Blockchain and artificial intelligence (AI) might still sound like something out of the imagination to non-techies, but in reality, these two are altering how we transact. For the benefit of non-techies, let us define blockchain and AI.
Several people associate blockchain with cryptocurrencies such as Bitcoin and Ethereum, but the blockchain is much more than that.
At its most basic, blockchain is a digital record of transactions. Blockchain technology decentralizes data storage, allowing data to be owned and managed by multiple parties rather than a single governing body.
AI, on the other hand, employs computer systems to perform tasks that would normally necessitate human skills, such as forecasting.
Machine learning is a subset of AI that employs computational and statistical techniques to enable computer systems to “learn” how to act by analyzing data. Robots, in a beginner’s language.
AI and blockchain are both transforming the financial industry. AI can process information at a tremendously faster rate than we can.
It enables financial institutions to obtain more perspectives, automate repetitive tasks, and foster innovation by leveraging massive amounts of data.
Through decentralized finance (DeFi) and smart contracts, blockchain is also disrupting the financial industry by increasing transparency and access to financial markets.
As more Decentralized Autonomous Organizations (DAOs) are established, we will be forced to reconsider our current centralized financial systems.
However, the two technologies have nothing in common. While blockchain has challenges with scalability and effectiveness, AI also has challenges with transparency and privacy, making the two technologies an ideal match because each can solve the vulnerabilities of the other.
AI benefits from blockchain’s trust, privacy, and accountability, while blockchain benefits from AI’s scalability, effectiveness, and security. The combination of AI and blockchain will elevate African transactions to new heights.
Combining AI and Blockchain for Transparency and Security
Blockchain technology and artificial intelligence (AI) can collaborate to ensure transparency and security in African blockchain transactions.
Here are some examples of how AI can assist:
Since most transactions are done online, it is very easy for fraudsters to harm. Artificial intelligence can be used to detect fraudulent transactions and flag them for further investigation.
AI can help prevent fraudulent activities by analyzing patterns and detecting anomalies in transactions, ensuring transparency in blockchain transactions.
For every transaction, there is always the question of data privacy. Blockchain technology already provides a high level of security by encrypting each transaction and ensuring that it cannot be tampered with.
However, AI can improve data privacy even further by introducing new layers of security, such as multi-factor authentication, biometric authentication, and encryption algorithms.
Also, AI can analyze blockchain data to identify potential risks and provide insights that can be used to prevent fraudulent activities from occurring.
For instance, artificial intelligence (AI) can analyze past transaction data to identify patterns that may indicate fraudulent activity and alert users to potential risks.
Smart contracts are self-executing contracts that execute automatically when certain conditions are met. Artificial intelligence can be used to analyze these contracts and ensure that they meet legal and regulatory requirements.
AI can be used to monitor blockchain transactions in real-time, ensuring that all transactions are legitimate and transparent.
AI can detect suspicious activity and take appropriate action to prevent fraudulent transactions by analyzing transaction data in real-time.
AI can be a useful tool in ensuring transparency and security in African blockchain transactions. Blockchain transactions can become more secure, transparent, and trustworthy by using AI to detect fraud, improve data privacy, provide predictive analytics, ensure compliance, and monitor transactions in real-time.
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