Artificial intelligence has a massive scope in every field of life. After conquering the conventional world, AI is now making its way into optimizing smart contracts as well. AI in smart contracts is a massive revolution in blockchain and cryptocurrency transactions.
Before proceeding, it is essential to have a clear understanding of smart contracts. In essence, a smart contract is a self-operating contract where the terms of the agreement are directly inscribed into lines of code.
They are kept on the blockchain and automatically carry out the terms when certain conditions are met, eliminating the need for intermediaries and reducing the likelihood of fraud.
In 1994, Nick Szabo, a legal scholar, and cryptographer, introduced the concept of “smart contracts.” These contracts aimed to apply advanced contract law practices to electronic commerce protocols, facilitating secure transactions among strangers on the Internet
The same principle applies to real-world scenarios. Industries like medical records, logistics, finance, insurance, and others can all benefit from smart contracts to eliminate third parties.
What is The Role of AI in Smart Contracts?
AI in smart contracts will enhance visibility, implementation, and adherence to the agreement. In short, Artificial intelligence using its NLP and Machine Learning integration will make smart contracts more efficient and productive. The predictions will be better, and there will be less chance of any fraud or scams.
Other essential factors of AI enhancing smart contracts are as follows:
- Better Decision Making: AI has a unique feature that can simplify complex formulas and regulations. In smart contracts, it can understand the clauses and rules of both parties. Improves the codes and implements them most effectively. The integration of AI will help both parties understand the contract’s terms and conditions and future consequences.
- Relevant to Time and Fashion: AI can predict any upcoming change in the process and results of contact. So it will improve the clauses, and with the automated settings of both parties, it can implement them to prevent any problems in the future.
- Enhanced Security: AI enhances smart contract security by identifying unusual behavior patterns that signal potential breaches, allowing rapid preventive actions.
- Fast Execution: AI in smart contracts has all the information and clauses necessary to run any agreement smoothly. It is transparent and visible to every party of the contract. As it does not need third-party intervention, the contract can execute faster than the traditional contract. Hence, the results would be better and more fruitful.
- Error-Free Contracts: In the traditional contract, there is always a chance of making a human error. Even in smart contracts, there is a slight chance of wrong coding and interpretation of clauses. AI enables its machine learning integration to improve the arrangement and makes it feasible for both parties.
- Better Predictions: Artificial Intelligence can foresee future events. The data gathered from all the forums will tell both parties about any cryptocurrency upward or downward trend. It can also predict the fallout percentage for up to 80 percent.
This feature helps in other departments as well. Like in retail, AI can predict the future sales of a particular product. Like smart contracts, AI will indicate the success ratio of the transaction and saves both parties time and money.
Cortex – The First AI Based Smart Contract Platform
Cortex is a decentralized AI Platform that enables AI developers to upload their models to the blockchain. Smart Contract and DApp developers can access these models using CTXC, the Cortex native token.
Cortex’s unique approach brings AI inference directly on-chain, eliminating the need for third-party Oracles and addressing trust issues. By enhancing the computing power of the Virtual Machine with specific instructions, Cortex explores new possibilities.
AI smart contracts can be written in Solidity, the programming language used for Ethereum developers. Cortex’s CVM is compatible with EVM but includes infer instructions.
It is still in its infancy, and tech professionals are trying to implement it in the crypto world for better performance. But looking at its early magic on smart contracts, it is easy to say that cortex or its other prototypes will improve the performance and implementation of smart contracts in the future. The contract management will be more organized, centralized, and error-free.
Limitations of AI in Smart Contracts
With a lot of benefits, there are a few disadvantages as well. These are the minor limitations that simple codes and more crypto integration in artificial intelligence can solve.
- Data privacy: AI needs a lot of data, which can lead to privacy issues. So, handling data carefully and having strong privacy protections is essential.
- Law enforcement: Since laws about smart contracts and AI are still changing, making sure everything is done legally can be tough
- Technical Complexity: Adding AI to smart contracts needs advanced tech skills, and this could be difficult for some companies
In conclusion, combining AI in smart contracts signals a promising future for blockchain technology. As technology matures, we are set to witness more significant and impactful changes in the world of smart contracts. Only time will reveal the full extent of AI’s transformative impact on smart contracts.
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Nick Szabo introduced the concept of "smart contracts” in 1994. These contracts aimed to apply advanced contract law practices to facilitate secure transactions among strangers on the Internet.
Unlike traditional paper contracts, smart contracts do not need a third party for better understanding and execution. The cost and time-saving in smart contracts are what makes it unique.
Smart contracts can be implemented on any lawful contract in any field. From financing, logistics, medical, and entertainment, it can cater to any clause and regulations.