February 21st, 2024

Why Blockchain could be the solution for data quality and ethics in AI

Artificial intelligence (AI) is transforming the world in unprecedented ways, offering new possibilities for innovation, efficiency, and social good. It also poses significant challenges and risks, especially when it comes to the quality and ethics of the data used to train and operate AI systems. Data is the fuel that powers AI, and the quality and ethics of data directly affect the accuracy, reliability, and fairness of AI outcomes. Poor data quality can lead to errors, biases, and inefficiencies, while unethical data collection and usage can violate privacy, security, and human rights. Therefore, it is imperative to ensure that the data that feeds AI is trustworthy, transparent, and accountable. This is where blockchain technology can play a vital role.

Blockchain is a distributed ledger that records transactions in a secure, verifiable, and immutable way. It can provide a decentralised and tamper-proof platform for storing and sharing data among multiple parties, without the need for intermediaries or central authorities. It can also enable smart contracts, which are self-executing agreements that can trigger actions based on predefined rules and conditions. Blockchain can enhance the quality and ethics of data in AI in several ways, such as:

Authenticity: Blockchain can verify the origin and provenance of data, ensuring that it is authentic and reliable. The ability to track the changes and modifications made to data over time, creating an audit trail that can help detect and prevent fraud, manipulation, and corruption. For example, it can help verify the identity and credentials of data providers, as well as the consent and permissions of data subjects. It can also help validate the quality and accuracy of data sources, as well as the integrity and consistency of data processing and analysis.
Augmentation: I believe it can augment the intelligence and capabilities of AI by providing access to large and diverse datasets that can enrich the learning and performance of AI models. It can also facilitate data sharing and collaboration among different stakeholders, such as researchers, developers, regulators, and users, enabling cross-domain and cross-border data exchange and interoperability. The technology can also leverage smart contracts to automate data transactions and operations, such as data acquisition, aggregation, annotation, cleaning, and labeling, as well as data monetisation, compensation, and governance.
Automation: As mentioned in my speeches, blockchain helps to automate the ethical and legal aspects of data and AI, such as compliance, accountability, and transparency. It can embed ethical principles and values into the design and development of AI systems, as well as the data that feeds them. It can also enforce ethical rules and regulations through smart contracts, such as data protection, privacy, security, and consent. It can also provide mechanisms for monitoring, auditing, and reporting the impacts and outcomes of data and AI, as well as for resolving disputes and addressing grievances.

Blockchain and AI are complementary technologies that can create synergies and benefits for each other. I have mentioned very briefly in my earlier article on trends to look at in 2024. Blockchain can improve the trustworthiness of data resources that AI models pull from and increase the speed of AI operations by connecting models to automated smart contracts. AI can enhance the efficiency and scalability of blockchain by optimising its performance, security, and usability. Together, they can create a more trustworthy, transparent, and accountable data and AI ecosystem that can foster innovation, value creation, and social good.

However, this combination is not a silver bullet that can solve all the challenges and risks of data and AI. They also have their own limitations and drawbacks, such as technical complexity, performance issues, energy consumption, and governance challenges. Therefore, it is important to adopt a holistic and balanced approach that considers the opportunities and challenges of both technologies, as well as the ethical and social implications of their integration and application.

The potential of this intersection is not only theoretical, but also practical and observable. Recently, several developments have highlighted the emerging synergy between AI and cryptocurrency, which is a subset of blockchain technology that enables digital currencies and payments. For instance, Grayscale Investments, the world’s largest digital asset manager, published a research report that reveals the impressive performance of AI-related crypto assets, which are up 522% in the last year, outperforming the Utilities and Services Crypto Sector (+86%) over the same period. The report also discusses how blockchain and AI can address future AI-related societal issues, such as the rise of deepfakes, concerns around data privacy, and concentration of power.

