Cryptocurrencies have long been dogged by a reputation when it comes to security. Could artificial intelligence be about to change that?
There are several significant concerns regarding cryptocurrency that make some investors hesitant.
Paramount among them is security.
More than a handful of crypto exchanges have already been victimized by substantial acts of theft, ranging from $5 million to $400 million. On a smaller scale, such companies are always trying to stay ahead of users looking to reap additional mining rewards by participating in unfair practices. Such security concerns have haunted the use of cryptocurrency since its inception.
However, the recent interest in applying artificial intelligence to improve the security of high volume transactions resulting from blockchain technology has been successful in alleviating much of the apprehension. By removing the human dependency of the network and utilizing self-learning technology, AI has been playing a significant role in making sure malicious actors don’t get the upper hand on the blockchain.
Here are a few of the ways that AI has been making cryptocurrencies safer.
AI Can Prevent Unauthorized Mining
Blockchain technology can decentralize the process of transferring money by making transactions transparent and allowing the community of users to verify them. If selected to approve a blockchain, a user will receive a financial reward for their participation.
Because it becomes profitable to verify a transaction, hackers are incentivized to increase their chances of being selected. This has led to some companies employing artificial intelligence to ensure that the selection and rewards process is fair, legitimate, and cannot be tampered with.
For example, Velas uses an Artificial Intuition Delegated Proof of Stake (AIDPOS) system to compensate users for their proper active behavior on the blockchain, rewarding them in their own currency.
AI Can Prevent Many Types of Hacking
Because AI is self-learning, it is increasingly evolving with changes in network conditions, making it harder for potential hackers to find loopholes or vulnerabilities. Being able to recognize abnormalities in the blockchain can help highlight hacking attempts before they have a chance to be successful.
For example, artificial intelligence has the potential to alert the blockchain to a Sybil attack, in which a group tries to forge a large number of false identities to gain more influence within the network. If a malicious group can quickly create enough identities, they will be able to rewrite the blockchain to their advantage.
AI can recognize this aberrant behavior and alert the system.
AI Can Protect Digital Wallets
Most cryptocurrency users store and manage their funds in a digital wallet. Crypto codes typically protect these wallets, however, there have been cases in the past in which hackers have used malware to try to break through the cryptology and steal the funds. Not only can AI work to create systems that are increasingly more difficult to hack, but it can also flag such attempts.
Artificial Intelligence has played a central part in improving the security of blockchain networks and will be imperative in the efforts to stay ahead of thieves and hackers. With blockchain technology and AI working in concert together, cryptocurrency can gain the confidence necessary to become the way we all use money.