We often hear or read the terms “Cryptocurrency / Crypto”, ” Bitcoin”, “Blockchain“. Honestly speaking these terms are in everyday news. There are separate news channels, blogs, youtube channels, etc for Cryptocurrency, Blockchain & Bitcoins, etc and the number is growing. In this article, I am going to discuss Blockchain and whats the future of Blockchain and AI.
The concept of cryptocurrency came to our attention since bitcoin became popular.
So what is Cryptocurrency? Is it the same as Blockchain or Bitcoin? If not what’s the difference? What is the future scope of AI and Blockchain?
If you want to get a hold of basics concepts of AI, please go through my other BLOG HERE on Artificial Intelligence.
This article is especially for those who have no or little knowledge about the basics of Blockchain and Cryptocurrency and get excited about this ( as an investor/miner).
I just want to clear the confusion you have in your mind and maybe you can think of being a member of this huge digital currency industry in near future.
So just stick to this article till the end you will have a piece of good knowledge about Cryptocurrency, Blockchain & bitcoin.
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Table of Contents
Some Definitions
First of all, this whole concept, I am going to talk about in this article, is all about currencies that don’t exist physically. There are no printed paper notes such as dollar bills.
These are the digital currency systems e.g. if I say “ give me 1 $”. It means I can accept a dollar bill that has physical existence or someone can send me online.
But Crypto, Bitcoin, and Blockchain all point to paperless digital currencies.
BITCOIN is the name of the most popular digital currency.
BLOCKCHAIN is the technology that created bitcoin.
CRYPTOCURRENCY is the medium of exchange e.g. EURO, US DOLLAR, BRITISH POUND, etc.
How does traditional Client-Server Architecture work?
Before we dive into the details of how the blockchain works, let’s have a clear understanding of what is traditional client-server architecture and what are the drawbacks that created the need for cryptocurrency.
Typical online banking systems follow a client-server architecture, where the entire data is located on a single database. If anyone ( from frontend ) makes a request ( to check bank account, transaction details, to transfer money, etc ), the request looks for a proper service based on the parameters given and the service, in turn, tries to find for the requested data which is present in the single centralized database.
Once the service captures the data, it sends the result back to the front end as a response and the client can see it as an output.
Drawbacks in Traditional Client-Server Architecture
The traditional client-server architecture uses a centralized database, as the entire data is located in one central location. There is some problem in this type of architecture
- If any hacker hacks the central database, the entire system has to compromise.
- If the whole system goes through a routine update or maintenance, all the transactions need to wait.
- When the database server is down, the whole system compromises.
Blockchain Technology
Blockchain technology is disruptive in nature.
The word “Blockchain” stands for the structure of itself, which is blocks of information interconnected like a chain. These blocks are blocks of information. Each contains the amount of money, timestamp, etc. The details of the parties involved in the transactions are also present in the data blocks.
Block chain has the following three properties
- Decentralization: Blockchain is a decentralized ledger as compared to a centralized client-server architecture. So the information is not stored in a single place and because of decentralization, the information is not owned by one particular database or something like that. There is a network of computers and each computer taking part in the network has equal ownership of that block. So if a new block is added or data of one particular block is updated, each computer updates its record. So in that sense blockchain is more secure than centralized architecture. If a hacker tries to damage one block, the entire system doesn’t have to compromise.
- Transparency: Transparency is one of the main characteristics of blockchain technology making it unique. Generally, the cryptocurrency systems are open source, meaning that all the records are accessible by anyone who is in the network. Only the private information ( e.g. Name of the buyer ) is encrypted. But then how come Blockchain guarantees Privacy? Privacy is guaranteed not by traditional means but by a different technique. So if anybody in the network wants the tamper with the data of any block, it is reflected in all the computers in the network because they all have that record. If any data is changed, the change must be accepted by a certain percentage of the participants in the network otherwise the change will not be accepted. That’s how blockchain makes it impossible for hackers to tamper with the data.
