AI and blockchain technology

AI has various applications in blockchain technology. It has the potential to enhance blockchain systems by analysing smart contracts, detecting fraud, optimising scalability, and enabling tokenisation, among other issues. But it also comes with challenges, for instance, in the form of AI-driven attacks aimed at exploiting blockchain vulnerabilities.

AI to complement blockchain technology

AI algorithms are already used to optimise the consensus mechanism used on cryptocurrency blockchains by analysing and enhancing the efficiency and effectiveness of the consensus protocols. Using machine learning algorithms and data analysis, AI can identify patterns, optimise parameters, and predict successful consensus strategies. Additionally, AI can help address challenges related to scalability and energy consumption.

AI can also enable the tokenisation of assets, facilitating the creation and management of digital assets on blockchain platforms. Asset management systems powered by AI can automate processes like asset valuation, portfolio management, and investment decision-making. Security issues associated with blockchain can be identified and mitigated using AI. For instance, AI is used to analyse patterns in DDoS attacks and identify possible security holes in the code. AI techniques are also employed to verify smart contracts and reduce the likelihood of exploits and vulnerabilities. Furthermore, by analysing transaction patterns and identifying suspicious behaviour, AI can detect fraudulent activities within blockchain networks and help prevent illicit activities such as fraud and money laundering. Additionally, AI can help enhance the privacy and security of blockchain networks by developing advanced encryption algorithms and employing privacy-preserving techniques to protect sensitive data and transactions.

As is the case with other technologies, different blockchain systems are often incompatible with each other. AI solutions that enable different blockchains to communicate are in development and will potentially create new opportunities.

Challenges at the intersection of AI and blockchain 

The integration of AI and blockchain technology presents several challenges. Adversarial attacks are a significant concern, as AI can exploit blockchain system vulnerabilities and compromise security and integrity. The analytical capabilities of AI can potentially de-anonymise blockchain data, thereby raising privacy concerns. Additionally, the resource-intensive nature of AI systems often necessitates significant computational power; when integrated with blockchain systems, AI systems can exacerbate scalability and performance issues (i.e. the limited resources of blockchain networks may be strained by the processing power and storage requirements of AI tasks). Finally, governance and regulatory challenges arise when determining responsibility and accountability in decentralised AI-powered blockchain systems.

Digitalisation, e-commerce, and the emergence of e-money in our daily lives made the notion of non-physical currency quite common. Since the early 2000s, the idea of a digital payment system and a digital currency native to the Internet has become very attractive.

What is a blockchain? Simply put, it is a data ledger (think of an accounting ledger, which records every ‘in’ and ‘out’ transaction). The ledger is distributed, which means that many copies of the same ledger exist on computers worldwide. It is also protected by strong cryptography to protect it from malicious actors attempting to change any information within the blockchain.

How was this technology born? In 1992, W. Scott Stornetta and Stuart Haber presented the idea of blocks of digital data that are chained by cryptography to prevent tampering with time-stamped documents. By 2008, an anonymous person known by the name of Satoshi Nakamoto, proposed a new payment system to a group of prominent cryptographers and mathematicians through a cyberpunk mailing list.

The proposal, called Bitcoin: Peer-to-peer electronic payment system, was based on an online distributed ledger – verified by cryptography – functioning through a ‘proof-of-work’ consensus mechanism – the same technology that was being used to tackle spam. The term blockchain was not mentioned in the proposal; it was coined later on, with reference to Stornetta and Haber’s proposal.

How is new data added to a blockchain? Every computer (or node) synchronises the data through a consensus-based mechanism. Once data is added, it cannot be added or altered on a blockchain unless there is a consensus.

There are many types of blockchain databases. The main types are open blockchains, and closed or private blockchains.


Open blockchains

Open blockchains are permissionless: they are fully transparent and each transaction is visible to anyone on the network. The most prominent open blockchain is the one developed for the Bitcoin cryptocurrency in 2009.

The aim behind an open blockchain is to do away with a central authority which arbitrates each transaction, such as a financial institution or a payment processor, allowing individual users to carry out transactions directly (peer-to-peer).

Private or closed blockchains

A private blockchain is controlled by a central authority. One or several parties can control who can add data, and take part in setting the rules. The advantage of this model is the ability to react to any incorrect data that is inputted. Security is therefore entrusted to the central authority, which is able to change the rules and expel malicious users.

Blockchain as a service

With the emergence of the blockchain industry, large tech players stepped in to create ready-to-use, deployable blockchain solutions. Given the large processing power needed to secure transactions on the blockchain, IBM, Microsoft, and others were able to use the power of their massive cloud capacities to offer secure, fast, and scalable blockchains.

How is blockchain used mostly?

The most prominent use is as a platform for cryptocurrencies. Bitcoin’s blockchain, based on the open, permissionless model, was proof that large-scale deployment was indeed possible. Other cryptocurrencies started introducing open and closed blockchains to issue and monitor online currencies.

Blockchain is also used extensively in supply chains. Major world retailers and distributors can track merchandise alongside global supply chains, which helps the industry cross-check data such as labeling processes. From the food industry to the aero-parts industry, blockchain is proving itself to be a powerful tool for reducing costs and introducing trust throughout the production and supply chains.

Blockchain technology is also being used for storing and safeguarding public information. Examples include land registries, the issuance of personal documents, and for online verification methods.

Blockchain-based digital identities could bring a decentralised approach to data management, and empower users to choose how and which of their personal data can be shared on the Internet. Tech companies are creating deployable solutions: these include Microsoft’s partnership with the W3C consortium to introduce open standards for Decentralised Identifiers, and IBM’s own digital identity solution.

The certification of goods, academic degrees, and even copyright claims are next on the private sector’s radar for potential development.


Blockchain is a type of distributed database. Blocks of information added in chronological order, and chained by the use of cryptographic hash function. Blockchain creates an immutable database, appended in real-time. Decentralized means that a database is not stored on a single computer from which is distributed to the network. Instead, the database is copied on every computer that has access to the network. This increases the security of the whole system

What is a token?

Coin (Token) - In cryptocurrencies, coins are created and transmitted over the decentralised network. Inside the network can be given the qualities of assets (currency, digital art, digital property) or payment for the network utilisation.

What is a blockchain fork?

Blockchain fork is a change in software or in network requirements. Applying a new set of rules or technical details considering the network, agreed by the community

  1. Soft fork: upgrade that is compatible with the earlier version
  2. Hard fork: upgrade that is not compatible with the previous version. The previous version no longer works and needs to be replaced

What is a digital wallet?

Digital wallet (or cryptocurrency wallet) is a software, desktop or mobile app, that serves as a personal identifier for the network. Digital wallet generates your private and public key to identify users on the network. Wallets are used to create ‘addresses’ related to that unique identity. Addresses are used to receive digital currency, or allocate your digital assets (like NFTs). Wallet can create numerous addresses. Wallets can be stored on external hardware, often in a form of a highly secured USB sticks.

What is a private key?

Private Key is a part of the cryptographic signature. The cryptographic signatures use online verification by pairing two cryptographic keys in order to confirm that information is from a certain origin. Private key is a part of a cryptographic signature that, once created, is embedded into your computer hardware. It stays in your device, and provides the information needed for verification.

What is a public key?

Public Key is a second part of the cryptographic signature. It is broadcasted publicly in order to prove the compatibility of a private key. If they correspond, authentication is confirmed.