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AI bias: how blockchain can ensure its safety

As artificial intelligence (AI) becomes increasingly integrated into our daily lives, concerns about bias within AI systems have garnered significant attention. Bias in AI refers to the systematic errors or inaccuracies in decision-making processes, often resulting from the unconscious prejudices of its developers or the data used to train the algorithms. Addressing bias in AI is crucial to ensuring fairness, equity, and safety across various applications, from hiring processes to judicial systems. In this context, blockchain technology emerges as a promising solution to mitigate bias and enhance transparency in AI systems.

According to a post by CyberGhost, human biases can significantly influence AI algorithms, leading to discriminatory outcomes. For instance, if AI systems are trained on biased datasets, they may perpetuate and amplify existing societal inequalities. This highlights the urgent need for innovative approaches to address bias in AI and uphold ethical standards.

Blockchain technology, known primarily for its association with cryptocurrencies like Bitcoin, offers a decentralized and transparent framework that can effectively combat bias in AI. Unlike traditional centralized systems, blockchain operates on a distributed ledger, where transactions are recorded across a network of computers. Each transaction, or in the case of AI, each decision made by the algorithm, is transparently recorded on the blockchain, making it immutable and tamper-proof.

One way blockchain can ensure the safety of AI systems is through the concept of a decentralized autonomous organization (DAO). In a DAO, decisions are made collectively by a community of stakeholders rather than a single centralized authority. By integrating blockchain into AI governance models, decisions made by AI algorithms can be subjected to community scrutiny and consensus, reducing the likelihood of biased outcomes.

Moreover, blockchain enables the creation of transparent and auditable datasets for training AI algorithms. Data provenance, or the ability to trace the origin and history of data, is crucial for identifying and mitigating biases in AI. By recording data transactions on the blockchain, stakeholders can verify the authenticity and integrity of datasets, ensuring that they are free from bias or manipulation.

Furthermore, blockchain-based smart contracts can be utilized to enforce fairness and accountability in AI systems. Smart contracts are self-executing contracts with the terms of the agreement directly written into code. In the context of AI, smart contracts can specify fairness criteria and penalties for biased decisions, thereby incentivizing developers to prioritize ethical considerations in algorithm design.

Implementing blockchain technology in AI systems is not without its challenges. Scalability, interoperability, and energy consumption are among the technical hurdles that need to be addressed. Additionally, regulatory and legal frameworks surrounding blockchain and AI integration require careful consideration to ensure compliance with data protection and privacy laws.

Bias in AI poses significant risks to individuals and society at large, undermining trust and perpetuating discrimination. Blockchain technology offers a promising avenue for mitigating bias in AI systems through transparency, decentralization, and accountability. By leveraging blockchain’s inherent features, we can foster more equitable and safe AI systems that uphold ethical principles and serve the greater good.

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What are Smart Contracts and Why are They Important?

The purpose of all contracts in its rudimentary sense is to enforce commitment, and it is ingrained in the principle “pacta sunt servanda,” which translates to “agreements must be kept.”

What necessitated the need for contracts

The idea of contracts was conceived in the 1750s during the industrial revolution. At this time, the increase in business and merchant trade was exponentially high, leading to a need for people to look for better ways to enforce their business agreements because the standard means of making agreements, which was by consensus, was losing its effectiveness. In England, contract law was created; this was a system of law designed to be a reference by which business agreements were made and enforced.

Transparency to know the rules governing the contract, access to what information is the other party of the contract has in his/her possession, and what are they doing with it.

The sporadic increase in the level of incidents,with some carrying severe consequences, was proof of the fact that this has become a problem of significant concern in the space.

Source: Breach Level Index

Since the lack of transparency puts the security of any transaction in jeopardy, this as now a problem of grave concern.

A bit of history on smart contracts

In 1995, a computer scientist and cryptographer named Nick Szabo conceived the idea of smart contracts and built it into reality. Nick was also known for many other projects related to the blockchain technology, such as Bitgold: at some point, rumor has it that he was Satoshi.

There is a fine similarity between Bitcoin and smart contracts, while Bitcoin was created to replace or act as an alternative to fiat, smart contracts were designed to replace the intermediaries in contracts, the human intermediaries. Over the years, we could say that there has been an exponential growth in the number of smart contracts being churned out, more than necessary, I would say.

Below is a chart showing the number of new smart-contracts created each quarter since 2015.

Source: Hacker Noon

In contractual agreements, it is this human intermediary factor that engenders setbacks like manipulation of agreements, delay, and sometimes even failure.