Another example of the convergence of AI and cryptocurrency is the AI fever that took over the World Economic Forum in Davos, Switzerland, in January 2024, pushing crypto aside as the new cool kid on the block. Some of the world’s biggest companies, such as Intel and Salesforce, showcased their AI products and services, while the AI House hosted events and discussions on various topics related to AI and blockchain, such as verifying content authenticity, reducing model bias, and improving access and competition within AI development. The AI dominance at Davos reflects the rapid rise in AI investments and interest last year, sparked by the explosion of popularity of ChatGPT, the AI chatbot developed by OpenAI, and launched at the end of 2022. ChatGPT is an AI system that can generate natural language responses to any text input, using a large dataset of internet conversations. It has been widely praised for its ability to produce coherent, engaging, and sometimes humorous dialogues, as well as for its potential applications in various domains, such as education, entertainment, and customer service.

In my opinion, it also raises some ethical and technical challenges, such as the risk of generating harmful or misleading content, the lack of transparency and accountability of its algorithms, and the difficulty of verifying and controlling its data sources. This is where blockchain technology can come in handy, as it can provide solutions for ensuring the quality and ethics of the data and AI. For instance, blockchain can help verify the origin and validity of the data used to train and operate ChatGPT, as well as the consent and preferences of the users and data subjects. Blockchain can also help track and audit the changes and outcomes of its interactions, as well as enforce ethical rules and regulations through smart contracts. Blockchain can also help augment and automate ChatGPT’s capabilities, by providing access to more diverse and reliable data sources, facilitating data sharing and collaboration, and enabling data monetisation and governance.

In conclusion, blockchain technology can offer a valuable solution for enhancing the quality and ethics of data and AI, as well as for creating synergies and benefits with AI and cryptocurrency. This intersection is not only theoretical, but also practical and observable, as evidenced by the recent developments in the field, such as Grayscale’s new study and the AI fever at Davos. These developments indicate a transformative phase where AI and cryptocurrency coalesce, fostering a landscape ripe for innovation and societal benefit.

This union is not only redefining blockchain’s utility, but also addressing critical challenges in AI governance and development. However, this union also requires a careful and balanced approach that considers the opportunities and challenges of both technologies, as well as the ethical and social implications of their integration and application.

Source: https://ciosea.economictimes.indiatimes.com/blog/why-blockchain-could-be-the-solution-for-data-quality-and-ethics-in-ai/107618432

Anndy Lian

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com

j j j

May 17th, 2022

What’s the solution to Terra’s UST and LUNA crisis?

Terra’s LUNA and UST stablecoin implosions are roiling the crypto world and beyond. Picking up the pieces won’t be easy — nor finding a good path forward.

The “road to hell is paved with good intentions,” but that’s no comfort to the many people who have lost all their money as a result of the estimated US$50 billion Terra UST/Luna crash, a crash that took place in just three short days. A decentralized stablecoin designed as the ultimate payments system “combining the price stability and wide adoption of fiat currencies with the censorship-resistance of Bitcoin” that didn’t require any financial collateral seemed fine in principle, but when it stopped working, human collateral damage was the end result, both in terms of loss of savings and devastation of lives.

The repercussions are just starting to be felt, from talk of government regulation from U.S. Treasury Secretary Janet Yellen, to Tether temporarily losing its 1:1 peg to the dollar to as low as US$0.95, and the impact on the price of Bitcoin thanks to Terra selling off its collateral reserves in a vain attempt to shore up the value of its UST stablecoin.

To confirm the basic point driving one of the biggest collapses in crypto’s short history, last Thursday Terra’s pegged Luna token dropped in price from its high in April of US$118 to US$0.09, while TerraUSD (UST) hit US$0.04. And despite all that, plenty of self-styled #LUNAtics — the project’s fans, including developers and Terra itself — refused to admit the party was over. In a Twitter thread on Wednesday, May 11, the ever-confident Terra co-founder Do Kwon tried to sound reassuring, telling the Terra community: “I understand the last 72 hours have been extremely tough on all of you — know that I am resolved to work with every one of you to weather this crisis, and we will build our way out of this. Together.” That didn’t work.

