Combining Blockchain and AI for Fraud Detection: Building Secure, Transparent, and Sustainable Financial Ecosystems

Abstract

In today's rapidly evolving financial landscape, fraudulent activities within live transactional
systems present significant risks to economic stability and institutional trust. This paper explores
integrating Blockchain and Artificial Intelligence (AI) as a comprehensive strategy for detecting
and preventing fraud in real-time financial transactions. Blockchain provides a decentralized,
tamper-resistant ledger, ensuring secure, transparent data, while AI excels at identifying patterns
and anomalies indicative of fraud. By leveraging both technologies, this research proposes a
framework to improve fraud detection efficiency and reduce vulnerabilities in financial systems.
Smart contracts further enhance this by automating fraud detection. The paper also discusses the
challenges of implementing this integrated system, including Blockchain scalability and AI’s
computational demands. Ultimately, this combination has the potential to transform fraud
prevention strategies, contributing to more secure, transparent, and sustainable financial
ecosystems.