Smart contracts do not have intermediaries, and this is what makes them different. Unlike regular contracts, they are not enforced by a third party or intermediary like a lawyer; the element responsible for implementing a smart contract is the programming language it was coded with. But the thing is, even though Smart contracts may be different from traditional arrangements, they are both still embedded in the same fundamental contract law.

In simple terms – based on Cryptocurrency Facts – “A smart contract is a self-executing contract where the terms and conditions are defined and enforced using a software.” The software, in this case, is blockchain technology, and its whole essence is to facilitate and enforce agreements digitally.

Why are smart contracts necessary?

Smart contracts are generally crucial because they fill up the gap and cover-up for the limitations that traditional contracts possess. Some of the three key elements that make smart contracts necessary are:

Automation: Contractual agreements are pretty complicated; this is what creates the need for lawyers, brokers, and escrows. All these entities do a lot of good, but in the long term, they cost a lot more and are sometimes not necessary. The use of smart contracts simplifies the process, clearing out all the many people needed to enforce a contract. This brings many benefits like speed, clarity, and precision with each contract.

Cost-efficient: On a rough estimate, it costs between $150 – $1000 per hour to hire a lawyer to look at your contract and work with you. This is quite expensive and might not be cost-efficient in the case of a business setting. Smart contracts are free as opposed to regular deals, and they also execute immediately once the terms that bind the contract has been fulfilled.

Autonomy: Smart contracts are self-sufficient; once they are entered into, the parties involved are not subject to external authority, only to the terms they agreed on. This feature also makes them free of manipulation, from either party, increasing the safety and security of contractual agreements.

Ever since the introduction of blockchain technology, smart contracts have been the highest form of its application. Added with its autonomous power, speed, and transparency, the possibilities for smart contracts are unlimited.

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Ontology Teams Up with Chainlink to Solve the Oracle Problem by Creating Externally Connected Smart Contracts

In an effort to foster the Ontology network, the platform has announced its decision to collaborate with Chainlink to build data-driven smart contracts with end-to-end security and reliability, which is centered on solving what they identified as the oracle problem.

An oracle being a gateway to the external world, allows off-chain data inputs to come into the smart contract and also allows output data to be pushed out on to external systems. It permits a link and has control over the connection between two different systems, just like the Internet Service provider does.

By being able to control how the smart contract responds to what it sees, it has a problem, which is about developing the same rate of tamper-proof security for the real world connection that exists presently on the underlying blockchain. This then means that when an oracle is compromised, its smart contracts are also compromised. In that case, having a centralized oracle model is dangerous and unreliable because it does not support the merits inherent in end-to-end decentralization.

However, Ontology’s partnership with Chainlink will effectively address the oracle problem by providing a new option that will allow the creation of externally connected smart contracts.

The report noted that Chainlink’s solution decentralized oracle network, which has the potential of giving smart contracts secure and reliable access to data providers, enterprise systems, payment systems, web API, cloud providers, IoT devices, other blockchains and so on.

With this partnership in place, the Ontology network invites more developers to follow them and make great use of the excellent tools Chainlink provides, which will help to secure smart contracts.

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Chico Crypto Goes Head-to-Head with Cardano Founder on Smart Contracts

Crypto gets its first bout in the ring with well-known crypto YouTuber Tyler Swope aka Chico Crypto going head to head against Charles Hoskinson Founder of Cardano.

As reported from Chico Crypto himself, live streaming on youtube, a fight has been on the cards for weeks. With quips coming from both sides on who would win and who would be happy to get this fight moving.

The proceeds will all go towards charity which will make it a fight for a good cause, many other events have taken place in recent years with influencers getting into the ring. This time St. Judges Children’s Hospital will receive all of the proceeds.

Industry awareness for blockchain and raising money for charities is all a positive that will surely get enough media coverage. But does this have any meaning for cryptocurrency or blockchain?

With many questioning, if this is newsworthy, only time will tell leading up to and after the event. Mass adoption and media need to continue to breach all industries, with sports being a fantastic podium to discuss more the technology and what it can do for the athletes, ticket offices and more.

Showing off what blockchain can currently do, the fighters’ contracts for the fight will very likely happen on-chain. With both fighters agreeing to terms and having everything signed likely on the Ethereum blockchain. Showcasing what can currently be achieved, and its many benefits will be one strong reason why those in the industry should be hoping for more information and events like this to be shared on traditional media channels, with those not working or investing in the industry.

Smart contracts will have a great chance to shine showing how agreements can be carried out fairly, cheaply and effectively using Distributed Ledger Technology (DLT) aka Blockchain.

Taking control of how proceeds are distributed, rewarded and also confirmed is a huge advantage that DLT brings. With over 60,000 subscribers coming from YouTuber Chico Crypto alone, it could be one of the biggest crypto events of 2020.