“You can’t mint your way out of bankruptcy all the time,” tweeted Binance CEO Changpeng Zhao, also known as CZ, after Terra announced that their blockchain had resumed block production as if there’d just been a technical hitch.

Part of the core problem is that what drove Terra’s initial success is what also helped drive it into the ground. Do Kwon’s aim to build a payments platform better than Bitcoin and with an ecosystem of dApps to rival Ethereum, according to one analysis, meant it targeted a “stablecoin product built to compete directly with traditional financial settlement networks on a customer basis,” and that unlike other third-generation blockchains, “it isn’t necessarily competing for developers and cryptocurrency native users — it’s going after real-world people.” The other component, highlighted by CoinRoutes CEO Dave Weisberger, is Kwon’s pivotal role in silencing critics and avoiding transparency: “He publicly tried to humiliate critics that pointed out risks. That, considering the power of social media & his notoriety, was VERY problematic.”

Taking a step back from this mess, what caused the collapse of the UST/Luna system? And what happened to the US$3.5 billion Bitcoin that Terra had bought to steady the ship? Rumors that either the hedge fund Citadel, the asset manager BlackRock or crypto exchange Gemini created the crash have been rejected by the companies, and persuasively shot down by B2C2 founder Max Boonen.

Any discussion of the cause of the crash cannot ignore that as an algorithmic stablecoin not pegged to any collateral, it used a two-token system, allowing users to swap Luna to Terra’s UST and vice versa for a guaranteed price of US$1, with the difference that it was based on its own layer-1 blockchain. And Terra’s UST was itself propelled by a key dApp on that blockchain called Anchor, which was offering yields of 20%. Anchor’s total value locked (TVL) grew from US$8.65 billion on Jan. 1 to US$17.05 billion at its peak on May 6. And as UST began to show signs of strain in late March, a team in the form of the Luna Foundation Guard (LFG) started to buy Bitcoin, amounting in total to US$3.5 billion between January and May this year.

It should also be noted that as an algorithmic stablecoin, UST is not a decentralized stablecoin. Terra used a consensus mechanism called “delegated proof of stake” (DPoS) that meant control was in fact concentrated in the hands of “a few validators” — no doubt the same hands that controlled the Bitcoin collateral. On May 9, LFG announced that it would “Loan $750M worth of BTC to OTC trading firms to help protect the UST peg,” which, according to Elliptic, was followed by a further US$930 million, to the same address, and the 52,189 BTC was sent together to a Gemini address. CZ tweeted on Sunday May 15, “I would like to see more transparency from them. Much more! Including specific on-chain transactions (txids) of all the funds. Relying on 3rd party analysis is not sufficient or accurate. This is the first thing that should have happened.” This was eventually confirmed by the LFG on May 16 in a tweet: “Transferred 52,189 $BTC to trade with a counterparty, net of an excess of 5,313 $BTC that they have returned, for an aggregate 1,515,689,462 $UST.” With just 313 BTC remaining (approximately $9 million, plus other assets) as highlighted by Laura Shin on May 16.

What is needed now is a plan to solve this crisis, which is not just for Terra and its users who have lost so much but also to restore confidence in the wider crypto market, which has suffered tremendously both materially and in loss of trust. Terra’s collapse has potential longer-term impact on Tether USDT — the world’s largest stablecoin — which has the wider financial markets spooked. It has seriously impacted DeFi (decentralized finance) as well. For example, Venus Protocol reportedly suffered a US$13.5 million loss because the Chainlink oracle stopped updating the price of Luna below US$0.1 while the market price was US$0.01, allowing users to lend $LUNA and borrow against it 10x more assets than normally possible. It’s for these reasons I strongly believe a self-governing council should be established to investigate what went wrong, exercise some control, produce findings, and provide insights to address specific issues. To be clear, this body needs to be impartial, objective, and transparent. If we fail to take such proactive action as an industry, the impact of government regulators may be far worse.

