Coinbase and Binance : Crypto advocates see blockchain opportunities in artificial intelligence

“Recent lawsuits by US authorities have cast doubt on the future of cryptocurrencies.

However, crypto enthusiasts are convinced that blockchain can help make AI more transparent and decentralized.

The US Securities and Exchange Commission's recent lawsuits against Coinbase Global Inc. and Binance Holdings Ltd. have raised serious questions about the future of cryptocurrencies. While digital assets face increasing regulatory pressures and other market headwinds, they have also been dethroned as the latest technological fad.

When OpenAI launched its ChatGPT bot in November, it paved the way for the practical use of artificial intelligence. Since then, AI has attracted the attention of founders and investors - the same people who fueled the crypto boom.

AI may have stolen the spotlight from crypto, but some crypto enthusiasts believe it can bring new possibilities to the blockchain industry.

"You could actually see a situation where AI is sort of a catalyst for the return to blockchain," said Adam Struck, founder and managing partner of investment fund Struck Crypto, who has delved deeper into AI since the release of the ChatGPT bot.

Protect against fraud

Alex Felix, managing partner and chief investment officer at crypto VC firm CoinFund, believes blockchain technology can bring greater transparency and decentralization to AI. This can be extremely opaque when it comes to what data is used to train models.

Recently, CoinFund Tools for Humanity backed the crypto startup co-founded by OpenAI's Sam Altman, raising $115 million. It shows a real use case for crypto in AI, according to Felix.

Tools for Humanity, which developed a digital currency called Worldcoin, has developed a small sphere that scans people's eyeballs to generate a unique ID for that person based on the blockchain. This gives them a digital "proof of identity" that can also be used in conjunction with Worldcoin to facilitate secure payments.

“For us it started with the question: Where is the world going with AI? And the way to solve that was crypto," said Tiago Sada, chief product officer at Tools for Humanity.

Felix compares the current AI craze to the crypto initial coin offering boom of 2017, when investors rushed to buy arbitrary crypto tokens, many of which were scams. But he said this time it's easier to review new projects and see if someone has enough expertise in AI.

"It's harder to fake credibility because the circles are so small," Felix said.

Find hackers

Crypto advocates believe that just as blockchain could bring more transparency to AI, the technology could empower cryptocurrency by improving the way digital asset platforms sort data, protect information, and interact with users.

“Hackers managed to extract millions of dollars from blockchain protocols. AI bots can stem the tide of cyberattacks plaguing distributed finance,” said Adam Struck. A great deal of penetration testing can be done simply by letting these bots simulate attacks, he believes, adding that these tests could uncover vulnerabilities in smart contract code that hackers could manipulate to siphon off money.

Bots could also be used to moderate content to filter out spam and scams on messaging platforms like Telegram, Discord, Signal, WeChat and WhatsApp, Struck said. While this type of benefit is not unique to crypto, it is important for an industry where many scams originate from social media.”