To Integrate Blockchain and Artificial Intelligence -2

The Theoretical Background of EcoVerse

In blockchain, a consensus algorithm manages two important functions: The first is maintaining and updating the ledger during block formation. The second is managing the distribution of wealth created by the blockchain network. So far, nearly every coin on the market has been designed to use a consensus algorithm intertwined with these two functions.

For network and ledger maintenance, a consensus algorithm provides the necessary technology and network structure; for wealth distribution, it distributes wealth in the form of incentives to contributing participants. That is, the wealth is distributed to miners and/or block producers. At EcoVerse, however, these two aforementioned functions have been designed separately. The first function is managed through the implementation of artificial intelligence.

In this article, I want to explain why it is important to integrate artificial intelligence with blockchain in the EcoVerse project, the first ever self-sustainable network. But first it is necessary to examine the evolution of blockchain.

The identity of Satoshi Nakamoto, who first introduced blockchain in 2008, has to date remained anonymous. But many think he is a computer programmer well-versed in cryptography. He created a payment system that allowed the general public to trade with each other in cyberspace without the need for third party supervision. [1] And what’s so important about this, as some of you may think, is that cyberspace is fundamentally unreliable. If a person cannot be trusted, a reliable mechanism must be created instead. So this problem is solved through cryptocurrency: even if you don’t know the other party, the transaction is secured through cryptographic verification.

For example, when two soldiers meet on a dark battlefield, the best way to verify each other’s identity is through a pre-determined secret code. The first soldier starts with “potato” and the second soldier answers “sweet potato”, and they have successfully verified each other. Nakamoto’s idea is that if identities can be proven in this manner, business is possible even when the two parties are strangers. Through this great idea, the first cryptocurrency, Bitcoin, was created. Although while Bitcoin is a successful system for value storage, there are many problems. The first concern is that Bitcoin is not very practical. And the most basic issue is the problems with what Bitcoin promises. More than a means for us to make money transactions in our daily lives, there must be a mechanism by which the public can both commit to each other and see that commitment fulfilled. To accomplish this, Vitalik Buterin created Ethereum, a cryptocurrency platform that utilizes what’s called a “smart contract” that parties agree to in order to interact with one another. [2]

While Ethereum has a much more advanced system than Bitcoin, it also has a number of issues, including a lack of practicality.

(image source: blockgeeks.com[5])

The most noticeable of these problems are issues of scalability, referring to the number of transactions per second (TPS) and the transaction finalization time (TFT). While many platforms have sought to address this, and over time it has slowly improved, it still remains as an issue to be further ironed out.

The most deadly of problem of cryptocurrency today though, is that of self-sustainability. Most crypto platforms, simply put, are self-destructive. Saying this means that, without external influence, an ecosystem without self-sustainable properties will ultimately destroy itself. [10] This is caused by the following:

· Unfair wealth distribution

· Poor performance

· Abstraction of decentralized ideology.

In a previous series, I discussed the blockchain requirements for self-sustainability. [6–12] In this series, I am focusing on the issues mentioned above.

New York University Economics Professor Roubini, “Dr. Doom”, responds to these problems, saying that cryptocurrency is the parent of all scams and bubbles.” [4] He says there is no place for Shitcoins in the world of cryptocurrency. And I beyond simply understanding his arguments, I also agree with many of them. It’s true: most currencies are a scam. According to Webster’s dictionary, a scam is “a way to trick people into making money dishonestly.” I think that with a few exceptions, most coins are scams. The reason being that coins exert more effort to emulate human greed rather than pursue technical excellence. In almost every case, the team is working hard to satisfy the insiders’ desires. Evidence of this is seen with the Gini coefficient.

Here, the Gini coefficient shows that Bitcoin is at 0.99. If the Gini coefficient is at 1, we say it is in total inequality. To understand this with simpler terms, let’s take the example of a community whose income comes from farming. If 100 people were working on the farm and earned $100 together, but only one person actually took home the $100, then that is totally unfair for the rest. Here, the Gini coefficient shows to be one(1), and is called at the state of total inequality. Since Bitcoin is at 0.99, one may assume the others like Ethereum and EOS should be lower — but they are even closer to 1 than Bitcoin. While the network may be decentralized, the distribution of wealth is becoming incredibly centralized. Developers say that it’s inevitable since they need to solve the problem of scalability and seeing users in daily life (symbolized by faster TPS and TFT). This is just an excuse. It’s nonsense. The distribution of wealth is far more important in the long term than the day-to-day network performance problems.

This is what EcoVerse has been dwelling on for quite some time. Can we solve the problem of scalability and daily usability while simultaneously decentralizing the distribution of wealth? At first it may seem impossible — but that’s where artificial intelligence comes in. This is what we call AI-DPoC (Artificial Intelligence supported Delegate Proof of Stake)™.

As mentioned earlier, AI is responsible for block formation and maintenance of the consensus algorithm. Once AI handles this, there’s only one function left for the consensus algorithm. This function is to evenly distribute the wealth generated by the users. With this, we can share our wealth creatively. Until now, wealth distribution has been severely unbalanced. This is why we have introduced artificial intelligence to our ecosystem.

The detailed design of AI-DPoC will be discussed in the next article.

This is the second part of “The Theoretical Background of EcoVerse” To read the 1st part, click here: https://link.medium.com/42cwuwSOzS

This article has been translated from its original Korean, readable on Steemit: https://steemit.com/ecoverse/@nicklee002/45sbbw-2

References

[1] Bitcoin Whitepaper. Bitcoin: A Peer-to-Peer Electronic Cash System. https://bitcoin.org/bitcoin.pdf.
[2] Ethereum Whitepaper. https://github.com/ethereum/wiki/wiki/White-Paper
[3] Nicholas Courtois. “On The Longest Chain Rule and Programmed Self-Destruction of Crypto Currencies”, https://arxiv.org/abs/1405.0534
[4] CNBC. Roubini doubles down on criticisms of crypto, calls it a ‘stinking cesspool that is in meltdown.’ https://cnb.cx/2NESVBO
[5] Blockgeeks. Smart Contracts: The Blockchain Technology That Will Replace Lawyers. https://blockgeeks.com/guides/smart-contracts/
[6] Younghwan Nick Lee. Requirements for Self-Sustainable Blockchain Part 1. https://link.medium.com/ITYWwdYOzS
[7] Part 2. https://link.medium.com/NeHxFS0OzS
[8] Part 3. https://link.medium.com/2gCtzu2OzS
[9] Part 4. https://link.medium.com/1wIOI83OzS
[10] Part 5. https://link.medium.com/nEa8i15OzS
[11] Part 6. https://link.medium.com/RFmiSM7OzS
[12] Part 7. https://link.medium.com/dgUF5u9OzS


To Integrate Blockchain and Artificial Intelligence -2 was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.