Elliptic, a London-based blockchain organization centered around the investigation and prevention of criminal activity in cryptocurrencies has recently released a study that claims only two percent of Bitcoin transactions are unlawful.
The study, which was produced in partnership with MIT and IBM (NYSE:IBM) utilized Artificial Intelligence and deep learning algorithms to reach its conclusions, represents something of a landmark for the use of AI in the blockchain and cryptocurrency industry.
The primary purpose of the investigation was the exploration of several methods used to detect acts of money laundering within the crypto industry, hopefully with the result of increasing efficiency of detection and prevention.
Of the 200,000 transactions analyzed throughout the study, two percent were deemed unlawful, 21 percent were considered legal, while the remaining 77 percent were left unclassified.
The primary takeaway from this study is that while cryptocurrency as a whole has gained a reputation as the channel of choice for illicit behavior such as money laundering, those opinions may be somewhat dated.
Recent developments in AML (Anti-Money Laundering) and KYC (Know Your Customer) protocols have gone a long way to helping eliminate much of the illegal activity that was admittedly prevalent in the early years of crypto.
AI in the crypto sphere
A key element in the success of the recent study is the utilization of artificial intelligence throughout the procedure. The integration of AI into the process of AML protocols is significant in that it highlights how far the technology has come. Artificial intelligence is now sophisticated enough to both analyze and navigate the complexities that the blockchain presents.
The Elliptic report isn’t the first time we’ve seen AI technology used in the blockchain and crypto world. Companies such as Singapore-based DeepBrain Chain and Velas, a startup based out of Europe have been forging a path for quite some time now.
For Alex Alexandrov, CEO of both Velas and crypto payments gateway CoinPayments, the role of artificial intelligence in the blockchain industry is simple: To solve problems.
“Here at Velas, our purpose is to address and fix existing issues and challenges faced by most existing Blockchains, such as centralization for example, or 51% attack, nothing at stake problem, scalability, security, high upfront expenses and so on. This is done by using neural networks optimized by artificial intelligence to enhance its consensus algorithm.”
AI’s role in preventing money laundering
Artificial intelligence’s role in the world of cryptocurrency and the prevention of criminal behavior is already fairly well defined at this point, but the integration of the technology into the blockchain industry could be a game-changer of significant proportions.
In a recent interview with a leading cryptocurrency news outlet, DeepBrain Chain CEO He Yong explained that DeepBrain Chain aimed to “connect all the idle AI computing resources globally so that the entire network can share computing power.”
He went on the add that as things stand “there is no algorithm that I know of that can connect thousands of computers to each other on a secure base,” which is where progress still has to be made.
If this was achieved, however, the inclusion of AI with AML protocols could bring forth a new era of robust and empowered security tools that could change not just the crypto industry, but the world of finance entirely.
Today there is still a lot of skepticism of the blockchain and crypto worlds, more so the latter, but that is to be expected of an industry that is still relatively young and finding its feet. What cannot be denied is the vast potential that blockchain technology offers, and the integration of AI is yet another facet of this industry that could change the way we go about business in the future.
We are seeing the technology gain more and more acceptance from academics and developers alike, which can only be a good thing for overall progress within the space. The work carried out thus far by companies like Velas and DeepBrain Chain is shining examples of what is possible when AI is utilized alongside blockchain technology.