- Immutability: In Blockchain the blocks are interconnected using linked-list ( An important aspect of data structure ). Each block has data about the dollar amount, Timestamps, details of the parties involved in the transactions, etc and a HASH function.
A HASH function is a special type of function used in computer programming which converts an input string of any size into a fixed size e.g. incase of Bitcoin it converts the input string into a fixed size of 256 bit. The hash function of each block points to the data part of another block. That’s how all the blocks are interconnected to each other in a chain-like manner. So if somebody wants to change the data of one block, the connected block will also be affected. Eventually, that block will affect the other block associated with it. So it becomes impossible to change the info of one block.
Advantages of using Block-chain Technology
- Less Transaction fee: Whenever a transaction happens through the traditional banking system, the bank charges a small number of fees for every transaction authorized by the bank. Bank authorizes the payment. But in the case of blockchain, there is no middleman. If I want to send money to my friend using blockchain its a direct transfer between me and my friend. So it eliminates those extra fees.
- Less Error: In reality, the blockchain network consists of hundreds of thousands of interconnected computers. If one of the computers in the network tries to change the data on a block, more than 50% of the computers present in the network must approve this change. So the chances for errors are very less. There is no human interference which leads to less error.
- More Flexibility: In the case of the traditional banking system, it usually takes 3-5 days for a transaction to complete. Whereas if you request the transaction on Friday, it is more likely to get complete not before Monday. In the case of blockchain, it takes a maximum of 10-15 minutes to complete the transaction. Also, it doesn’t stop working weekdays. So for faster services Businesses also prefer this.
- More Privacy: When the buyer issues a transaction using bitcoin or any other cryptocurrency, the personal information of the buyer is stored in the blocks in an encrypted version using an encryption key. So even if blockchain is open source and the records are visible to everybody present in that network, there is a limited chance that someone can get the real information of the buyers unlike in the traditional banking system where once a hacker hacks into the banking system he/ she can get an actual data of the account holder.
Drawbacks of using Blockchain Technology
- Implementation cost: Though cryptocurrency apparently eliminates the transactional fees, the implementation cost/infrastructure building cost is beyond the roof. Many companies ( small or medium-sized ) may not be able to invest to create an infrastructure like Bitcoin.
- Time Constraint: Honestly speaking the time it takes to generate a single block in bitcoin is ridiculously too much. It takes approximately 10 minutes to create a single block. So the block generation process is pretty tedious.
- Central Bank Restrictions: Some of the Central Govt Banks are not in support of this disruptive technology e.g Reserve Bank of America. As blockchain questions on the efficiency of traditional banking systems, Big banks are not in favor of this technology. Many countries don’t approve bitcoin.
- Illegal Activity: Though blockchain technology provides a decentralized architecture and P2P ( Peer to Peer ) network, where one party can send to or receive money from another party directly without the presence of the third party involved, it gives access to people who are involved in illegal activity to commit illicit transactions online.
A perfect example was a site called “ SilkRoute” created by a silicon valley mastermind. This website was like the Amazon of the online Black market for illegal trading of Drugs, Forged documents, Money Laundering, etc. it was finally taken down by the FBI.
Real-life Applications of Blockchain
- In Finance and Banking System: Blockchain technology can bring revolution to banking and financial systems if they are ready to integrate blockchain in their existing system. Blockchain assures secure transactions. In the traditional banking system, it takes time to open an account ( a couple of days ), depositing money into an account and transferring from one account to another ( at least one to three days). On the contrary in blockchain, it takes an initial 10 minutes time frame to just create the block and rest happens pretty fast. Also, it eliminates the transactional fees because of its decentralized mechanism. So there is no third party involved to approve any transaction to occur. Any business will be benefitted from blockchain as it is faster and more secure.
- No Regulation by Central Authority: Under the rule of the Central Govt regulated finance system such as Reserve Bank, the money and other assets are controlled by the Govt. So if for any country, the economy is unstable and banking systems collapse ( e.g. economic crisis of 2008 ), Our money and assets will be at stake. In block-chain technology, we can secure our savings. The use of more and more cryptocurrencies e.g. Bitcoin, Lite Coin, etc will help to create such an ecosystem.
