen as delegates. The transactions are broadcast only among these delegates. In previous blockchains, transactions have to transfer to every node in a P2P network and the latency increases as the number of nodes grows. With our algorithm, the small number of nodes enables a significantly lower latency because of the reduced overhead of broadcasting a transaction.”
A more flexible Blockchain
Matrix enables the seamless integration of public and private chains with the capability for multi-chain collaboration. Support for adaptive self-optimization and the ability to adjust blockchain parameters without the creation of a hard fork. Matrix uses an evolutionary algorithm built to support enterprise and government ecosystems.
A safer and more secure Blockchain
Matrix AI Network is using AI to improve the safety and security of blockchain transactions. According to Chief AI Scientist Steve Deng, “to enhance transactional security, Matrix’s Secure Virtual Machine is able to detect attacks on transactions by providing AI-backed vulnerability detection with fault-tolerant protocols. In other words, the MATRIX team has introduced formal verification technology during transactions to detect security vulnerabilities.”
Matrix AI Network’s security engine can identify bugs and vulnerabilities in smart contracts, leveraging the power of AI to maintain the safety of digital assets under malicious attacks. Because it is adaptable, the AI can self-optimize over time and improve at finding additional defects that could put transactions and funds at risk. Matrix AI Network’s security framework 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.
Addressing all the key deficiencies currently limiting blockchain’s more widespread adoption, Matrix AI Network is proving that artificial intelligence can solve for many of these issues. While AI alone won’t save blockchain, it is certainly capable of going a long way toward helping the nascent technology realize its full potential.