Explore the dynamic interaction between blockchain and AI in cryptocurrencies, including deepfakes and fraudulent behaviors in trade, huge data, and smart contracts.

Blockchain technology and artificial intelligence (AI) have a love-hate relationship. Although ChatGPT has raised awareness of the full potential of AI in the worlds of trading, big data, and smart contracts, there are still some risks that the crypto community needs to keep at a distance. Binance is particularly certain that some bad people can get around KYC verification processes by defrauding businesses and investors via deepfakes.

Crypto alert: deepfakes and artificial intelligence

The popular artificial intelligence technology raises the first “red flag” in the bitcoin sector. Jimmy Su, head of security at Binance, predicts that deepfakes, which are proliferating due to AI software, will lead the next wave of scams in the sector.

Deepfakes are able to construct extremely convincing (but fake) images or videos from genuine content on networks thanks to machine learning. These imitation copies, in particular, accurately imitate features, facial motions, bodily movements, and even a certain voice.

Cybercriminals are accomplishing this by committing well-planned scams while posing as some of the leading individuals in the crypto ecosystem. Although this method can be employed honestly and profitably in daily life and work, benefiting those who utilize it, it can also be harmful to investors and cryptocurrency companies.

In August of last year, Patrick Hillmann, the manager of communications at Binance, issued a warning that hackers were attempting to create a deepfake of him based on his appearances on TV and in online video interviews.

The “deepfake” version of Hillmann was subsequently utilized in online meetings on Zoom with cryptocurrency project teams, who were paid with the prospect of token prices.

According to Jimmy Su, the only way to stop the spread of this kind of deception is to inform people about the fallacies that artificial intelligence offers while reproducing material.

Binance thinks artificial intelligence could jeopardize the KYC methods used by cryptocurrency projects

Artificial intelligence and deepfakes, according to the cryptocurrency exchange Binance and its chief security officer, can jeopardize KYC verification processes by putting customers’ data and cash at danger.

This applies generally to all crypto-themed enterprises where it is necessary to verify the identity of users through the traditional “Know your customer” (KYC) method, not just Binance where there are advanced verification automations. The strategy for getting around these systems is as follows: first, they look for victim images online, then, with the help of AI algorithms, they start to create incredibly convincing videos in which the false characters may go unnoticed.

According to Jimmy Su, deepfakes are mostly being distributed to perpetrate scams, particularly on forums of cryptocurrency enthusiasts.

He also thinks that the overall caliber of the false footage isn’t yet such that it can deceive human verification.

In order to educate users about risk management strategies, Binance plans to write a number of blog entries. The company uses artificial intelligence and machine learning algorithms to find unusual login habits and platform transactions, according to the exchange’s initial material. Therefore, it is conceivable to use AI for legitimate purposes, but caution must be taken as this technology develops since it could seriously harm the cryptocurrency industry.

In reference to deepfakes, a Web3 security expert worries that they can be abused in Ledger’s new “Recover” version, which allows users to ask the hardware manufacturer to provide them the seed phrase if they lose it after confirming their identity through KYC verification.

The top cryptocurrencies with AI integration

The crypto market is seeing an increase in initiatives that, in more or less direct ways, incorporate artificial intelligence technology into their operations.

Sometimes, the public’s fascination with AI and the story around it is used to generate trading volume for tokens that, in reality, are supported solely by effective communication and marketing strategies.

The majority of these mix the brand name of a well-known memecoin with words like “GPT,” “AI,” and “CHATBOT” in their titles. But the artificial intelligence movement is enabling important projects like Singularity Net, The Graph, Render Token, Fetch.ai, and Injective to raise more money.

With a considerable gain since the start of 2023, the “AI and Big Data” segment of cryptocurrencies on CoinMarketCap has crossed the $5 billion mark in this regard. Given and taking into account that there are few actually implemented use cases in the crypto realm, with the exception of those where frauds are attempted, it is likely still too early to see a true explosion of the artificial intelligence trend.

Chatbots, trading system automation, and big data detection play a crucial role in shaping future markets, but further advancements are needed for a true revolution. However, it is important to use technology responsibly and not engage in activities like creating deepfake videos or spreading false information for personal amusement or harm.

However, take care to keep the prank in private channels to avoid spreading misinformation (FUD) around the neighborhood.

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