Decentralization

Bias in AI: What can blockchains do to ensure fairness?

Experts believe that decentralized systems can help secure the integrity and objectivity of data being fed to AI systems, but there still exist very clear limitations.

Projects rooted in artificial intelligence (AI) are fast becoming an integral part of the modern technological paradigm, aiding in decision-making processes across various sectors, from finance to healthcare. However, despite the significant progress, AI systems are not without their flaws. One of the most critical issues faced by AI today is that of data biases, which refers to the presence of systemic errors in a given set of information leading to skewed results when training machine learning models. 

As AI systems rely heavily on data; the quality of the input data is of utmost importance since any type of skewed information can lead to prejudice within the system. This can further perpetuate discrimination and inequality in society. Therefore, ensuring the integrity and objectivity of data is essential.

For example, a recent article explores how AI-generated images, specifically those created from data sets dominated by American-influenced sources, can misrepresent and homogenize the cultural context of facial expressions. It cites several examples of soldiers or warriors from various historical periods, all with the same American-style smile.

An AI generated image of Native Americans. Source: Medium

Moreover, the pervading bias not only fails to capture the diversity and nuances of human expression but also risks erasing vital cultural histories and meanings, thereby potentially affecting global mental health, well-being and the richness of human experiences. To mitigate such partiality, it is essential to incorporate diverse and representative data sets into AI training processes.

Several factors contribute to biased data in AI systems. Firstly, the collection process itself may be flawed, with samples not being representative of the target population. This can lead to the underrepresentation or overrepresentation of certain groups. Second, historical biases can seep into training data, which can perpetuate existing societal prejudices. For instance, AI systems trained on biased historical data may continue to reinforce gender or racial stereotypes. 

Lastly, human biases can inadvertently be introduced during the data labeling process, as labelers may harbor unconscious prejudices. The choice of features or variables used in AI models can result in biased outcomes, as some features may be more correlated with certain groups, causing unfair treatment. To mitigate these issues, researchers and practitioners need to be aware of potential sources of skewed objectivity and actively work to eliminate them.

Can blockchain make unbiased AI possible?

While blockchain technology can help with certain aspects of keeping AI systems neutral, it is by no means a panacea for eliminating biases altogether. AI systems, such as machine learning models, can develop certain discriminatory tendencies based on the data they are trained on. Additionally, if the training data contains various pre-dispositions, the system will likely learn and reproduce them in its outputs.

That said, blockchain technology can contribute to addressing AI biases in its own unique ways. For example, it can help to ensure data provenance and transparency. Decentralized systems can track the origin of the data used to train AI systems, ensuring transparency in the information collection and aggregation process. This can help stakeholders identify potential sources of bias and address them.

Recent: Why join a blockchain gaming guild? Fun, profit and create better games

Similarly, blockchains can facilitate secure and efficient data sharing among multiple parties, enabling the development of more diverse and representative data sets.

Also, by decentralizing the training process, blockchain can enable multiple parties to contribute their own information and expertise, which can help mitigate the influence of any single biased perspective.

Maintaining objective neutrality requires careful attention to the various stages of AI development, including data collection, model training and evaluation. Additionally, ongoing monitoring and updating of AI systems are crucial to addressing potential prejudices that may arise over time.

To gain a deeper understanding of whether blockchain tech can make AI systems completely neutral, Cointelegraph reached out to Ben Goertzel, founder and CEO of SingularityNET — a project combining artificial intelligence and blockchain.

In his view, the concept of “complete objectivity” is not really helpful in the context of finite intelligence systems analyzing finite data sets.

“What blockchain and Web3 systems can offer is not complete objectivity or lack of bias but rather transparency so that users can clearly see what bias an AI system has. It also offers open configurability so that a user community can tweak an AI model to have the sort of bias it prefers and transparently see what sort of bias it is reflecting,” he said.

He further stated that in the field of AI research, “bias” is not a dirty word. Instead, it is simply indicative of the orientation of an AI system looking for certain patterns in data. That said, Goertzel conceded that opaque skews imposed by centralized organizations on users who are not aware of them — yet are guided and influenced by them — are something that people need to be wary of. He said:

“Most popular AI algorithms, such as ChatGPT, are poor in terms of transparency and disclosure of their own biases. So, part of what’s needed to properly handle the AI-bias issue is decentralized participatory networks and open models not just open-source but open-weight matrices that are trained, adapted models with open content.”

