Blockchain technology and artificial intelligence were designed to solve different tasks. However, they can also be used together to solve long-standing problems in different industries. Blockchain and AI are currently used in sectors such as the automobile industry, supply chain and logistics, healthcare, media and entertainment, insurance, and more. It is also being implemented by AIWORK to address long-standing issues plaguing the online video space.
There are plenty of use cases where a combination of both technologies can be used. One industry that is being completely transformed by blockchain and AI is the financial services industry. This article will take a look at the role blockchain, and AI are playing in transforming finance.
What Is Blockchain Technology And AI?
Blockchain technology is a familiar concept, where a shared, immutable ledger allows users to share data with multiple users and initiate and complete transactions. Blockchains also store data and transaction details and can track orders, accounts, payments, production, goods, etc. Blockchain technology guarantees the fidelity and security of data and information stored on it without needing a third party.
Artificial Intelligence (AI), on the other hand, refers to machines capable of simulating human intelligence. AI-powered machines are capable of performing tasks that would typically require human intervention. They can also think like humans, mimic actions, and exhibit various qualities associated with the human mind, such as learning and problem-solving. AI can also partake in decision-making processes, rationalize and take actions that have the best chance of achieving a specified outcome. AI can also learn from data sets provided to it and get smarter and more efficient over time.
What Do They Have In Common?
Blockchain technology and AI are the definition of “opposites attract” because they don’t have much in common. However, what they do have in common is that both are leading innovations in the world today and have several use cases, both individually and in tandem. However, both play entirely different roles. Blockchain technology acts as a decentralized, immutable, and secure storage, while AI can process vast amounts of data but is typically centralized and opaque.
Blockchain struggles with efficiency and scalability, while AI has problems when it comes to transparency and privacy. This makes them ideal for one another, as they can address each other’s weaknesses. Using blockchain provides trust, privacy, and accountability to AI and its processes, while AI provides scalability and efficiency to the blockchain.
How Are Blockchain And AI Chaning Finance?
The financial industry has always been a leader when it comes to innovation and the implementation of new technologies, as it needs to stay ahead of the curve when it comes to security and data protection. So how is implementing blockchain technology and AI changing the financial ecosystem? For starters, AI can process data at exponential speeds, allowing financial institutions to leverage a significant amount of data and extract more insights, automate any repetitive tasks, and help make processes more efficient.
Blockchain technology is complementing this by adding greater transparency to financial processes. It also enables better access to financial markets through decentralized finance (DeFi) and smart contracts.
So, blockchain technology and AI can greatly improve finance by processing data faster, enabling transparency and decentralization, and introducing smart contracts. Let’s understand how exactly.
Securing Payment Networks
One of the most significant benefits of blockchain technology is its ability to function as a borderless payment network and enable frictionless payments involving low transaction costs. However, despite these concerns, lingering concerns around security hindered adoption. However, leveraging AI can help identify any inconsistent account activity and trigger human involvement. Additionally, other AI-related technologies, such as biometrics and behavioral analysis, can further eliminate any vulnerabilities.
Financial systems that implement blockchain and AI solutions are typically looking to deliver improved speed and quality of services. By combining the two technologies to drive business processes, financial institutions can maximize their returns while also providing greater value to their customers.
Cheaper And Faster Payments
Most bank transactions are slow and cumbersome. Compare this with blockchain-based cross-border payments, which are quick and inexpensive because they cut out the middleman from the transaction. Implementing AI can further increase the speed and efficiency of transactions by reducing human intervention. Additionally, AI can help banks automate payment workflows by implementing image recognition in financial documents and using natural language processing to support payments.
The current financial industry is highly centralized. The implementation of blockchain technology and AI can usher in a new era for finance, characterized by faster transaction speeds, increased transparency, and better security. The integration of AI would make it possible to process large amounts of data, while blockchain would improve transparency, security, and data management. However, while both show considerable promise, both have to be carefully integrated with currency operations.