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How can AI improve blockchain?

AI improve blockchain

Our life is ruled by convenience and ease at the moment. Our smartphones are the equivalent of mini computers, capable of executing our wishes based on voice commands. We can order anything and everything for delivery to our homes, while the internet has made it possible to get access to every type of entertainment imaginable. All of this has only been possible due to the advancement of technology, especially in the 21st century, and one development has probably been the key.

Artificial intelligence is now quite mainstream and can be found in most household and consumer devices, despite being characterized as something that could go out of control and take over the human race, in popular culture. The AI market is expected to grow to $126 billion by 2025, showing its potential and the extent to which it forms part of our daily life. Another technological innovation which has become quite popular, is blockchain technology. The development of distributed ledgers and cryptocurrencies has made blockchain usage quite widespread among certain sectors, while cryptocurrencies are being touted as the future of money, taking fiat currencies head-on. There has also been an interesting combination of these two technologies, in ways that we will discuss further.


Cryptocurrencies have emerged as significant assets in financial services and markets, especially after the rapid rise in the price of Bitcoin and some other cryptocurrencies. The crypto trading industry has a market capitalization of more than $340 billion at present, which shows how it has become a genuine asset class in its own right, with portfolio managers often looking to include it as a diversifying, high-yield option. However, with more and more traders joining the flock, the role of AI becomes even more important. The size of the crypto market is not large enough for the sort of AI-based algorithmic trading which takes place on more traditional asset classes, but many crypto traders have already developed AI bots for this purpose, with the bots being able to reduce transaction costs and execute profitable trades. The role of AI in this regard is only set to increase as more and more people enter cryptocurrency trading markets.


One concern around blockchain is its security, with many servers and exchanges being hit by malware and phishing attacks. Apparently, $9 million is lost to cryptocurrency fraud every day, which makes it vital that firms and investors can breathe easy about their money, if invested in crypto assets. Thus, AI-based security systems can be the answer here. Most attacks on blockchain servers are time-sensitive, with the first response being extremely critical. An AI-based security system could identify threats as they occur and blacklist the source before it can launch a malicious attack, thus nipping the problem even before the bud has blossomed. The ability of AI to identify patterns is extremely crucial in this regard, which makes such systems perfect for defending blockchain servers and other critical and essential infrastructure online.


Bitcoin is created by mining, a process where computers carry out mathematical calculations to be able to ‘unlock’ bitcoin. These calculations are used to verify blockchain transactions, with the miners being rewarded in bitcoin. However, the computing power needed for these calculations is very great; it is not something a layman can do from his home computer, for example. Bitcoin mining needs many graphics processing units (GPUs), and the energy consumption is also quite massive. Thus, to save costs and reduce mining time, many mining companies have been using AI-based GPUs. Some miners have created shared ecosystems where they can pool their resources and use AI to identify the most optimal GPUs to use at any given time. AI algorithms used in this way have made Bitcoin mining easier, quicker, cheaper and thus more profitable for miners.

ai improve blockchain

The actual real-world applications of blockchain technology are quite numerous. One of the sectors where it is poised to erupt soon, is the casino industry. Casinos have been some of the first businesses to accept cryptocurrencies as payment, with many crypto casinos now becoming commonplace. However, they have generally lagged behind in terms of technological advancement, with many establishments not even having a proper accounting system in place, for example, and paying out wins, especially online and digitally, is still a challenge. This is where blockchain can come to the rescue. Accounting systems can be based on blockchain, which will have several benefits. The establishment’s financial records and documents can be moved to a blockchain server, where they can be accessed from anywhere in the world, but at the same time they are a lot safer as well. Custom wallets can be created for players, and custom tokens can be developed, which will allow players to cash out their wins in the form of cryptocurrencies. This ensures that the chances of fraud are minimal, since there is verification that takes place when using the token and the wallet, and at the same time makes the win disbursal process seamless and easy. Smart contracts and a KYC database can be set up on the blockchain server to create an access system, whereby casino employees can monitor transactions and flag any suspicious activity immediately. Cashing out would be as simple as the customer scanning their fingerprint or face on a device owned by the casino, with smart contracts managing the entire process and disbursing the cryptocurrency to the player’s wallet in a matter of seconds. This would make casino transactions extremely secure. Another potential benefit would be that land-based casinos could immediately also have their online counterparts, as the cryptocurrency availability would make it easy to market the online casinos to users. Finally, blockchain could also be used to monitor and enforce responsible gambling. Data will be in one central hub, and thus can be accessed to monitor players’ behaviour and the time they spend while gambling. Anyone exceeding their time limit will be barred from the casino floor, ensuring that potentially ruinous behaviour can be stopped before it takes place.

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