Similarly, Dan Peterson, chief operating officer for Tenet — an AI-focused blockchain network — told Cointelegraph that it’s tough to quantify neutrality and that some AI metrics cannot be unbiased because there is no quantifiable line for when a data set loses neutrality. In his view, it eventually boils down to the perspective of where the engineer draws the line, and that line can vary from person to person.

“The concept of anything being truly ‘unbiased’ has historically been a difficult challenge to overcome. Although absolute truth in any data set being fed into generative AI systems may be hard to pin down, what we can do is leverage the tools made more readily available to us through the use of blockchain and Web3 technology,” he said.

Peterson stated that techniques built around distributed systems, verifiability and even social proofing can help us devise AI systems that come “as close to” absolute truth. “However, it is not yet a turn-key solution; these developing technologies help us move the needle forward at neck break speed as we continue to build out the systems of tomorrow,” he said.

Looking toward an AI-driven future

Scalability remains a significant concern for blockchain technology. As the number of users and transactions increases, it may limit the ability of blockchain solutions to handle the massive amounts of data generated and processed by AI systems. Moreover, even the adoption and integration of blockchain-based solutions into existing AIs pose significant challenges.

Recent: Crypto in Europe: Economist breaks down MiCA and future of stablecoins

First, there is a lack of understanding and expertise in both AI and blockchain technologies, which may hinder the development and deployment of solutions that combine both paradigms effectively. Second, convincing stakeholders of the benefits of blockchain platforms, particularly when it comes to ensuring unbiased AI data transmission, may be challenging, at least in the beginning.

Despite these challenges, blockchain tech holds immense potential when it comes to leveling out the rapidly evolving AI landscape. By leveraging key features of blockchain — such as decentralization, transparency and immutability — it is possible to reduce biases in data collection, management and labeling, ultimately leading to more equitable AI systems. Therefore, it will be interesting to see how the future continues to pan out from here on end.

Nigerian crypto payment startup shuts down, offers IP for sale

Nigerian crypto and Web3 company Lazerpay shuts down after failing to raise funds and advises users to withdraw before April 30.

Nigerian crypto and Web3 company Lazerpay announced on April 13 that it is shutting down its operations.

According to a statement released on Twitter by Lazerpay founder and CEO Emmanuel Njoku, the decision to shut down the startup was necessary after the company could not raise funds in a funding round.

In the statement, Njoku said, “We are immensely grateful for the connection we have made and the impact our platform has made in the crypto ecosystem. We fought hard to keep the lights on for as long as possible, but unfortunately, we are now at the point where we need to shut down.”

The shutdown comes just months after announcing layoffs in November 2022. The company’s layoffs were due to its inability to raise funds after a lead investor pulled out.

The startup has announced its renewed focus on ensuring a seamless transition for its users by resolving any outstanding issues. To this end, it has been recommended that merchants use the bank or crypto payout options and withdraw their funds from the platform before April 30, 2023. Additionally, the startup is now inviting companies to make offers to purchase its intellectual property.

Njoku launched Lazerpay as a teenager and co-founded the company with Abdulfatai Suleiman and Prosper Ubi in October 2021 to drive crypto adoption globally. The company helps businesses accept stablecoin payments from customers globally.

According to Njoku, Lazerpay has onboarded over 3,000 businesses, processing over $1 million in transactions.

Related: Nigerian crypto foreign investment is at a record low: Study

The African crypto space has recently been hit with a wave of upheaval. Just last week, Bitcoin (BTC) peer-to-peer marketplace, Paxful, announced that it would cease operations.

However, certain crypto payment startups in the continent are still thriving. For example, NairaEx is an active Bitcoin exchange in Nigeria serving as a medium for Nigerian traders to purchase or sell the country’s fiat currency, nairas, for cryptocurrency.

Magazine: Bitcoin in Senegal: Why is this African country using BTC?

EOS Network lands $60M investment and partnership from DWF Labs

DWF Labs invests over $60 million in a partnership with the EOS Network Foundation, providing a $45 million EOS token purchase agreement and a $15 million pledge for EOS-based projects to expedite growth and adoption.

