Dictionary.com recently named “hallucinate” as its word of the year for 2023, shedding light on a peculiar phenomenon in the realm of artificial intelligence (AI). This phenomenon arises from the emergence of artificial general intelligence (AGI), which has gained significant attention since the launch of OpenAI’s generative AI chatbot ChatGPT.

AGI hallucinations occur when an artificial intelligence provides false information or generates random language that does not address the specific query it has been given. These hallucinations can have real-world consequences, as seen with Microsoft’s Bing search engine and the legal industry.

AI and the Financial Sector

As AI becomes increasingly integrated into the financial industry, caution is warranted. The allure of artificial intelligence in a sector that thrives on automation can lead to significant losses if not properly regulated. The risks associated with AGI hallucinations are particularly concerning, as they can propagate false data and influence poorly informed trades.

Causes of Hallucinations

Hallucinations in AI often stem from the construction of prompts that confuse current AI models. Additionally, flawed datasets used in training AI models can contribute to hallucinations, leading to incoherent and indirect responses.

Potential Solutions

Various solutions have been proposed to minimize AGI hallucinations, including retrieval-augmented generation (RAG) and blockchain technology. Blockchain, with its decentralized nature, could provide a transparent and immutable platform for sharing data in real-time, reducing the occurrence of hallucinations.

Ultimately, the choice lies with us to create a system that empowers AI to make informed decisions based on reality rather than hallucinations.

Enzo Villani, CEO and Chief Investment Officer of Alpha Transform Holdings, brings over twenty years of experience in strategic planning and innovation across various industries, including blockchain. With a background in Fortune 500 companies and venture capital, Enzo is at the forefront of navigating the intersection of AI and finance.

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