For the sake of transparency and for the crypto community as whole, not just for UST/Luna users who have lost so much, Do Kwon needs to come clean about a few things. He needs to own up to his troubles with the U.S. Securities and Exchange Commission and his involvement in Basis Cash, a previous failed stablecoin project. He needs to give a frank disclosure as to what has happened with the US$3.5 billion Bitcoin collateral, to show where it is now. He needs to talk in terms of these specifics and not provide warm words and simply talk of re-launching Terra in some form or another. If he cannot learn from his past mistakes then he’s doomed to repeat them in some form or another, and the rest of the industry will suffer the consequences.

Certainly, in the interim, we should welcome the positive attitude of SEC Commissioner Hester Peirce, who recognizes that the market does need room to allow for trial and error, but also adds that due to the variation in types of stablecoins, it’s also “difficult to craft a regulatory framework.” I’m less optimistic about Terra’s plans to resurrect the platform by forking, as CZ tweeted “forking does not give the new fork any value. That’s wishful thinking.”

In the latest twist on May 16, CZ confirmed Binance had received 15,000,000 LUNA (at a peak worth US$1.6 billion) plus had US$12,000,000 in UST from staking. “To lead by example on PROTECTING USERS, Binance will let this go and ask the Terra project team to compensate the retails users first.”

While it is important to protect users first, users also have to understand this is neither the best outcome nor should it set a precedent for the future for a repayment plan and having the community think that it is okay to fail like this with no legal ramifications.

For the sake of both Terra users and the wider crypto community, things need to be sorted out as soon as possible. Practically speaking, the devil is in the detail, and that’s what we need to grapple with now, for the sake of everyone involved.

Original Source: https://forkast.news/whats-best-solution-terras-ust-luna-crisis/

Anndy Lian

www.anndy.com

j j j

November 28th, 2021

Banning cryptocurrencies not a solution, say experts

New Delhi: All eyes are on the much talked about Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 to be introduced in the winter session of Parliament beginning next week. In a meeting chaired by Prime Minister Narendra Modi on 13 November, he had flagged the issue of misleading non-transparent advertising on crypto currency. Stressing the point on how “unregulated” markets cannot be allowed to become avenues for “money laundering and terror financing”, a major concern and issue for the government was how youths of the country are misled and over promising and non-transparent advertisements attract youths. In the craze for more and easy money and a better future, youth are, in fact, being led to a bleak future. But the government is also aware that this is an evolving technology and thus steps taken by government will be progressive and forward-looking. The RBI continues to be a critic of crypto currencies, saying they pose serious threats to macroeconomic and financial stability of the country. While details of the said bill are not known, the 2021 bill seeks to prohibit all private crypto currencies in India with certain exceptions to promote the underlying technology of crypto currency and its uses. The bill also seeks to “create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India”.

While there is lot of noise around whether the Indian government will ban crypto currencies or not, global experts say ban is not the solution and more regulations on crypto transactions, legal framework and penalties on fraudulent activities will help.

The Sunday Guardian talked to some experts to know views on the same. Anndy Lian, an inter-governmental blockchain adviser and investor and chairman at BigONE Exchange, which is a global digital asset, says, “There is need for better regulation and education to support the estimated 15-20 million crypto investors in India, who are benefiting from using crypto currency to send and receive money around the world, through to earning money from playing blockchain-based games such as Axie Infinity. As a government, one cannot stop the move to decentralization. With India’s crypto adoption ranking second in the world in the recent 2021 Global Crypto Adoption Index, this move looks like it will not only hurt individuals, but also larger businesses. Compared to Vietnam and Pakistan, the country has a significantly larger share of large institutional investors, suggesting that India’s cryptocurrency investors are part of larger, more sophisticated organizations. To ban cryptocurrency as part of a wider strategy to roll out their own central bank digital currency (CBDC) will therefore seriously undermine the nation’s crypto and blockchain business community, with the crypto industry in India currently seeing over 100% growth month-on-month growth, despite the government’s alleged desire to foster innovation in the blockchain sector.”

