How can new solutions be pioneered to increase the security of the crypto ecosystem?

REDeFiNE TOMORROW2023 has returned once again, a meetup that brings the leaders of the industry in DeFi, Web3, blockchain, and cryptocurrency to hold a special discussion. The first session would be  focused on "Beyond Blockchain Analytics: Pioneering Next-Gen Solutions for a Safer Crypto Ecosystem" and was given by Matthew Walsh, Founding Partner at Castle Island Ventures, and Michael Gronager, CEO and Co-Founder of Chainalysis, a blockchain analytics startup that uses machine learning and statistical analysis to analyze in-depth data for checking the cryptocurrency transactions in the world of blockchain. These helpful concepts and important subjects are covered in this article.

The cryptocurrency industry's movement this year

According to Gronager's perspective on the cryptocurrency market industry from the previous year to the present, he believed that the market operates similarly to tech stocks in that major technology companies experience constant growth. Even in extremely difficult economic conditions, cryptocurrency businesses are effective and attract more attention. The growth of assets in terms of trading is reportedly moderate. Although there is a negative effect from interest rates, failed projects, and scams, the ecosystem is still in good shape. However, this is the perfect time for positive change, as it is the ideal time for individuals to start new initiatives.

Despite the numerous scam cases, Gronager believes that cryptocurrency still offers an ecosystem that is transparent unlike anything else because he is familiar with the tools that can be used to analyze and track scams and market activity. These analytical tools assist foresighted investors in understanding the parties' risk and causing less damage, which is not what many did at the time.

If we take a close look at how transparent cryptocurrencies are, many people may claim that they are a risky and fraudulent space. This is actually only one aspect of it. He reasoned that the crypto space's transparency and clarity make it easier to see fraud cases and other negative aspects than other spaces.

He uses the hacking of the blockchain bridge, which is a relatively new infrastructure, as an example. As a result, there are numerous mistakes and acts of violence in security.

How can privacy and security in the cryptocurrency world be improved?

Gronager began by talking about how exceptional cryptocurrency is for privacy. In the crypto sphere, he made clear the important distinction between privacy and the incognito state, and he expressed the view that being completely anonymous might result in legal issues. A balance of user privacy that is governed by a regulatory framework needs to be established.

For example, by making purchases on cryptocurrency exchange platforms that offer identity-hidden procedures, users are unable to determine whose money is being used or what stage it is in, but they can still call for verification if a problem has been found or if something seems suspicious in accordance with the rules. As a result, we can draw the conclusion that security and regulation should be balanced in order to check the history fairly, while private, transparent, and verifiable characteristics are also maintained as a cryptocurrency strong point.

Walsh also provided an example of the market expansion that is occurring in the US, particularly if banks and stockbrokers are permitted to engage in activities related to the crypto space, such as trading process supervision and legal action. He pointed out the legal barrier to growth that exists today, which can be improved and used to decide on the best work structure for users.

Solution for achieving a balance between regulations and privacy to support the cryptocurrency industry

Gronager offered two main solutions: firstly, the jurisdiction's scope should be attractive enough to draw in fascinating businesses, since these businesses can operate anywhere in the world as they want, and secondly, after appealing businesses to the crypto space, a framework for appropriate consumer protection should be established. Markets In Crypto-Assets Regulation (MICA), the first and only law in the world which was announced on April 20, 2023, and served as a model for other jurisdictions, was also recommended by Gronager as a potential paradigm for defining the digital asset law that is clear to businesses operating in Europe.

The intriguing investment and the next step for cryptocurrencies in Gronager's opinion

According to Gronager, most of Chainalysis's revenue comes from the public sector globally. He believed that since the law is clear, US financial institutions are more interested in cryptocurrencies. He noticed that US banks deal with cryptocurrencies much more quickly than European banks do. In the future, it will be inevitable for banks and stock brokers to participate in transactions involving digital currencies, including those involving assets that use blockchain technology.

Due to his long-standing fascination with Bitcoin from the beginning and the blockchain's key innovation, Gronager has gained a lot of popularity in the cryptocurrency industry. He compared blockchain to the internet, which can affect change or has an evolutionary path for innovation similar to that of blockchain in terms of data, just like leaders and those who understand this innovation.

He added that blockchain-based consumer goods, real estate, and properties might appear in the future. Once the regulation is clear and transparent, these things are possible.

Development during the bear market in Gronager’s opinion

The two primary methods for creation and development, according to Chainalysis by Gronager, are based on understanding customer behavior using a wealth of blockchain data and utilizing the blockchain's transparency for efficient risk management. This is done to lessen some of the impacts and minimize any potential total damage.

Walsh brought up a significant issue about how financial institutions need to take risk into account more, especially when handling Bitcoin transactions. Gronager agreed with this and advised any institutions entering this industry to concentrate on the importance of developing an understanding of these risks.

What do we learn about blockchain and AI integration?

The combination of AI and blockchain does not, in Gronager's opinion, make sense, but he believed there might be people who understand and use it effectively. He also recognized the value of AI and machine learning for managing large amounts of transaction data and increasing cryptographic security.

Large language models and traditional educational methods have undergone significant changes as a result of AI. The large language models can result in user interfaces with a variety of new features. Using AI to find the smart contract's security flaws, improve usability, and increase software’s security are just a few of the many opportunities it can open up for the cryptocurrency industry.

 Gronager expressed his enthusiasm for the industry's most intriguing recent technological advancement, the development of a lightning network, and how so far it has impressed him. This also includes the interaction between cryptocurrency and the Internet of Things (IoT), which provides positive and promising signs for the growth of the cryptocurrency industry.

Watch “Beyond Blockchain Analytics: Pioneering Next-Gen Solutions for a Safer Crypto Ecosystem” session on Youtube: https://youtu.be/Gr4zSQOMic4