Don’t fall for the hype, AI technology is not yet compatible with blockchain – Andre Cronje

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(Kitco News) – The soaring success of OpenAI’s ChaptGPT has led to an increase in artificial intelligence-related cryptocurrency projects in 2023, but a popular developer in the blockchain industry warns that the sector is offering false hopes as AI is far from ready to integrate with blockchain technology in its current form.

Andre Cronje, a highly respected blockchain developer and director of the Fantom Foundation, recently spoke with Kitco Crypto about the sudden rise in popularity of AI-related crypto projects, while Cronje emphasized the fact that based on current technology, AI is not truly compatible with blockchain technology .

– There is no integration. An artificial intelligence cannot (with today’s technology) live in a blockchain,” Cronje said. “AIs are also black boxes and changeable, blockchains are transparent and immutable.”

Cronje went on to note that while “vertical integration” is possible, such as “blockchains used for payment infrastructure to facilitate machine-to-machine access to (or between) AIs,” and the use of blockchains “for AI federation and communication protocols,” these “can also be achieved without blockchains.”

“The two are not in an exclusive symbiotic relationship,” Cronje said. “The problem is less the intersection of AI and blockchain, and more the narrative chase/hype/fomo system of the crypto industry.”

When asked what crypto investors should instead be looking for in the way of the next big advance coming to blockchain technology, Cronje’s answer was simple: “Throughput.”

“In the same way that ISDN improved over 56k dial-up. Or ADSL over ISDN. Or Fiber over ADSL, etc. Bitcoin (56k dial-up) was improved by Ethereum (ISDN),” Cronje said, adding: “Ethereum has been improved by Fantom (ADSL).”

“Every milestone is blocked by the underlying technology,” he noted. “Decentralized finance practically could not exist on Bitcoin, but Ethereum could. Decentralized social media, gaming, streaming, etc. cannot exist on Ethereum, to some extent they can on Fantom, but they will not be unlocked until the barriers are reduced .”

Cronje suggested that things like wallets, gas taxes, and non-token-based revenue streams were all barriers to entry that need to be addressed to help improve the overall function and adoption of new blockchain verticals, such as social media. “We have hit the current technology wall and need to break it first,” he said.

Turning the topic of conversation to a sector near and dear to Cronje – decentralized finance (DeFi) – the prolific developer said DeFi “mimicking finance” and suggested it will follow a similar development path.

“If we consider traditional finance, we started with: remittance, asset tokenization, equity trading, market making, leverage/lending, insurance, high-frequency trading, derivatives and integrated payments,” Cronje said. “The reason it evolved this way is because each preceding element is necessary for the next to become viable.”

“Decentralized finance follows this pattern to date,” he elaborated, noting the journey from remittance, asset tokenization and trading to market making, leverage/lending, insurance, high-frequency trading, derivatives and integrated payments.

“The next evolution will probably be less around core primitives, but more around the requirements to extend from on-chain to off-chain,” he said. “In particular: Tokenization of real-world assets; Onchain audit tools and reporting; and insurance.”

According to Cronje, “Real-world assets are becoming a regulatory discussion which has historically been why this has been underdeveloped, but with positive legislation occurring in the EU and Asia, we are likely to see an influx here.”

To help address these issues and move the industry forward, Cronje and the team at Fantom have been focused on addressing some of the issues outlined above by improving confirmation times, bringing true finality to Fantom by removing chain reorganisations, including a monetization feature for gas developers to earn 15% of revenue from gas fees, providing gas subsidies to help users onboard the Fantom ecosystem, and the creation of native smart wallets that allow crypto wallets to be owned through common Web2 methods such as username/password, authentication on social media and facial recognition.

The main message from Cronje was that crypto investors should be wary of sudden narratives that drive prices higher without much substance, saying that it is “an important thing to remember that narratives and news travel much faster than research and development. These things take years and decades, not weeks or months. Patience and a long-term view are the keys.”