In its most substantial investment to date, DWF Labs, a digital asset market maker and investment firm, has announced an alliance with the EOS Network Foundation (ENF), entailing an investment deal worth over $60 million. EOS is a layer-1 network for developers looking to build blockchain-based games (GameFi) and deploy decentralized applications (DApps).

DWF is bolstering the EOS Network by means of a $45 million EOS token purchase agreement and a $15 million pledge to invest in businesses and projects based on EOS. This pledge is aimed at expediting the expansion and acceptance of the EOS Network.

The ENF plays a pivotal role in the EOS network’s development by coordinating support, creating feedback loops for innovation, promoting community involvement, allocating funding and facilitating the growth of the EOS ecosystem.

The timing of this collaboration is advantageous, as the EOS network is set to unveil its enterprise-grade EOS Ethereum Virtual Machine (EVM) on April 14, featuring speed that surpasses Polygon, BSC and Avalanche, with over four times more swaps per second.

The synergy between DWF Labs and the EOS project is set to unlock potential in the blockchain ecosystem and the world of web3. The partnership will bring together their respective expertise and resources, ensuring a future for the EOS Network.

Related: Synthetix nets $20M from Web3 quant trading firm

DWF Labs has emerged as an investor during the crypto bear market. Recent investments have included a $20 million fundraise for derivatives trading platform Synthetix and a $40 million raise for AI-focused crypto protocol Fetch.ai.

Magazine: $54B fund partner runs women-only DAO, LatAm blockchain gaming guild

Bitfinex Securities El Salvador receives Digital Asset Service provider license in El Salvador

The license granted by El Salvador’s National Digital Asset Commission will allow Bitfinex Securities to issue and trade secondary assets on a regulatory-compliant platform.

Digital asset exchange Bitfinex Securities El Salvador has received a digital asset service provider license under El Salvador’s new Digital Assets Issuance Law, which was passed by El Salvador’s National Congress in January, with the goal of fostering increased financial innovation and growth in the Central American country. 

According to the announcement, the license, which was granted on April 11 by El Salvador’s National Digital Asset Commission, makes Bitfinex Securities El Salvador “the world’s first international digital asset platform to receive approval to be licenced as a Digital Asset Service Provider” in El Salvador 

Paolo Ardoino, chief technology officer of Bitfinex, noted that the license will allow “Bitfinex Securities to facilitate the issuance and secondary trading of assets with clearly defined rights and obligations as outlined in the new digital asset regulatory regime.”

The announcement said that Bitfinex Securities El Salvador, a newly-formed entity, would offer a regulatory-compliant platform for companies worldwide to issue digital assets like equities, bonds, and other financial instruments. This will present a unique opportunity for businesses and individuals to leverage the advantages of issuing, investing, and trading digital assets in the favorable regulatory environment of El Salvador. 

Bitfinex Securities El Salvador will function independently from Bitfinex group’s current platform, Bitfinex Securities AIFC, managed by Bitfinex Securities Limited. 

Related: Why did 12K Bitcoin margin longs close at Bitfinex, and why didn’t it impact BTC price?

Bitfinex continues to expand its global reach. In 2022, Bitfinex’s security token platform went live in Kazakhstan. The security token platform (STO) by Bitfinex, announced in September 2021, is now regulated under the Astana International Financial Center (AIFC) in Kazakhstan.

El Salvador, the first country to establish Bitcoin (BTC) as a legal tender, continues to forge its way in becoming a tech friendly hub. On April 1, Cointelegraph reported that the country had decided to eliminate all taxes on technology innovations. Salvadoran President Nayib Bukele believes that winding down tax requirements will expedite technological development. 

Ethereum projects launch MEV Blocker to protect users from high prices: Finance Redefined

The top 100 DeFi tokens had a mixed week in terms of price action, with the total value locked in DeFi protocols maintaining above $50 billion.

Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights — a newsletter crafted to bring you significant developments over the last week.

A total of 27 Ethereum projects joined hands to minimize the cost incurred by users in the form of maximal extractable value (MEV). The launch partners include Balancer, Gnosis DAO, Shapeshift and StakeDAO, to name a few.