New Delhi-based cyber law expert Virag Gupta said: “While crypto is spreading like wildfire, there should be no delay in its regulation. The delay in bringing a law has given an opportunity to certain exchanges to create a parallel empire of cryptocurrency. Crypto currency and Bitcoin scams have surfaced and regulation is much required.” He also said it’s a misconception to believe that a conducive regulatory environment will harm the crypto currency sector. Rather, to cement a certain future, detailed jurisprudence diving deep within the currency and technology is essential. “Taking the benefit of zero regulatory framework around crypto, the “self-styled godmen” of this industry have made their own regulatory mechanism and code of conduct which have put the Indian law-making machinery in a bad light for the world. The biggest question now is: How is the government planning to levy and recover tax on money being made by crypto trading exchanges and apps? If it is treated as capital gains, then the players get undue benefit and if it is treated as business income, then the whole illegal system turns legal,” Gupta said, adding: “In the proposed law, if cryptocurrencies are not accepted as legal tender, how will it be treated as an asset class and who will be its regulator. Non-levy of GST in various layers of its transaction and non-imposition of income tax with penalty is causing huge loss to the state and central government revenue.”

Hayden Hughes, CEO of Alpha Impact, a social trading platform, said like other central banks across the world, the RBI is “fearful” of losing control over monetary policy and seeks to rapidly push a Central Bank Digital Currency while slowing down mainstream crypto currencies. “The RBI has been battling the Supreme Court over the fate of crypto currencies in India since 2018, in a ban that was ultimately overturned. The thesis is that if CBDC adoption can occur, the threat will be mitigated. While it’s clear that there will be some restrictions, the latest draft of the bill has not been made public. There has been explicit references to “exceptions” in the bill, and the devil will be in the details. Even if there is a total ban of crypto currencies in India, we only have to look to China to see that firms would immediately offshore their operations. Only on-shore crypto companies would be affected. Bitcoin and cryptocurrencies are, after all, decentralized, meaning they cannot be shut down. If China cannot shut crypto down, India won’t be able to either.”

Aliasgar Merchant, Developer Relations Engineer at Tendermint, which is the core contributor of Cosmos SDK with flagship products such as Starport and Emeris, said: “A blanket ban on crypto currency will have a negative impact on the Indian economy. Apart from immediate effects like drop in value, institutions working on cutting technology like blockchain will lose trust and ultimately there will be a brain drain. While I recognize the potential misuses of crypto, the government should be focused on regulating crypto rather than putting a blanket ban on crypto. This brings us to the question will people stop investing in crypto? Decentralized exchanges like Emeris, Uniswap, etc could be used which will ultimately defy the purpose of a ban. This is very similar to banning alcohol in a state. People interested smuggle the spirit, ultimately costing the government millions in taxes.”

With crores of Indians invested in crypto currencies with their holdings totaling billions according to industry estimates, many are worried about the future. At the same time, many feel this is an opportunity in the hands of India as a country to show the path to others towards the crypto world and it will be interesting to see how India grabs this opportunity.

About Sunday Guardian

The Sunday Guardian is a Sunday newspaper founded by journalist, author and politician M.J. Akbar in 2010. The newspaper is divided into two sections: news and features, with 20 pages dedicated to each section. Both provide interesting perspectives which is a mix of news, investigation, opinion, entertainment, lifestyle and issues of human interest. M.D. Nalapat is the editorial director of the newspaper. The newspaper has two editions—Delhi and Mumbai.

The newspaper is owned by the ITV Network of Kartikeya Sharma, Managing Director ITV Network (Information TV Pvt Ltd), which also runs news channels India News and NewsX.

Also found on Epaper, page 17: https://www.sundayguardianlive.com/e-paper/28-november-2021/