Image via Lee Cooper

Cardano EUTXO Blockchain Upgrade Will Combine the Best Of Bitcoin and Ethereum

Cardano (ADA) has released a detailed outline of how it will implement its smart contracts using the extended UTXO model. The file was shared on founder Charles Hoskinson’s Twitter feed on Jan. 27.

The smart contract implementation is vital to the upcoming Goguen update.

Keeping the Record—UTXO vs Account/Balance Model

Two popular types of record-keeping models in modern blockchain networks are the UTXO model and the Account/Balance Model.

UTXO stands for ‘unspent transaction output’. It is the output of a transaction that a user receives and is able to spend in the future as it is ‘unspent’. UTXO primarily helps to organize a blockchain ledger so that funds cannot be spent twice.

The Bitcoin blockchain works on the principle of a UTXO model and was first developed by Satoshi Nakomoto, although it is not mentioned in the original Bitcoin White Paper. In Bitcoin, each transaction is based on the concept of outputs and inputs which represent specific amounts of Bitcoin. A user’s wallet keeps track of a list of unspent transactions associated with all addresses owned by the user and the balance of the wallet is calculated as the sum of those unspent transactions. The original Bitcoin script relied heavily on UTXO to check wallets for sufficient funds when a transaction was requested.

Ethereum’s blockchain uses the Account/Balance model. This model is the same as a typical bank with the bank tracking how much money each debit card has, and when we need to spend, the bank checks the record to see how much money is left and if it is sufficient for the transaction.

Cardano EUTXO Wants Best Of Both Worlds

According to the research, “Ethereum chose the account model explicitly to facilitate more expressive smart contracts. On the other hand, Bitcoin chose UTXO for good reasons, including that its semantic model stays simple in a complex concurrent and distributed computing environment.”

Cardano’s proposed EUTXO (Extended UTXO) will be a combination of both models to potentially have “expressive smart contracts while keeping the semantic simplicity of the UTXO model.”

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Ethereum Foundation Brings Blockchain to UNICEF

The Ethereum foundation team has madea series of donations to the UNICEF (United Nations International Children’s Emergency Fund), a move which, while charitable, has also increased the foundation’s exposure, accessibility and is driving adoption in various ways.

Last year, the foundation donatedaround $150,000 worth of Bitcoin (BTC) and Ether (ETH) to UNICEF’s experimental cryptocurrency fund. Which in turn has seen the Kazakhstan office of UNICEF to create an Ethereum-based procedure for carrying out internal payments, such as sending funds from its headquarters to people involved in local educational programs.

While discussing the aims and purpose of the donation, Ethereum Foundation Director, Aya Mihaguchu stated, “We are still discussing the details on what we can do together, but we have decided to continue support for the next couple of years. I believe a partnership with a group like UNICEF can maximize our impact without shifting our focus from what we still need to do to improve Ethereum as a technology.”

Worthy of note is the fact that the Kazakhstan-based team is still adding the final touches on the smart contract platform since UNICEF budgets require multiple signatures from individuals with different degrees of clearance level. Today, a large amount of Official paperwork still requires people to do a recheck in expenditures by hand. It is expected that the use of Ethereum blockchain to carry out such procedures could prove to be more efficient and less daunting.

UNICEF and crypto potential

UNICEF whose objective is defending children’s rights and assisting them in attaining their optimal potential announced a cryptocurrency donation fund last October.

Henrietta Fore, UNICEF’s executive director, noted that emerging technologies should be embraced. She asserted, “If digital economies and currencies have the potential to shape the lives of coming generations, it is important that we explore the opportunities they offer. That’s why the creation of our Cryptocurrency Fund is a significant and welcome step forward in humanitarian and development work.”

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EY, Microsoft and ConsenSys Create a Platform For Enterprises on Ethereum Mainnet

Global accounting firm EY, have launched their open-source Baseline protocol which aims to address privacy issues to encourage enterprise adoption of public Ethereum.

Baseline was created by EY in collaboration with technology giant Microsoft and ConsenSys and is specifically designed for enterprises to build on top of the Ethereum public blockchain.

According to the announcement on March 4, the Baseline Protocols aim is to empower enterprises to adopt the public Ethereum blockchain for complex and confidential processes, without storing sensitive data on-chain.

John Wolpert of ConsenSys and Hyperledger Fabric explained, “This is not a platform. It’s not a product. It’s not a coin, a token. It is a way of using the main net (public Ethereum) that will be acceptable, we think, to very conservative corporate CSOs (chief security officers), CIO, CTOs, where they can finally say, yep, it’s okay to use the main net in this way.”