Rugpulls in the DeFi ecosystem are nothing new, but in the first quarter of 2023, 73.3% of all rug pulls happened on Binance’s BNB Chain.

The DeFi ecosystem has become increasingly popular among North Korean hackers for money laundering, according to a new report from the United States Department of the Treasury.

Arbitrum Foundation has introduced a couple of new governance proposals following the fracas that occurred over its first attempt. The two new proposals were then put on community vote.

The top 100 DeFi tokens by market value have another mixed week in terms of price action with little change to the total value locked in DeFi protocols.

Ethereum projects unite to protect users from MEV-induced high prices

Over 27 prominent Ethereum projects joined hands to launch MEV Blocker, a solution that aims to tackle and minimize the amount of value extracted from their users, known as the maximal extractable value, Ethereum’s invisible tax.

MEV is a transaction tax imposed on DeFi users. MEV bots can hijack transactions midway, such as Ether (ETH) trades, nonfungible token (NFT) purchases and Ethereum Name Service registrations, inflating prices for users.

Continue reading

73.3% of Q1 rug pulls happened on BNB Chain: Immunefi

BNB Chain was the king of rug pulls in the first quarter of 2023, with over 73.3% of such scams in the entire crypto ecosystem happening on the network, according to an April 4 report from blockchain security firm Immunefi.

The report, titled “Crypto Losses in Q1 2023,” investigated a variety of crypto hacks and scams in the first quarter of the year. It found that Ethereum and BNB Chain were the two largest targets for hackers and scammers, with 68.8% of total losses from these networks combined. BNB Chain, in particular, made up 41.3% of total losses from hacks and scams.

Continue reading

North Korea and criminals are using DeFi services for money laundering — US Treasury

A new report from the U.S. Department of the Treasury analyzing decentralized finance concluded that actors from the Democratic People’s Republic of Korea and other scammers could exploit vulnerabilities to facilitate money laundering.

In its “Illicit Finance Risk Assessment of Decentralized Finance” report released on April 6, the U.S. Treasury said many groups engaged in illicit activity from North Korea benefited from some DeFi platforms’ non-compliance with certain Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) regulations. According to the report, insufficient AML/CFT controls and other shortcomings in DeFi services “enable the theft of funds.”

Continue reading

Arbitrum poses new governance proposals after community furor

The Arbitrum Foundation has released a draft of new improvement proposals following the fracas that ensued after its first failed attempt at governance.

The new proposals include AIP-1.1, which covers a smart contract lockup schedule, spending, budget and transparency. The other, AIP-1.2, tackles amendments to current founding documents and lowers the proposal threshold from 5 million Arbitrum (ARB) tokens to 1 million ARB “to make governance more accessible.”

Continue reading

DeFi market overview

Analytical data reveals that DeFi’s total market value rose above $50 billion this past week. Data from Cointelegraph Markets Pro and TradingView shows that DeFi’s top 100 tokens by market capitalization had a bullish week, with most of the tokens trading in green, barring a few.

Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education in this dynamically advancing space.

David Bowie unreleased record debuts as music NFT

Gala Music, a Web3 startup subsidiary, is launching 3,003 NFTs on April 14, with an unreleased version of David Bowie’s “Let’s Dance” included.

A previously unreleased version of David Bowie’s “Let’s Dance” has surfaced as part of a limited edition collection of nonfungible tokens (NFTs).

Gala Music, a subsidiary of the Web3 startup Gala Games, has joined forces with music producer Larry Dvoskin and publisher Warner Chappell Music to unveil an unreleased version of David Bowie’s 1983 track “Let’s Dance” as part of a limited edition collection of NFTs. The announcement was made on Thursday, March 6.

David Bowie created an impressive discography that included 27 studio albums, 11 live albums, four soundtracks and 128 singles during his lifetime. However, despite his passing in 2016, the singer-songwriter still has at least one unheard track.

Gala Music plans to launch 3,003 NFTs that showcase Bowie-inspired artwork on April 14, four decades after the original release of “Let’s Dance.“ Each NFT will grant its owner exclusive access to an unreleased version of the song, which Dvoskin co-produced with Bowie in 2002.