- Healthcare Records: In the Healthcare system, it is very important to keep privacy for patient’s records. One a person’s data is entered into the system and diagnosis is done, these data should be kept in blocks with extra security using private key encryption. Using blockchain we can achieve this.
- Supply Chain Management: Some technology companies are using blockchain in supply chain management to enable the authenticity of the products by putting the data about the items e.g. purchase order etc. into the blocks and keeping them safe using private key encryption.
- Accurate Voting Poll in Election : Blockchain can be the technology which will help to eliminate voting fraud. Each voting shuld be taken as a block and that data should be kept private using key encryption, there by it will be impossible to tamper it. This process has already been tested in 2018 and results were accurate. It will help the electoral process.
- Smart Contracts: Blockchain can be used to create smart contracts between two parties involved in a business transaction. E.g. I want to buy a car and make a contract with the dealer. The contract is when I receive the car I will pay 50% and if everything goes fine I will pay the rest after 2 weeks. Now, if I make a smart contract using blockchain and if the dealer delivers a Car that has an internal problem then my initial deposit should come back to my bank account immediately. The only way we can ensure this is using Blockchain, where the information provided in the agreement must be inserted into the blockers and protected using private key encryption so that the dealer can’t tamper it.
What is Bitcoin?
Bitcoin is a digital currency invented by a person/group of people named Satoshi Nakamoto in the year 2009. Bitcoin is the first decentralized cryptocurrency in the market. There are still mystery or conspiracy theories about the original inventor of Bitcoin.
Bitcoin or any other cryptocurrency mechanism uses the P2P ( Peer to Peer ) network meaning the transaction between two parties is direct and there is no centralized third party present in-between. It’s a decentralized network.
The current market value of cryptocurrency is more than $300 billion and bitcoin acquires almost 60% of it ( which is a quite big number ).
Some other alternatives of bitcoins in the market are
- Ethereum (ETH)
- Ripple (XRP)
- Litecoin (LTC)
- Tether (USDT)
- Bitcoin Cash (BCH)
- Libra (LIBRA)
- Monero (XMR)
- EOS (EOS)
The concept of Bitcoin Mining is getting popular evey day . I will create a separate blog dedicated to Bitcoin Mining.
SCOPE OF AI IN BLOCKCHAIN
AI & Blockchain are the two most important technologies in today’s date. The near future is to apply both of them together to create smarter systems but this concept is in a nascent stage. Scientists are still working on how to combine these two powerful technologies together.
Blockchain offers a decentralized public ledger system. It’s a network of interconnected blocks of data controllers by hundreds of thousands of computers in the network.
Big data offers a more efficient way to store huge chunks of data, where blockchain can store private information more securely using encryption techniques. Combining AI and block chain we can create more efficient ways to store data which is more protected.
Singularity.Net, a Netherlands based AI company has created a platform which enables AI vendors to exchange services using decentralized blockchain systems.
They will be using cryptocurrency tokens called “AGI tokens” to exchange information and services on this open source platform.
Active Oversight a colorado based AI company is using blockchain technology to speed up workflow in the construction industry
BXT360, an AI company based in Colorado, is using AI along with blockchain to improve the supply chain management for coffee, mineral and seafood industries.
Deep Brain Chain, a singapore based technology company is using blockchain & Artificial Intelligence together to implement Distributed AI computing Platform.
Numerai is a technology company based in Sanfrancisco, California. They give predictions on Hedge Funds. They use several aspects of Artificial Intelligence Models and use them in their Trading strategies.
Netobjex is a platform that enables tracking, tracing and monitoring of digital assets through Iot, AI and blockchain. They work on SmartCity projects.
There are more and more companies which are trying to combine AI & blockchain to perform complex work and the future is big.
Conclusion
So this is it for today. I think I am able to cover the basics of blockchain and how AI can be integrated with it, which can combined, create a better economy and more jobs !!
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