How the Protocol Works

The Baseline Protocol heavily leverages Zero-Knowledge Proofs (ZKP), a kind of encryption that is used to verify information without actually exposing the information.The Baseline Protocol started with a specific use case for volume discounts in a supply chain.

The release offered an example, “The volumes and the discount rates are not stored on the blockchain, but a zero knowledge proof is. As a partner, based on your volumes a smart contract will calculate the relevant discount rate. Critically, given smart contracts on a public blockchain are usually visible, with the Baseline Protocol, a competitor would not be able to see the smart contract contents or the volume discount details.”

The outputs are tokenized, although they are kept private. The release explained that tokenization makes transactions compatible with decentralized services offered on Ethereum. An EY spokesman explained, “So that the inputs and outputs are set up and being built out in such a way that we can access things like working capital for a purchase order or factoring of a receivable, without compromising the buyer or seller’s security and privacy.”

The Baseline protocol is aimed at firms offering customer relationship management and enterprise resource planning services without requiring any modification to legacy systems.

Tokenizing Municipal Bonds

ConsenSys recently featured on Blockchain.News when it was reported that the Ethereum development studio was making a move on the less glamorous and often-forgotten local municipal bond market. ConsenSys had acquired brokerage firm Heritage Financial Systems in an attempt to modernize the municipal bond market, which is notoriously error-prone and out-dated.

In an effort to place the traditional and inflexible municipal bonds market on the blockchain, ConsenSys intends to tokenize the $3.8 trillion municipal bonds market to allow local governments to raise funds and gain local investment more efficiently.

The company aims to tokenize municipal bonds (munis) in smaller denominations to enable local residents to invest in community projects. The tokenization will also decrease the high cost of managing, distributing, and selling mini municipal bonds.

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WeBank Blockchain Patents Filings Rank Third Highest Globally for 2019

China’s WeBank is leading the global banking community in banking technology patents jumping ahead of US giants JP Morgan Chase and Bank of America with 632 filed patents in 2019.

The majority of patents filed by WeBank focused on ABCD technologies (AI, Blockchain, Cloud, Computing, Big Data). According to a release on 24 April, WeBank also filed the third most blockchain patents globally making it the only bank in the top 10 for 2019, just behind non-bank giants Alibaba and Tencent.

Growing FinTech in China

As China races towards blockchain dominance, the increasing number of patents filed by WeBank indicates the banking industry giant is serious about growing its fintech capabilities. WeBank is determined to empower developers with open source fintech and create a collaborative local and global ecosystem.

Source: WeBank Blockchain Patents 2019

One of WeBank’s most interesting FinTech patents of 2019 was CN110188112, a unique device and method for tracking the changing records of blockchain smart contracts. According to the technical scheme, the method allows the change-record of a smart contract to be quickly and efficiently tracked and acquired by all parties while maintaining the authenticity of the smart contracts stored information.

China’s National Blockchain

In 2019, WeBank announced the open source fintech strategy that aims to facilitate the collaboration of developers around the world. So far, it has brought out dozens of successful open source projects, such as FATE (Federated AI Technology Enabler), FISCO BCOS (consortium chain platform built together with FISCO open source taskforce team) and open-source big data platform suite WeDataSphere.

Earlier in April, WeBank’s largest shareholder Tencent was invited to join the Chinese central government’s national blockchain committee to work on setting industrial standards.

The “Public Notice on the Formation of a National Blockchain and Distributed Ledger Technology Standardization Technical Committee.” is made up of 71 individuals from different backgrounds, including political, industrial, academic, and research organizations. The committee will be chaired by MIIT deputy minister Chen Zhaoxiong, along with five vice-chairs, all of whom are government staff, including Di Gang, the vice-head of the Chinese central bank digital currency institute.

Other committee members include executives from well-known Chinese institutions, including Tencent, Baidu, Huawei, Peking University, Tsinghua University, Fudan University, amongst others. The ministry is also asking for public feedback on the committee members until the deadline of May 12, 2020.

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Chinese E-Commerce Giant JD.com Launches Enterprise-Level Blockchain-Based Smart Contracts

Chinese e-commerce giant JD.com, also known as Jingdong, has successfully launched two enterprise-level applications, including blockchain-based smart contracts, and the protection of commercially confidential information.

These two applications were launched on JD’s independently-developed proprietary blockchain, JD Chain. The JD Chain blockchain framework was made open sourced around a year ago, five months after the company launched the JD Blockchain Open Platform enabling companies to use JD’s platform using pre-built APIs. The blockchain protocol has been opened up to allow enterprises to built custom solutions.

