In the last couple of years, ETH users and owners of other cryptocurrencies have lost more than $2 billion due to hacks and security breaches. At the same time, the public attitude toward crypto has changed, and there are more users.
Code audits are already used to improve security, but recently, Ethereum co-founder Vitalik Buterin proposed that it could be an additional field that can be improved by introducing AI. In this article, we’ll discuss the potential and implementation of AI audits.
The state of the crypto industry
The biggest event in the crypto industry since its creation was the introduction of ETFs. They allow the average investor to invest in crypto using the stock market rather than simply buying cryptocurrencies on their own. This has led to a big shake-up, as Bitcoin was at the forefront of this innovation. It has led some to ask is Ethereum dead in the market, especially when Bitcoin is taking charge.
Well, the answer is simple. The experience goes to show that there’s still a lot of room for growth for ETH, as it’s not a bubble but a unique tech on its own. With the major update that really cut gas fees, this token did get that needed boost. It led to Ethereum being widely used for smart contracts, and more and more industries are realizing the importance of this feature. This is why AI-facilitated code audits will become increasingly important as a security measure.
The state of AI
AI has been one of the most discussed tech industries among investors for a while now, and as the tech improves, more investors will line up. This is noticeable in the market-beating results of chipmaker Nvidia (NVDA). Cryptocurrency tokens that utilize AI and are based on it are also on the rise.
The introduction of AI to coding and software development is a hot topic in the industry as it will replace those who do them manually. “AI can be trained to recognize and adapt to new information and context, making it more effective at identifying vulnerabilities that may not be covered by static analysis rules,” said one TokenFi developer.
The extent of the losses
Cryptocurrency users lost nearly $2 billion to scams in 2023. In 2022, the losses were much higher, at about $4.2 billion. The reduction comes because of the increased security efforts. Ethereum, the biggest blockchain by active users, is responsible for $1.35 billion of these losses due to 170 different security incidents.
Losses on centralized platforms, such as exchanges and trading platforms, totaled some $256 million across seven cases. The largest of these comes from just one attack, during which cryptos worth $122 have been hacked. The attack on the Poloniex exchange was a wake-up call for many in the industry.
Common challenges in code auditing
A few common challenges for code auditing come from the process itself, and many believe that AI can solve them.
Manual auditing process
When human developers audit code, they do it manually by going over the code line by line and making sure that it works and is safe for the end user. The biggest downside to this process is that it’s labor-intensive and costly and that it takes a long time to train the experts who can do it.
It can sometimes take weeks or even months to complete a single, smart contract code audit, and the industry needs to be faster than that as it is onboarding so many new users.
Time constraint
Time constraints are one of the biggest issues for manual code audits. The process simply needs to be done slowly and with great care. That way, the coders can inspect the code one line at a time and provide results. Such an approach to work also constrains project development and implementation of new features.
It’s an especially significant issue now smart contracts are widely used, and cryptos such as ETH are becoming a part of everyday fast-paced workplaces.
Human error
Human error is very common when it comes to code audits that are done manually. It’s, in a way, a part of the process since the auditors need to go through the code several times and fix errors as they appear.
Besides the obvious problem with such an approach – the error itself, human error also makes the process more expensive. To create an environment of accountability, the coders check and balance each other during the audit process. This means that it requires more employees and, therefore, more expenses.
Difficult to scale
Blockchain-based cryptocurrencies and the businesses that use them are having an expansion. More businesses and more coins are created daily, and more users are also starting to invest. This requires the security process to scale up as well. Manual audits are very difficult to scale in this way without losing some of their quality.
Bottlenecks often appear in the project since a specific part of the code is being audited, and therefore, the whole development is shut down.
The benefits of AI-based audits
AI-based audits, such as the ones announced by ETH executives, can solve many of the problems inherent to manual audits. In the long run, this also prevents security breaches and fraud losses.
Faster time to market
The biggest benefit of using AI-based code audits is the speed at which they will be done. The high-tech industry is a fast-paced environment and one of the most competitive industries out there. Therefore, businesses need to create reliable products as fast as possible to compete.
Resource optimization
Resources needed to run high-tech businesses are scarce, which is most noticeable regarding human resources. Coders that work on code audits could be put to other and more profitable uses, such as developing the services a business has to offer and creating revenue.
When the coders are relieved of the audit duties, they will be able to focus their efforts on these more lucrative tasks. This is especially noticeable now when ETH-related businesses are on the rise and cryptos, in general, are becoming widely used. Even though there’s some skepticism over AI taking over IT jobs, most experts agree that it will allow for better resource allocation.
Improved security
The primary purpose of code audits is to ensure that the services that depend on them are safe for the end users. There are predators out there that prey on less tech-savvy and inexperienced users, and tech businesses need to provide security measures to assist them.
AI-based audits will be able to perform these tasks better than the alternatives when it comes to the actual results in spotting security issues. In the long run, increased security will help broaden the user base and make them willing to use crypto-based tech.
To sum up
In conclusion, AI-based code audits offer a promising solution to the persistent security challenges in the cryptocurrency industry. As manual audits are labor-intensive, error-prone, and slow, integrating AI can significantly enhance the auditing process’s speed, accuracy, and scalability.
This advancement optimizes resource allocation and bolsters security, thereby reducing the substantial financial losses that have plagued crypto users. With the growing adoption of cryptocurrencies and smart contracts, the implementation of AI in code audits is crucial for fostering trust and expanding the user base in the crypto ecosystem.
DISCLAIMER: Cryptocurrency is unregulated in the UK. The UK regulator, the Financial Conduct Authority, has repeatedly warned investors that they risk losing all their money if they buy cryptocurrency, with no possibility of compensation.
