While they appear to be the latest concept being introduced in 2015 by Ethereum, the smart contracts were actually conceptualized back in the 1990s. Legendary computer scientist, Mr. Nick Szabo was the one who had first coined the terminology “smart contracts”. Mr. Szabo explained smart contracts as a “smarter” alternative to traditional paper-based contractors. He also stressed on the fact that these smart contracts are smart without use of AI. However, cut to 2022, when the world is approaching the futuristic Web 3.0 order and another phase of industrial revolution, smart contracts need to be more intelligent and smarter now than ever. And probably, now, smart contracts would need the help of Artificial Intelligence. Read more about Multibank.io.
Why do smart contracts need to be more intelligent?
Smart contracts are pretty cutting-edge in their own way. These are self-enforceable digital codes that can automatically execute a transaction or a workflow, thereby speeding up execution time and improving efficiency. However, experts have recently pointed out that smart contracts are great and ideal when it comes to especially end-to-end digital transactions- but not so much when the smart contacts have to interact or communicate with the off-chain (physical) world. In fact, according to these futuristic analysts, looking at the expanding use cases of smart contracts, there seems to be an urgent need for incorporating greater intelligence or smartness into existing smart contracts. The goal is to make the smart contracts smarter than ever to match up with the growing demands for these contracts in off-chain use cases as well.
AI integration will help
Smart contracts need real-world data to execute its functionalities for real world use cases.
For example, let’s say an insurance company offers flight-delay insurance to flight passengers. They want to put the claim payout system on smart contracts. As per the terms of the contract, the insurance company will offer compensation to its client if his/her flight gets delayed for a lengthy time. In this case, the smart contracts have to work with real-world off-chain information. And for that, these contracts would need authentic information only. But, the internal rules of blockchain prevent smart contracts from accessing off-chain data independently.
This is a crucial place where Artificial Intelligence will help smart contracts to become more intelligent. In other words, the AI technology will work to decipher real-world data from various sensors in the most accurate manner and then feed that data to smart contracts so that they can execute real-world use cases more efficiently than ever.
How will AI integration help smart contracts to be more intelligent?
Artificial Intelligence technology deployed for the blockchain smart contracts can help to expand rule-based systems (systems designed to make decisions on the basis of rules and inputs) to more intelligent adaptive systems. These smarter adaptive systems would be defined by neural graphs, neural networks, and logic.
Ability to check past negotiations
The Artificial Intelligence technology will help smart contracts to come up with most ideal clauses for an ideal contract negotiation.
The AI technology is capable of checking out past negotiations and understanding the previous clauses. This historical analysis will help to point out the mistakes and discrepancies present in the past contracts. Based on that input, the AI technology can guide new smart contracts to include the essential aspects – that were otherwise omitted in the past- to create an ideal contract that can guarantee successful negotiation.
Suggest viable advancements in workflow
Smart contracts are not just about executing transactions. They can also be used to automate workflow- another place where AI can make smart contracts more intelligent than ever.
Taking cue from the pointer above, the AI technology can study smart contracts executed in the past to analyze both the weaknesses and strengths of the workflows processed by the smart contracts. The analysis will further help the technology to figure out the viable enhancements that could be made to new smart contracts to ensure more elevated workflow.
Advanced data analytics will come handy
This point is somewhat close to the role of AI technology (in improvement of smart contracts) we have discussed till now.
Blockchain networks tend to gather a colossal volume of data and this massive big data can be capitalized on to make smart contracts more intelligent than ever. Advanced data analytics will play a key role here to leverage the big data in blockchain for smart contracts.
Let’s take the example of a supply chain system that has adopted blockchain technology. Incorporation of advanced data analytics will help to find out patterns in the system form the data gathered such as-
- What kind of products generally incur stable costs
- A set of suppliers adhere to a set quantity of products
Examination and analysis of these data will help the data analytics technology to locate the issues faced by the supply chain in the past. The revelation will help to ensure the same mistakes are not repeated in the new smart contracts for the supply chain.
Blockchain and AI complement each other
A large section of blockchain and fintech experts are of the opinion that incorporation of AI into smart contracts is more than welcome. According to them, though blockchain and AI are complete opposites yet they complement each other. And hence, their combined force could do wonders to elevate the intelligence and real-world application of smart contracts.
We will wind up the article with a brief on how blockchain and AI complement one another- and for better.
AI machine-learning algorithms need reliable information to conduct their analysis and to arrive at optimized decisions. Put simply, it’s imperative for machine-learning algorithms to source data only from the most trusted and secured data repository. This is one major place where blockchain offers the much needed help to AI technology.
Blockchain rests upon an immutable ledger where every data entered is encrypted and that too end-to-end. Thus, blockchain is able to assure a highly credible and genuine historical data source for the AI ecosystem that further helps it to offer optimized predictions and suggestions to create smarter smart contracts.