Integral to the long-term fates of both artificial intelligence (AI) and blockchain technology are expanding use cases. The two disruptive technologies can help each other with that. And there signs that’s already happening.
That’s potentially good news for the Amplify Transformational Data Sharing ETF (BLOK). As an actively managed fund, BLOK can more nimbly respond to emerging trends in the blockchain space. It remains to be seen what becomes of the AI/blockchain “partnership.” But it’s clear that’s a potentially rich concept. And it’s one that could have implications for assets like BLOK.
Indeed, the intersection of AI and blockchain is young and still evolving. But the good news for investors is that some clear usage cases are already emerging. Those include applications in the world of law enforcement.
AI/Blockchain Could Be Pivotal Tool for Law Enforcement
Experienced cryptocurrency investors and market observers know a common criticism of bitcoin and other digital currencies — one levied by executives, politicians and regulators — is that the asset class has long been a haven for criminal activity, including money laundering.
Of course, the same is true of traditional fiat currencies. But bitcoin in particular has been the subject of much derision. That’s due to the fact that it’s been used by bad actors to clean ill-gotten gains. There are instances of related headlines adversely affecting prices. But the AI/blockchain combo could do something about that.
“A deep learning model is used to successfully identify proceeds of crime deposited at a crypto exchange, new money laundering transaction patterns and previously-unknown illicit wallets,” said blockchain forensics firm Elliptic in a statement.
Rising Use Case
Proving that there are potential benefits and a rising use case in the AI/blockchain equation, Elliptic worked with a crypto exchange operator to learn whether its technology could be useful in identifying money laundering. The results were positive. The firm noted its technology identified 52 accounts that could be primed for money laundering activity. The exchange told Elliptic 14 had already been flagged for that reason.
“Rather than identifying transactions made by illicit actors, a machine learning model is trained to identify ‘subgraphs,’ chains of transactions that represent bitcoin being laundered,” said Elliptic. “By identifying these subgraphs rather than illicit wallets, this approach allows us to focus on the ‘multi-hop’ laundering process more generally rather than the on-chain behavior of specific illicit actors.”
Elliptic pointed out that the transparency afforded by the blockchain made it easier for its AI to find illicit wallets and that crypto assets are open to using AI-based financial tools to weed out bad actors.
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