Enhancing public sector digital asset security and efficiency with generative AI

Two emerging technologies—digital assets and generative artificial intelligence (AI)—when used together stand to transform public sector entities, driving new levels of efficiency and security, as well as financial innovation and inclusion.

Digital asset innovations, such as blockchain and cryptographic signatures, will bolster public sector information authenticity and create tamper-resistant records. Generative AI, and the compute power behind it, offers the promise of supporting digital assets with large-scale problem-solving capabilities spanning onboarding, security, identifying emerging financial system risks and more.

The continued evolution of digital assets brings a number of powerful innovations. Popular cryptocurrencies (crypto) like Bitcoin and Ethereum, offer an accessible and transparent alternative to traditional banking. Stablecoins and Central Bank Digital Currencies (CBDCs), both of which offer cheaper, faster, and more transparent alternatives to traditional payments, will likely define the future of financial transactions around the world. Meanwhile, Non-Fungible Tokens (NFTs) use blockchain technology to make sure that artists and other creators can maintain copyright and reproduction rights over their digital creations while also certifying authenticity and ownership to a buyer. Combined, these innovations are paving the way for a revolutionized financial system that emphasizes equity, access, transparency, and efficiency.

It is increasingly clear that the intersection of cloud computing, AI technology, and digital assets will define global economic competition in the twenty-first century. Further, entities focused on secure, compliant public technologies, such as Coinbase and Amazon Web Services (AWS), will be at the forefront of shaping this future. The transition to automation and more efficient processes to manage these technologies starts with infrastructure investment and build at the municipal, state, and federal levels.

A modern paradigm

Digital assets are already changing the way people exchange value. This is made possible by blockchain technology—immutable recordkeeping that provides users anywhere access to a permanent transaction history. Blockchains, however, can do much more—they can fundamentally change the way people own and share their personal information.

Since its birth in 2008, crypto has grown in popularity and become an important part of the global financial system, according to the Atlantic Council’s Cryptocurrency Regulation Tracker. Crypto has the opportunity to revolutionize our existing financial structures by creating a more inclusive and equitable system, transforming the future of money and payments. With only 10% of Americans expressing high confidence with existing banks and financial institutions, crypto presents a unique opportunity to innovate the financial landscape. By making it more accessible, affordable, and efficient, crypto can enhance economic freedom and expand opportunities for millions worldwide. However, these potentially transformational changes are not without risk, and governments around the world are working toward regulations that protect consumers while encouraging innovation.

Coinbase is the leading, and only publicly traded, cryptocurrency exchange. Born on the cloud, Coinbase and AWS have long worked together to provide a secure, trusted environment that makes it simple for institutions and people to engage with digital crypto assets.

Both Coinbase and AWS see significant potential for generative AI to enhance the security and efficiency of blockchains in several ways. Exchanges, payments, and other financial services that sit on top of blockchains already rely on compute power provided by AWS—from onboarding customers and verifying IDs to monitoring transactions and identifying bad actors.

Coinbase extends these capabilities further by using generative AI to optimize processes supporting the digital assets that it lists, as well as for security during onboarding and beyond. Working in concert with blockchain technology, generative AI can detect manipulative trading patterns like spoofing or layering, and can learn over time to identify specific patterns that may indicate a scam or account takeover. The public sector can leverage this technology to effectively and efficiently provide additional traceability and transparency of information collection. The ability of generative AI systems to spot trends, analyze data, and highlight risk will help unleash the promise of digital assets while helping to protect customers, citizens, and their assets from fraud.

The convergence of generative AI and digital assets could bring a paradigm shift in the global financial infrastructure, and AWS supports these efforts with a suite of blockchain solutions for customers. The robust infrastructure and advanced security features that AWS provides are an essential component of Coinbase’s secure operations and integral to their public operations.

Future efficiency and security gains

Mutually reinforcing advancements in generative AI and digital assets have the potential to democratize financial access, enhance efficiency, and significantly improve security.

Public and private sector entities can leverage these two technologies in several ways to spot issues, monitor networks, and increase system up time.

Decentralized applications, for example, are front-end user interfaces built onto smart contracts, enabling transactions to be run without sharing personal information between the parties. Generative AI tools can be trained on both off-chain and on-chain data to optimize and secure the smart contract landscape. Today, generative AI assists smart contract parties through chatbots and virtual assistants in the writing of smart contract code and monitoring unusual network activity that may represent a security risk.

The more data generative AI tools have access to, the more effectively they can spot errors or security risks, enhancing their ability to proactively identify and mitigate risks in real time. At the same time, the blockchain networks on which these digital assets exist provide transparency, a single source of truth, and provenance that help to validate the authenticity of the information being actioned on by generative AI or used to update models.

With increased automation and digitization, cybersecurity takes on even greater importance. Generative AI can monitor transactional data in real time, identifying and flagging unusual activities. Advanced machine learning (ML) algorithms can predict future threat vectors based on existing patterns, providing an additional layer of cybersecurity for the public.

As foundation models are trained on the trusted digital asset transactions and smart contract code on blockchains, generative AI can help developers write more secure code. Technologies like Amazon Q Developer are speeding up coding tasks by providing inline code suggestions to improve developer productivity. In addition, Amazon Q Developer can detect hard-to-find security vulnerabilities and flag emerging security vulnerabilities during development. Generative AI also can generate documentation for smart contracts to make them easier to understand.

Leveraging Amazon Bedrock helps ensure Coinbase systems are built with resilient best practices in mind to guard against threats. Coinbase aims to enhance the overall trust of the digital asset landscape. Coinbase was founded with the goal of being the world’s most trusted crypto platform, and strives to set the standard for user experience and regulatory compliance in the digital asset industry. AWS believes in the vast potential of generative AI to build differentiated experiences, boost productivity and transform business for our customers and the public at large. Together, our shared view of the promise of generative AI and digital assets can pave the way for broader adoption of both technologies, and unlock their full potential to drive financial inclusion and innovation.