The NFTs will be available for purchase on a “pay-what-you-wish” basis, and the initial profits from the sales will go toward supporting MusiCares, a charity offering health and human services to individuals in the music industry.

Related: Huobi partners with Gala Games for L1 and Web3 development

The upcoming release next week will not be the first time the Bowie estate has ventured into blockchain technology. In September 2022, the Bowie estate collaborated with OpenSea NFT marketplace to introduce a collection of NFTs called “Bowie on the Blockchain” to raise charity funds. However, this collection faced significant criticism from Bowie’s supporters, who viewed the foray into blockchain as contradictory to the artist’s principles and beliefs.

Gala Games is primarily recognized for its Web3 gaming initiatives, allowing developers to create play-to-earn crypto and NFT games, but it has also expanded its interests to include music and film.

Magazine: 2023 is a make-or-break year for blockchain gaming: Play-to-own

Aragon and Polygon Labs collaborate to boost DAO accessibility

The collaboration is set to allow users to build decentralized autonomous organizations quickly and securely, for less than 50 cents, with no coding required.

Aragon, an open-source framework designed to launch decentralized autonomous organizations (DAOs), has revealed that its infrastructure is now available on the Polygon network. 

The collaboration between Aragon and Polygon Labs will offer users a cost-effective and accessible solution for creating and managing DAOs. The partnership will enable users to build DAOs quickly and securely, for as little as 50 cents, with no coding required.

A DAO is an organization that is run through rules encoded as computer programs on a blockchain. Unlike traditional organizations, DAOs operate without a central authority or hierarchy and rely on a distributed network of stakeholders to make decisions and govern the organization.

Through the partnership, users will be able to leverage Aragon’s “lean codebase” and Polygon’s layer-2 blockchain to rapidly launch DAOs without requiring technical expertise. By employing fully on-chain technology, this new method aims to lower the barriers and costs linked with establishing and administering DAOs, thereby enabling people worldwide to participate in the process at an affordable rate.

Sandeep Nailwal, the co-founder of Polygon Labs, said the partnership would make on-chain governance “accessible to everyone in the world,” thereby contributing positively to the “mass adoption of blockchain technology.” 

Established in 2016, Aragon and Polygon have a history of collaboration. In September 2021, Aragon’s initial products were introduced on Polygon’s platform, leading to the creation of more than 6,000 DAOs.

Related: Reddit deploys Gen 3 NFT avatar contracts on Polygon

On March 27, Polygon released its open-source zkEVM Ethereum scaling technology to the mainnet, a zero-knowledge rollup (zk-Rollup) scaling solution equivalent to the Ethereum Virtual Machine. The technology allows thousands of transactions to be batched off-chain, reducing transaction costs and increasing the throughput of smart contract deployments. The technology is set to facilitate the reduction of gas fees for decentralized application users and enable developers to copy existing smart contracts to Polygon’s zkEVM easily.

Arbitrum poses new governance proposals after community furor

The Arbitrum Foundation has made a couple of new governance proposals following the fracas that occurred over its first attempt.

The Arbitrum Foundation has released a raft of new improvement proposals following the fracas that ensued after its first failed attempt at governance.

On April 5, Ethereum layer-2 solutions provider Arbitrum posted new Arbitrum Improvement Proposals (AIPs) for the governance of the network.

The new proposals include AIP-1.1, which covers a smart contract lockup schedule, spending, budget and transparency. The other, AIP-1.2, tackles amendments to current founding documents and lowers the proposal threshold from 5 million Arbitrum (ARB) tokens to 1 million ARB “to make governance more accessible.”

In an April 5 tweet, it confirmed the Arbitrum DAO came to a consensus against its first proposal, AIP-1.

On April 2, the Arbitrum Foundation stated AIP-1 “likely will not pass” due to community backlash. Tokenholders objected to the proposal, arguing that it encompassed too many topics, and decried granting around $1 billion worth of ARB tokens to the foundation.

The foundation then backtracked, stating in an April 5 tweet that it would not take control of the tokens:

“The Foundation will not move any of the remaining 700M tokens in the Administrative Budget Wallet until an acceptable budget and smart contract lockup schedule have been approved by the DAO.”

The foundation also issued a transparency report that “describes actions taken to get the DAO up and running.”

