Cryptocurrency is a catalyst for the development of artificial intelligence and blockchain.

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Cryptocurrencies have led to the development of an alternative payment system, allowing financial transactions to be carried out without intermediaries such as banks. The use of blockchain technology in settlement systems, particularly in relation to AI, has increased as a result. The growth of cryptocurrencies has led to an increase in the share of this type of payment both among individuals and companies, while also leading to an increase in energy consumption and a rise in demand for rare earth and non-ferrous metals. The development of cryptocurrencies is intertwined with the development of blockchain and AI, as well as NFTs and metauniverses. Despite some initial resistance from governments, the expansion of the cryptocurrency market will push for further development in blockchain and AI.

Cryptocurrency is a catalyst for the development of artificial intelligence and blockchain.

With the advent of cryptocurrencies, the active development of an alternative payment system began. Now financial transactions between parties can be carried out directly without intermediaries in the form of banks. Because of the war, indirect costs (commissions) are reduced, the degree of anonymity of payments increases. Next, we will analyze how the spread of new money affects the development of blockchain technology and artificial intelligence.

The role of blockchain in the settlement system as it relates to AI

Blockchain (transaction register), which is an unbreakable chain of blocks, is used for cryptocurrency transactions. Information about the operations performed is recorded in each such element. Entered information cannot be deleted or changed. The capacity of blocks is limited – it takes time and computing power to create new ones.

The popularization of cryptocurrencies leads to an increase in the share of this type of payments both among individuals and between companies. Gradually, operations of the type under consideration are beginning to be used at the state level. The load on the networks increases, which leads to an increase in the cost and time of transfers. Solving the problem of improving blockchain technology, increasing the capacity and speed of generation of individual blocks.

Example: one block in the Bitcoin blockchain is created in about 10 minutes, has a fixed capacity of 1 MB. Such characteristics turned out to be insufficient in the conditions that were changed, a number of proposals were put forward to improve the classical technology. Due to disagreements, on August 1, 2017, the main network split (hard fork) into two parallel ones, and Bitcoin Cash appeared. The block capacity of the new cryptocurrency has increased to 8 MB.

A more perfect fork – Litecoin: the developers have increased the speed of block formation by 4 times (created in 2.5 minutes) in the form of simplification of the mining process.

The next step is to replace traditional mining with “smart” Proof-of-Stake algorithms (September 2022). Using Ethereum as an example, validators, system participants who contributed 32 ETH or more to staking, are responsible for the formation and approval of blocks. For the purpose of optimization, the pool of validators is divided into committees (from 128 to 2048 participants in each). The consensus procedure is divided into “epochs” of 6.4 minutes, which are 32 timeslots of 12 seconds each. Each new block is created within a time slot by a randomly selected II validator, the role of others is reduced to voting for acceptance/rejection.

The use of this technology is due to the widespread distribution of the Ethereum blockchain. Frequent network loads led to inappropriately high fees at peak times. Moving to Proof-of-Stake becomes a solution to the problem, but maintaining decentralization can be problematic. Validators are large holders of cryptocurrency, the number of which is limited. With the participation of a large number of financial institutions and state institutions in the system, the network ceases to be free.

The growing role of cryptocurrencies in international financial settlements is the driving force behind the improvement of the blockchain. Other areas are of auxiliary importance, but also affect the analyzed processes. The reasons are objective: the globalization of the world economy involves reducing the number of intermediaries to a minimum and reducing national state regulation. Many large corporations are transnational, requiring independent channels for transactions.

Together with the spread of cryptocurrencies in the world, energy consumption increases, the demand for key materials for microelements and semiconductors – rare earth and non-ferrous metals – increases. In the future, more advanced methods of generation and production will be needed, which will become an incentive for the development of alternative (green energy) technologies, the introduction of new production standards – otherwise it will not be possible to ensure the reduction of emissions into the atmosphere.

According to the information of the Organization for Economic Cooperation and Development, the majority of transactions using digital signs (tokens) are held by banking and the financial sector in general (30%).

At the same time, the rights to own any asset can be transferred with the help of the blockchain: shares, gold, real estate, etc. Synchronization of data on all operations is achieved due to the consensus mechanism. Nodes and nodes participating in the network are matched automatically.

The use of artificial intelligence makes it possible to automate arbitration and management in the decision-making process, ensure scalability without compromising security (synchronization of calculations), improve the quality of interaction between miners/validators due to optimization of strategies. The more complex the blockchain becomes, the more functions are transferred to AI, which stimulates the improvement of the programs used.

Blockchain, artificial intelligence and cryptocurrency in the new reality

Over the past few years, metauniverse projects have been actively developing. Virtual worlds are improving, offering users realistic analogues of life. Present with the help of an avatar, you can interact with other game participants, complete tasks, acquire digital plots of land and other assets. The management of the metaverse, including the generation of game processes, the creation of a realistic environment, is the responsibility of artificial intelligence.

Ownership is implemented as NFTs – irreplaceable tokens confirming the right to ownership. For internal calculations, cryptocurrencies are used, which can be purchased for liquid digital coins and are tied to the exchange rate of fiat stablecoins. All types of mentioned tokens are created on the blockchain. Cryptocurrency is the only adequate means of settlement between the inhabitants of virtual worlds.

The emergence of cryptocurrency created the necessary conditions for the improvement and development of metauniverses, attracting large investments into virtual worlds. As a result, the requirements for blockchain and AI technologies have increased.

Digital art is another area of ​​application of non-fungible tokens. Famous brands announce exclusive collections of items and simultaneously release their virtual copies (NFT). Today’s artists are also using technology to create original works digitally. This type of creativity is in demand among collectors, the most successful works are acquired for the purpose of investment. Also, mass types of NFTs – original tweets – are created on the blockchain. At the same time, AI is responsible for accuracy and quality of execution, blockchain serves for generation, and cryptocurrency is the main way to buy assets.

Recording music with subsequent translation in NFT format allows authors to do without intermediaries, directly promoting their tracks over the Internet. For fans, the possibilities of collecting are expanding. The direction will not be able to completely replace the classic sites, but it is becoming a popular addition.

The development of cryptocurrencies leads to the improvement of AI and blockchain, which is a necessary condition for the release of unique NFTs with perfectly calibrated parameters and a high degree of detail. Without the appearance and spread of a new type of money, the emergence of this technology would be impossible. Prospects

The initial reaction of national governments to the emergence of cryptocurrency was mixed. Decentralized money was tried to be banned, and regulation issues are currently being actively discussed. The very essence of blockchain technology does not allow full control over the process of issuing and using cryptocurrency, which makes progress inevitable.

In the future, the new method of calculations will become more and more popular. Also, similar solutions are already created only at the level of countries (digital ruble, dollar, yuan). At the same time, the total capitalization of the cryptocurrency market is relatively small, amounting to only 327 billion US dollars. For comparison, the total amount of derivatives (derivative instruments) is 542.4 trillion. dollars, and the world’s cash is 7.6 trillion. dollars (OECD data).

Despite the limited emission, cryptocurrencies have multiple growth potential in terms of capitalization. The expansion of the market will push the development of the blockchain, presenting new requirements for the capacity of blocks and the speed of their generation. The complication of related processes directly stimulates the development of artificial intelligence.

The fundamental value of cryptocurrencies is determined by the demand and trust of settlement participants. The principles of pricing are market in their purest form. As a result, dependence on the intervention of the state in the process of formation of a fair exchange rate is excluded. When making international transactions, this system is the most honest and transparent.

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