The rise of ChatGPT has been nothing short of spectacular. Within two months of launch, the artificial intelligence (AI)-based application reached 100 million unique users. In January 2023 alone, ChatGPT registered about 590 million visits.
In addition to AI, blockchain is another disruptive technology with increasing adoption. Decentralized protocols, applications and business models have matured and gained market traction since the Bitcoin (BTC) white paper was published in 2008. Much needs to be done to advance both of these technologies, but the zones of convergence between the two will be exciting to watch.
While the hype is around AI, a lot goes on behind the scenes to create a robust data infrastructure to enable meaningful AI. Low-quality data stored and shared inefficiently would lead to poor insights from the intelligence layer. As a result, it is critical to look at the data value chain holistically to determine what needs to be done to get high-quality data and AI applications using blockchain.
The key question is how Web3 technologies can tap into artificial intelligence in areas like data storage, data transfers and data intelligence. Each of these data capabilities may benefit from decentralized technologies, and firms are focusing on delivering them.
Data storage
It helps to understand why decentralized data storage is an essential building block for the future of decentralized AI. As blockchain projects scale, every vector of centralization could come to haunt them. A centralized blockchain project could suffer governance breakdown, regulatory clampdown or infrastructure issues.
For instance, the Ethereum network “Merge,” which moved the chain from proof-of-work to proof-of-stake in September 2022, could have added a vector of centralization to the chain. Some have argued that major platforms and exchanges like Lido and Coinbase, which have a large share of the Ethereum staking market, have made the network more centralized.
Another vector of centralization for Ethereum is its reliance on Amazon Web Services (AWS) cloud storage. Therefore, storage and processing power for blockchain projects must be decentralized over time to mitigate the risks of a single centralized point of failure. This presents an opportunity for decentralized storage solutions to contribute to the ecosystem, bringing scalability and stability.
But how does decentralized storage work?
The principle is to use multiple servers and computers worldwide to store a document. Simply, a document can be split, encrypted and stored on different servers. Only the document owner will have the private key to retrieve the data. On retrieval, the algorithm pulls these individual parts to present the document to the user.
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From a security perspective, the private key is the first layer of protection, and the distributed storage is the second layer. If one node or a server on the network is hacked, it can only access part of the encrypted data file.
Major projects within the decentralized storage space include Filecoin, Arweave, Crust, Sia and StorJ.
Decentralized storage is still in a nascent state, however. Facebook generates 4 petabytes (4,096 terabytes) of data daily, yet Arweave has only handled about 122TB of data in total. It costs about $10 to store 1TB of data on AWS, while on Arweave, the cost is about $1,350 at the time of publication.
Undoubtedly, decentralized storage has a long way to go, but high-quality data storage can boost AI for real-world use cases.
Data transfer
Data transfer is the next key use case on the data stack that can benefit from decentralization. Data transfers using centralized application programming interfaces (APIs) can still enable AI applications. However, adding a vector of centralization at any point in the data stack would make it less effective.
Once decentralized, the next item on the data value chain is the transfer and sharing of data — primarily through oracles.
Oracles are entities that connect blockchains to external data sources so that smart contracts can plug into real-world data and make transaction decisions.
However, oracles are one of the most vulnerable parts of the data architecture, with hackers targeting them extensively and successfully over the years. In one recent example, the Bonq protocol suffered a $120 million loss due to an oracle hack.
Besides smart contracts and cross-chain bridge hacks, oracle vulnerabilities have been low-hanging fruit for cybercriminals. This is mainly due to a lack of decentralized data transfer infrastructure and protocols.
Decentralized oracle networks (DONs) are a potential solution for secure data transfer. DONs have multiple nodes that provide high-quality data and establish end-to-end decentralization.
Oracles have been used extensively within the blockchain industry, with different types of oracles contributing to the data transfer mechanism.
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cointelegraph.com