The world of blockchain technology has become increasingly intriguing, and appropriately, as the prices of Cryptocurrency have reached all-time high points in 2021. Not to add a surge in the use of blockchain technology, particularly with the popularity of Non-Fungible Cryptocurrencies on the rise.
Blockchain and cryptocurrencies, like any other technology, have challenges with confidentiality, scalability, and effectiveness. There are legitimate efforts focused on tackling important blockchain-related problems, despite all of the hype and media attention. As per The Crypto Genius Trading Bot, everyone deserves a chance to at least dipping their toes into the bitcoin waters. This article will discuss a number of these issues, as well as scientific attempts utilizing machine learning approaches to solve blockchain/crypto-related issues.
Investing (Learning through conditioning)
- Institutional investors and huge financial organizations are both interested in trading cryptocurrencies like Bitcoin and Ethereum. Traditional distribution bots employed in the currency institutions increasingly contain machine learning-powered techniques. As a reason, it’s no surprise that machine learning algorithms are used to build a financial position for the cryptocurrency markets. The use of direct supervised learning to construct a model for cryptocurrency-based stock investing was presented in a research article.
- Reinforcement Learning (RL) is a machine learning subdomain that is commonly used in gaming and emulation applications. RL works by teaching programs (operatives) how to design an optimized approach (strategy) for gaining rewards in a virtual world.
- In classic RL, the agent does not receive immediate feedback on performance; but, in DRL, the agent receives input depending on the success of preceding sessions. The researchers were able to eliminate the need for price prediction models by using DRL to construct a system that reacts based on a predetermined period (daily).
Mining techniques that work (Learning through conditioning)
- Using computational resources to estimate a set of principles used to solve a function on a blockchain is known as cryptocurrency mining. The miner that solves the function is permitted to add legitimate pending transactions to the blockchain. After that, the blockchain network is upgraded to include the financial blocks. The goal of mining is to maintain the blockchain with pending transactions, and incentives are offered for the miners’ contributions.
- Block incentives (i.e. bitcoin) and service charges accrued from relevant transactions are given to miners in exchange for their efforts. We can attempt more estimates to answer the algorithm the more powerful our technology is.
- Without an original solution of the blockchain and relevant variables (miner’s compute resource, service charges, etc.) it was feasible to use RL methods to continuously extrapolate mining approaches that are more standards-compliant than other strategies, according to a study (traditional honest mining and selfish mining). Traditional reinforcement learning strategies develop strategies for individuals to increase the value of incentives they acquire in a particular environment. However, because the blockchain network is a dynamic situation, it is difficult to develop a representative model.
Defending against ransomware attacks
- Another interesting application of machine learning in cryptocurrency mining is cybersecurity. Educational institutions and regulatory bodies support research labs with significant computing resources and equipment.
- Cryptohackers take over computers and use them to mine cryptocurrencies. Researchers from the United States have collaborated to develop a way for identifying fraudulent applications that seek to take over computing resources.
- The technology established by the researchers is known as SiCaGCN. SiCaGCN calculates the similarities between two programs or pieces of code using location information on a regulated graph representation of the programs. SiCaGCN is the name of the system, and it has shown promise in terms of detecting international bitcoin mining code. The system guards against alien programs abusing and misusing computational power.
In the realm of blockchains and cryptocurrencies, machine learning has a purpose. The relevance of machine learning techniques extends beyond cryptocurrency price forecasts and investing. In the future years, as a few of these approaches find their way into the manufacturing environment and become commercialized, the world of blockchain may begin to open up to Machine Learning professionals.