Can Blockchains Solve Deep Fakes and Other AI Challenges?

0:00This AI Breakdown bonus episode is an excerpt from an interview I did with Chainlink founder Sergey Nazarov about a month ago. Now, for those of you who listened to the main breakdown, you'll have already heard this. But for those of you who have just joined the AI breakdown, this is the part of my conversation with Sergey where we talk about how the rise of adversarial AI potentially changes the need for cryptographic truth systems in the world. It's a really interesting line of thought, and I think that you'll enjoy it. Happy Sunday and see you back here tomorrow for the regular AI breakdown.

0:31I think the thing with AI is that it's very exciting and has a lot of great applications, but it's the type of technology that can get away from people without the right controls and without some of the right things in place to manage risk. And also it's accelerating at a very fast pace. I've had an interest in it for many years, but at the end of the day, the way it relates to our industry is what I call AI resistant. So I think that one of the main questions is, what are the countermeasures to AI misbehavior and adversarial AI things, basically? Both the misuse of AI, which is in the example you described, as well as purely adversarial AI.

1:13Both of these questions are things I don't see really enough work being done. And at the end of the day, from the point of view of decentralized infrastructure like blockchains, adversarial AI would just be another adversary, be another type of adversary. So the real question is, would blockchains be the safe haven to create a reliable world in a world that was made less trustworthy and less reliable by the misuse or through adversarial AIs? That's the way that I would formulate the question. And I think the answer to that question is yes, that blockchains would be quite useful. Oracles and smart contracts would be quite useful, not only for verifying what's a deep fake and not a deep fake, but also for maintaining the ability to transact in markets, maintaining a view of reality in relation to asset prices and assets.

2:12Because one of the simplest things that AIs could do, frankly, is they could go manipulate and crash markets. and then you would be left with the need for a market, but no existence of a market. And then if you had an alternative environment, such as a blockchain environment, like a DEX or derivatives, a DeFi project or something else like that, and that was resistant to AI manipulation, AI resistant, then you would migrate there. So for me, AI has a lot of great potential that I'm excited to utilize in risk management, even within Oracle networks and in other ways. But at the same time, it presents unique risks and a unique profile for what an adversary could be and could do and a new type of adversary.

3:00And that adversary is one that could make the world very unreliable, unpredictable. And that's once again, what I feel blockchains and our industry does is it creates a predictable world, right? It creates a world where things are deterministic and the outcomes of markets, the outcomes of information is reliable. So the degree to which AIs get misused or there's an adversarial AI that goes on to manipulate markets or information, I do think that encryption technologies will be quite useful in minimizing that risk. And if that risk grows large enough, and if there's enough manipulation by AIs of markets that are not AI resistant, or of information channels that are not AI resistant, then I think encryption technologies will be able to resolve that crisis of faith even more.

3:58So I think it's not really just about blockchains, I think it's about encryption technologies. And blockchains are an encryption technology that will have a very large role to play in a world that would become unreliable due to AI misuse or misbehavior. And so that's the thing that's interesting to me, in addition to how can AI be used for risk management and to increase the security of Oracle networks. Because really, it's a tool like anything else. You can misuse the tool or you can use the tool properly. And with any new tool, you'll have people that use it properly and people that misuse it.

4:35And if our industry is focused on creating a deterministic, reliable, predictable world, then our industry will have to create that against all forms of unpredictability. And if AI becomes a form of unpredictability, then it's possible that our industry becomes the solution to that problem in certain cases. In your deepfake example, I think it's, I wouldn't say it's a relatively simple fix, but I think you probably need a public infrastructure that can identify people and then can allow them to sign information as accurate or inaccurate. Personally, I really wouldn't be surprised if Twitter became this.

5:15So if Twitter, they had to check marking everybody, on the one hand, it makes them money. On the other hand, they're getting people to verify themselves into a private key infrastructure where they could sign things as fake or real. And I think blockchains would have a role to play in that. But I think blockchains would actually have an even bigger role to play in various systems where transactions were getting manipulated. So for example, markets. And while deepfakes and this type of stuff is valuable, really markets are very valuable. Markets are what the whole world runs on. And if you get to a world where AIs can manipulate markets in adversarial ways, that's a pretty scary world.

6:00And if you had another alternative world where you had other markets that weren't manipulated, like DeFi markets weren't as easy to manipulate for the reasons that we said with encryption technologies being ingrained in there at the very base level, that could indeed happen. But it once again depends on this event, right? It depends on this negative event. The negative event could be global financial collapse, irrespective of AI. Could be AI accelerating global financial crisis. Could be, I don't know. I don't know what it could be, but basically it could be a ton of stuff. And I don't think the world's going to get more reliable.

6:37I think it's going to get less reliable. And whether that's AI driven or global markets, fun time comes to an end driven. I think our industry will be the answer to both or either of those scenarios. I want to just spend a moment maybe playing out this example, because I think it's something that people are going to start to really try to wrap their heads around. Let's maybe try to hone down in on two things. One is, what might adversarial AI market manipulation look like in the simplest form of that? And then how would a blockchain-based or encryption-based market be less subject to that adversarial behavior?