“We have heard the feedback,” it stated, before adding that it has “worked diligently to address it and make sure the Foundation can represent, and serve the DAO’s best interests with their support.”

The two new AIPs were posted on the Arbitrum community forum and will be available for feedback for at least 72 hours before a planned week-long snapshot vote.

Related: Arbitrum to break up governance votes after community backlash

ARB prices have dropped 4% over the past 24 hours, falling to $1.22. The layer-2 token was dumped heavily following its airdrop on March 23 and is down 86% from its peak price of over $8.50 on that day.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Pantera Capital leads $22.5M investment in M^ZERO Labs for decentralized infrastructure

The funds will be used to develop decentralized infrastructure that enables institutional investors to allocate assets on-chain.

Berlin-based M^ZERO Labs, a company that seeks to build neutral infrastructure linking assets in the global financial system with decentralized applications, has raised $22.5 million in a financing round led by Pantera Capital. The funding round also includes participation from other investors such as Road Capital, AirTree, Standard Crypto, The SALT Fund, ParaFi Capital, Distributed Capital, Kraynos Capital, Mouro Capital and Earlybird. 

The company said the funds would be used to build a decentralized infrastructure that allows institutional participants to allocate assets on-chain and transfer value in a “completely transparent, open-source, and composable manner, while minimizing their exposure to counterparty risk.” The capital will also be deployed to aid ongoing product development. 

M^ZERO shared that its objective is to equip accredited financial institutions that comply with their local regulations with advanced middleware for on-chain and open-source value transfer. The platform intends to connect global financial system assets with decentralized applications, offering participants enhanced capabilities.

“This fundraise will enable the team to develop an infrastructure that, we believe, will revolutionize how institutions allocate assets and exchange value,” said Luca Prosperi, CEO of M^ZERO Labs. “Shared on-chain governance and settlement will seamlessly interact with best-practice asset onboarding in a regulatory-friendly setup.”

“It will be an open-source, credibly neutral protocol where providers of liquidity and collateral can freely meet in a decentralized market on blockchain rails,” Pantera Capital’s Paul Veradittakit said.

Related: Bitcoin is already in its ‘next bull market cycle’ — Pantera Capital

Pantera is one of the crypto industry’s earliest investment funds. It began operating in 2013 when the value of Bitcoin (BTC) was trading below $100. In 2022, Pantera CEO and founder Dan Morehead announced plans to raise $1.25 billion for a second blockchain fund.


Masa announces soulbound ID tokens for Coinbase’s Base Network

The token protocol can be used for a wide variety of applications, including membership badges, loyalty programs, decentralized captcha bots, and credit underwriting.

Masa Finance’s soulbound tokens will soon be available on Coinbase’s Base network, according to an April 4 announcement from Masa Finance. The new tokens will allow users to link identifying and reputational characteristics to their wallet addresses, making credit underwriting possible on the blockchain, the company said.

Masa had previously released its Soulbound Token protocol for Ethereum and Celer.

In its announcement, Masa stated that the protocol can be used for a wide variety of applications, including human-readable domain names, membership badges, loyalty programs, achievement badges, decentralized captcha bots and more.

It will release a Base SBT Developer Toolkit within the coming weeks that “will support the seamless deployment and interaction with SBTs on Base,” which will include a quickstart guide, Masa command line interface, software development kit, REACT developer tools and examples of how to build applications using Masa soulbound tokens.

Related: Coinbase wants devs to build inflation-pegged ‘flatcoins’ for ‘Base’ network

Coinbase is the largest centralized crypto exchange in North America. It launched its Base Network testnet on Feb. 23, planning to implement it as an optimistic rollup layer 2 for Ethereum. On March 23, Coinbase issued a Request for Builders asking developers to create several protocol types for Base, including an on-chain reputation system.

In response to this request, Masa began developing a Base version of its soulbound protocol, the company said in its announcement.

The announcement of Base Network’s creation has contributed to bullish sentiment within the Ethereum community, with some users expressing hope that it will lead to greater onboarding of Coinbase users to Ethereum. In an interview with Bloomberg Radio, Coinbase CEO Brian Armstrong claimed that “centralized players” on Base will need to implement some form of identity verification for users.