AI and Blockchain, what’s the hype, and why use them together?
By: Darryl Maraj
Tags: Business Transformation, Smart Contracts, Blockchain, Artificial Intelligence

Today, no matter what industry you serve, you are probably aware of two buzz-worthy terms: Artificial Intelligence (AI) and Blockchain. As an executive or IT professional, you may be wondering how I can get past the hype and leverage these technologies to create value in my organization?

What is AI?

Artificial Intelligence or AI simply refers to a machine mirroring human behavior. This behavior can generally be classified to have a narrow or general focus. Narrow AI (AIN) is generally designed to be single task-oriented, whereas General AI (GAI) is designed to match or surpass human intelligence.

For this article, we will focus on narrow or task-oriented AI, and we’ll start with the most common or popular example of narrow-focused AI, which is Machine Learning.

What is Machine Learning?

Machine learning (ML) gives a computer a set of data and allows it to learn from it. Machine Learning identifies trends, patterns, or anomalies that might not be obvious to a human observer. This information can then be used to drive suggestions and actions.

How is Machine Learning already impacting you today?

A great example is observing human behavior in our everyday lives. Let’s say, for example, each morning you might ask your favorite digital assistant, such as Alexa, Google, or Siri, to turn on the lights, raise the shades, adjust the temperature and read the news highlights before you leave for work. When you leave your home, maybe you issue another set of commands to turn off the lights, and when you arrive, you open the door and issue another set of commands and then again at bedtime. After a couple of days, your digital assistant now prompts you to set up a morning and evening routine of those same actions to match your behavior. Then, when leaving home, your assistant automatically closes the shades, raises the temperature, notifies you of traffic on your usual route, and maybe even reminds you to take an umbrella or jacket due to your local weather forecast.

While you might say this can be easily be accomplished using a rules-based system, it doesn’t quite work like that. As long as the weather, your behavior, and decisions can vary, so will the model that learns those changes. Over time, as new models are being introduced, your digital assistant can now perform more intelligently, such as distinguishing between people in your household based on voice patterns, which now adds a further layer of authentication or security in vocally directing actions. This feature prevents someone from walking in and commanding actions in your absence within your home. Your smart home can even save energy by automatically adjusting temperatures based on internal humidity sensors and external weather data.

It is the “art of the possible” that makes the full gamut of artificial intelligence technology so exciting.

What is Blockchain?

Blockchain is a system of recording information that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is essentially a digital ledger of duplicated transactions that are distributed across a network of computer systems.

It is a specific type of shared database where transactions are recorded to track assets or value like an accounting ledger.

Transactions on a Blockchain are distributed on a network of computers called nodes and stored in data blocks. The block of data is represented as a mathematical value called a hash. Each block of information is chained (now the name starts to sink in…) using these mathematical values one on top of the other.

In a Blockchain, no matter which computer on the network looks at the information, it should all result in the same mathematical value (hash), making it immutable. Data in a Blockchain cannot be deleted and is virtually impossible to tamper with.

If someone were to tamper with the information, the resulting mathematical value would no longer match, and the data would then be considered compromised.

While this is an oversimplification of cryptography, it demonstrates why so much trust is placed on a blockchain network.

Putting this into perspective Blockchain is best defined by IBM as:

“…a shared, immutable ledger for recording transactions, tracking assets, and building trust”.

What is a Smart Contract?

“Smart contracts”, another key term, is when the value of intelligence and Blockchain come together, creating even greater value for a business.

Smart Contracts, as it relates to Blockchain, is a term designed to describe a self-executing contract. This means the terms of an agreement are stored on a blockchain and automatically executed when a series of strictly defined conditions are met. Those conditions are automatically verified and validated by software, not humans.

How do Smart Contracts work?

Let’s take an example of a hospital entering into a contract to purchase COVID-19 vaccines from a pharmaceutical company. The terms of the contract mandate (a) 50% of the funds will be paid on the shipped date, (b) the vaccines must maintain a temperature of -4 degrees Fahrenheit, and © must be received in less than seven business days. All the parties involved may have to provide some form of evidence of these various steps done by either logging into a secure system, scanning a bar code, or validating a step “complete” in a process. Suppose these terms of the agreement are met by each stakeholder providing the necessary form of evidence or validation on the Blockchain. In that case, the “smart contract” will now validate these steps as complete, confirm verification as final, and automatically trigger the hospital’s transfer payment to the pharmaceutical company. If any of the terms of the contract in the smallest of detail required on the Blockchain are not met, the transfer will not occur, appropriate stakeholders will be notified, and the payment will not process. While this is a simplified version of a “smart contract,” you’ll see that it is only as smart as its rules established in the contract.

You might ask, how is the temperature information monitored and entered into the Blockchain? Or, how can both companies ensure this external temperature data has not been tampered with? This is where trust comes into play and can be solved with contemporary tools such as temperature readings with digital timestamps, GPS, and Bluetooth automated logging through software, with direct input on the Blockchain.

Why AI and Blockchain together?

There are many reasons why these two technologies can and should be used together.

Blockchain needs to ingest external data safely. Meaning, AI can be used to detect anomalies and assist with external data validation before it enters the Blockchain.

Example: validating temperatures against multiple sources before allowing the information to enter the Blockchain

Smart Contracts are rules-based, manually programmed contracts. AI can be used to detect patterns in transactions on the Blockchain and suggest future Smart Contracts.

Example: automatic payments, returns, repair, or replacement requests.

Any form of AI needs access to information to learn and build models. In this case, Blockchain can act as a “source of truth” for model development.

Example: using blockchain data as training data to drive predictions and suggest actions that result in near real-time decisions, improved logistics tracking, and early failure detection and warning.

Blockchain can be used to democratize and control data privacy for AI models.

Example: giving anonymous access to your health records for research and AI model generation without exposing identity and controlling when and how it is used.

My hope with this article is to imagine new ways to utilize both AI and Blockchain technologies. As our world continues to change, we should all collectively use these ideas to create more efficient ways to conduct business, break down industry barriers, overcome decades of data silos, and truly champion data privacy.

After all, innovation is meant to make our world a better place for everyone!

About DIG

The Digital Innovation Group (DIG Holdings, Inc.) is a GA Telesis™, LLC company, the leading provider of integrated services in the commercial aviation industry. DIG is a creative think tank and execution team charged with innovating business solutions using emerging technologies. Through the vision of a secure and connected world powered by ingenuity and democratized technology, DIG is making transformational technology accessible for every business. DIG is underway developing and introducing a series of innovative and connected business solutions helping drive transformational change in removing friction and improving business speed and viability.

For further information please email: info@dig.tech