The two enterprise-level blockchain applications have been applied to industries such as supply chain, human resources, leasing, and around ten other industries. The blockchain smart contracts have been used for over 1 million transactions involving contracts, and the company expects the number to grow to hundreds of millions in the near future.

The JD.com blockchain-based smart contract platform offers a one-stop service for high flexibility in signature management, framework management, contract management, contract framework, and online judicial services. The platform aims to cover most online business scenarios involving contracts and to offer governments and enterprises to be able to digitize these processes.

In April, the National Development and Reform Commission (NDRC) of China recently made it clear that the scope of its new infrastructure includes technologies such as blockchain, 5G, artificial intelligence (AI) and other technologies to upgrade the traditional infrastructure. Following the direction offered from the NDRC, JD.com is moving towards building a secure, efficient, and credible blockchain ecosystem to set the standard for the industry.

The e-commerce giant believes that blockchain technology has a huge potential to enhance supply chain transparency to ensure the quality and authenticity of their purchases. JD.com has already deployed its blockchain technology on over 50,000 products ranging from across over 700 brands.

Chinese institutions join China’s national blockchain committee

The Chinese central government has put together a national blockchain committee to work on setting industry standards. The Ministry of Industry and Information Technology (MIIT) issued a notice on April 13 of the “Public Notice on the Formation of a National Blockchain and Distributed Ledger Technology Standardization Technical Committee.”

Other committee members include executives from well-known Chinese institutions, including Baidu, Tencent, Huawei, Peking University, Tsinghua University, Fudan University, amongst others.

China to build ‘digital central bank’ infrastructure

China’s Central Bank, People’s Bank of China (PBoC) is planning to look into building a digital central bank infrastructure to improve the standards of financial services in the country.

On May 18, the Chinese Central Bank’s 2020 video conference on scientific and technological work was held in Beijing. The meeting focused on the technological achievements made in 2019, an in-depth analysis of the current situation and challenges, and the upcoming key plans for 2020.

A three-year FinTech development plan was set out for the country in August 2019, and 2020 has entered its second year. The development of blockchain, the internet of things (IoT), big data, and other innovative business models will also be expected to drive the digital transformation of the financial industry and promoting financial technology in the country.

China has also taken an ambitious step to “maintain its leading position in digital currency technology,” as it remains the central bank’s current top focus. According to Zhongtai Securities, the People’s Bank of China expects to be in the world’s leading position in digital currency development, as it continues to strive for efficient research and development, as well as technical testing of digital assets.

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Machine Learning Network Fetch.ai Shares Vision of Interoperable Blockchains

Fetch.ai has an interoperability vision to bring machine learning services to every ledger and blockchain.

In an email to Blockchain.News, Fetch.ai today announced its interoperability vision to bring machine learning services to every ledger and all chains. The AI network also gave us an update on their imminent upgrade to the Fetch.ai test network to incorporate a new performance-focused FET virtual machine, based on WebAssembly.

Fetch.Ai Upgrade

The Fetch.ai Virtual Machine (VM) went live in February 2019—and is a computer program that emulates a processor and is used to execute a smart contract when transactions are made across the network.

In the case of Fetch.AI and other distributed ledgers, the VM is critical as it enables smart contracts to be deployed and transactions to run in multiple places. In short, it enables a massively replicated execution of the smart contract across all computers on the Fetch.AI network, accounting for different types of hardware that may be involved. The VM is fully integrated with the Fetch.AI Smart Ledger so a record of each smart contract is stored.

Per the announcement on July 21, the Fetch.ai virtual machine will be upgraded on the test network later this week, along with new documentation to enable agent developers to prepare for the migration onto the live network.

Commenting on the announcement, Fetch.ai CEO, Humayun Sheikh said:

“This evolution in our network will in time unlock huge value for the Fetch.ai services, with new opportunities opening for every chain to access AI and machine learning services, powered by the FET token”.

Interoperability of Version 2.0

Fetch.ai is an artificial intelligence lab based in Cambridge, building an open access, tokenized, decentralized machine learning network. This open-source software stack allows organisations to build or configure applications on top of a digital representation of the world in which “software agents”, autonomously search, negotiate and transact. The planned version 2.0 of the Fetch.ai main net will be interoperable with Cosmos Hub and other chains such as Ethereum via Cosmos’ IBC bridge, with a roadmap to enable full cross-chain compatibility. Jonathan Ward, Fetch.ai, Head of Research said:

“This move allows our AI technology to be applied in areas where it has had greatest impact in the centralized world such as social networks, gaming and, of course, finance.”