7:16I'm actually reticent to give anybody too many ideas about this. Yeah, I thought about that actually, as I was asking the question. From my point? Maybe let's do the second. Why don't we do the second? I think that the second part of the question might be able to be answered without the first part of the question. So rather than thinking about what the attack vectors are, what makes blockchain or encryption based systems more inherently able to resist or AI resistant or manipulation resistant? Sure, makes sense. So blockchain-based systems and smart contracts and DeFi and all these things are built from day one with security audits and security and encryption baked in to allow it to be resistant to various anonymous adversaries.

8:00So from the beginning, the whole premise of the system is actually to be resistant to manipulation. So that's one big advantage. This is not how many centralized systems are built. the way that centralized systems are built, because if you find one flaw and you get into the system, once you're past the security measures of the system, you can do a lot of crazy stuff, basically. And the amount of internal checks and the amount of internal checks and balances is not as large. So I think the first thing is that DeFi protocols have been securing hundreds of billions of dollars in value in an already very adversarial environment that it constantly tries to take and steal from them.

8:42The second reason, which I think is actually the more important reason, is once again consensus. Consensus is what underpins all of these applications, whether it's on an Oracle network basis or a smart contract state or the blockchain transaction itself. All of those are generated through some form of consensus. And the reason that consensus has better security properties is because of having one entity to compromise. you have tens or hundreds or thousands of entities, basically. So your ability to compromise one entity, research that entity's security practices, identify issues and holes in its infrastructure is significantly easier than it is to do that to over 50 % of the Bitcoin network.

9:31right? So you basically are left in a place where you have multiple places to compromise. And then as you have systems that have more and more independent nodes, you essentially arrive at a place where it becomes harder and harder. So it's essentially the centralization property. I think it makes sense. And thank you for taking some time. Like I said, I think this is an area of growing discourse. And I genuinely believe I said this, I've said this a couple times on Twitter. First, that a meaningful number of people who have been in the crypto space for whatever it is the last couple years and maybe came into the door of interesting tokenization projects or came in the door of NFTs are going to find themselves feeling like the big purpose is, in fact, having this sort of alternative to some of the challenges that that sort of new AI world will be get.

10:27Super interested to have that conversation. I guess by way of wrapping up, Sergei, this has been a great conversation. As you look over the next, I don't know, call it six months, 12 months, what are the most important or exciting steps on the pathway to this more deterministic world? I think DeFi has a big future and will continue to become more and more widely used. Blockchain gaming, I think as the scalability properties of the core underlying infrastructure improves, will continue to migrate. And I see more and more large real studios looking at making blockchain-based games for some of the reasons that I described.

11:04I think those are the two main categories right now, defined gaming. Insurance is something we're always working on, and it moves as slowly as an industry, but has a lot of impact. I think what we're going to do in order to facilitate all that is have greater and greater quality data, allow people to do more advanced computations in a consensus-driven way outside of a blockchain, and enable cross-chain communications and value transfer so that you can build applications that are essentially functioning across multiple chains. So those are the three big pillars of what we plan to achieve is more and better quality data, more advanced computation, so you can build more advanced applications still using consensus, but without relying on the computational limitations of chains, and then also cross-chain communications and value transfer so that you can build applications across multiple chains and what we're calling cross-chain applications.

12:01I think those three infrastructure improvements will, in the coming months and years, really accelerate what people can do in DeFi and gaming and insurance. But then there's always other use cases, right? Like it's very possible deep fakes become important. And then there's a lot of value for some version of proof of reserves that proves the origin of a piece of content, how NFTs came out of left field and very quickly became a social phenomenon. So I think that there's always that kind of unexpected element. And when that comes, I think what we're going to do is we're going to repurpose Oracle networks to address the need for cryptographic guarantees and cryptographic truth in that new unexpected element as well.

12:48Do you think, maybe that's another great question. Does it feel to you like the infrastructure is starting to be in place now to deal with unexpected occurrences that happen? You were just mentioning that you could repurpose oracles for this purpose. Do you see that sort of not just in the context of oracles, which obviously you spend your time on, but other parts of the crypto or blockchain ecosystem as well? are we prepared or maybe another way to ask it is are we prepared for unknown unknowns or are there things that we're lagging on that need to be built i think ai and quantum computing are things that are unclear in terms of their capacity to influence our industry i think both of those have the ability to make what our industry does either more valuable or less valuable depending on how they progress, basically.

13:46And I think that our industry will need to adapt to the emergence of both of those technologies in the next AI right now. Quantum computing, that's not clear to me. But I would say those are the two big unknown unknowns, depending on how far they go and how fast they get there. Other than that, there's the usual question about consumer demand and governments and all this type of stuff. But that's something that our industry has become experienced and more experienced at dealing with. Because as long as the consumer demand is there, people will make applications that service it. I think the unknowns and unknowns are really around AI and quantum computing.

14:30I would say those are the two big questions that I have. those are big questions i think for everyone right now and always awesome to have you here sergey to dig into this stuff we're going to need to have these conversations on a more frequent clip just to keep track of everything but i appreciate you taking the time out of building to to come talk with us today absolutely my pleasure thank you for having me

15:03Thank you.