Crypto braces for the impact of OpenAI’s new GPT-4

Sam Altman’s OpenAI has released GPT-4, an upgrade to its third-generation artificial intelligence engine that will impact the entire crypto industry.

The previous version, GPT-3, underpinned the viral hit ChatGPT which has millions of users and received countless media exposure. GPT-3 also enabled Altman to raise a staggering $10 billion from Microsoft, valuing OpenAI as the world’s largest AI company.

Computer enthusiasts by trade, the crypto industry immediately heralded the launch of GPT-4. NFT fans immediately began experimenting with the art tools.

However, others warned of threats to blockchains and protocols with limited security testing, such as decentralized finance protocols.

Crypto flash loans vulnerable to GPT-4 exploit

Many pointed to this week’s $197 million hack of Euler Finance, a new DeFi platform. Euler lost his reserves to an attacker who manipulated so-called “flash loans”.

• An attacker who takes out a flash loan trades with borrowed funds and repays that loan – all within a single block on the Ethereum blockchain.
• Flash loans allow any market participant to earn large amounts of money using only a small amount of capital. The attacker only needs to post a small amount of collateral to exploit to capitalize on a larger trade.
• Even worse, flash loan-based attacks reward patient, diligent attackers who carefully plan the entire attack before executing any of the segments. This uniquely favors AI and Big Data tools that can comb through reams of data and suggest flash loan attacks if the entire sequence of events can be executed within a single block on the chain.

When a flash loan attack begins, the profit is often guaranteed. For example, the Euler Finance attacker used malicious code to create artificially overvalued collateral and withdrew the real proceeds of a liquidation using that collateral.

Read More: Binance Smart Chain Hackers Made $167M Using Flash Loans, May Exploits

In any case, the entire crypto community will look to OpenAI’s new GPT-4 for immediate effects on the digital asset ecosystem. Although permissionless financial exchanges such as DEXs and other DeFi tools face the most immediate risks, the new AI will certainly affect NFTs, blockchain experiments, coding tools, security research and other cryptographic initiatives.

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