SeaportAI https://seaportai.com AI ML | Fraud Risk Sun, 30 Mar 2025 15:17:14 +0000 en-US hourly 1 https://wordpress.org/?v=6.4.7 https://seaportai.com/wp-content/uploads/2023/12/seaport-ai-logo-150x150.png SeaportAI https://seaportai.com 32 32 ISO 42001: AI Governance Made Simple https://seaportai.com/2025/03/30/iso-42001-ai-governance-made-simple/ Sun, 30 Mar 2025 14:42:28 +0000 https://seaportai.com/?p=4134 ISO 42001: AI Governance Made Simple A comprehensive guide to implementing effective AI management systems

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ISO 42001: AI Governance Made Simple

A comprehensive guide to implementing effective AI management systems

In today’s rapidly evolving technological landscape, artificial intelligence is advancing at breakneck speed. With this rapid development comes an important question: Is there even an ISO standard for AI? And does ISO really matter in AI?

Screen Shot 2025-03-30 at 6.51.03 PM

ISO 42001¹

The answer to both questions is a resounding yes. ISO 42001 represents the first AI Management System Standard, specifically designed to bring structure, governance, and accountability to AI. This standard is particularly relevant for organizations focused on ethics and governance in artificial intelligence implementation.

ISO 42001 Framework

Setting the standard for responsible AI governance in the digital age

🔍

AI Governance & Risk Management

+

AI isn't just software; it learns and evolves. ISO 42001 ensures AI systems are transparent, accountable, and well-managed through a comprehensive framework. The standard provides organizations with structured approaches to handle the unique challenges AI systems present.

⚖

Ethics & Responsible AI

+

ISO 42001 establishes a clear framework for ethical AI, significantly reducing risks related to bias, fairness, security, and societal impact. It helps organizations navigate the complex ethical considerations inherent in artificial intelligence deployment.

📋

Regulatory Readiness

+

With emerging legislation like the EU AI Act and various global AI regulations on the horizon, ISO 42001 helps organizations stay ahead of compliance requirements. This proactive approach to regulation provides a competitive advantage in an increasingly scrutinized field.

🔄

Standardization & Best Practices

+

Similar to how ISO 9001 establishes quality management standards, ISO 42001 ensures AI follows structured, repeatable, and auditable development processes. This standardization is crucial for maintaining consistency across AI implementations.

🚀

Competitive Advantage

+

Organizations that adopt ISO 42001 signal trust, responsibility, and leadership in the AI space. This commitment to standardized AI governance provides a significant edge in establishing partnerships and ensuring compliance with current and future regulations.

ISO/IEC 42001: A Comprehensive Management System

ISO/IEC 42001 specifies requirements for establishing, implementing, maintaining, and continually improving an Artificial Intelligence Management System (AIMS) within organizations. It's designed for entities of any size that provide or utilize AI-based products or services, ensuring responsible development and use of AI systems across all industries.

Key Benefits:

  • A framework for managing risks and opportunities
  • Demonstration of responsible AI use
  • Enhanced traceability, transparency, and reliability
  • Cost savings and efficiency gains through standardized processes
AI Standards Ecosystem
Relevance for AI

Part of a Broader AI Standards Ecosystem

ISO 42001 is part of a broader set of ISO standards for AI, covering risk management, governance, and best practices. This includes standards like ISO/IEC 22989 (establishing AI terminology), ISO/IEC 23053 (framework for AI systems using machine learning), and ISO/IEC 23894 (guidance on AI-related risk management).

Is ISO Relevant for AI?

More than ever. As AI capabilities grow, so does the need for strong governance. ISO 42001 provides the much-needed framework to ensure AI is built, deployed, and managed responsibly throughout its lifecycle.

For organizations looking to implement AI solutions ethically and effectively, ISO 42001 offers a structured approach that balances innovation with governance—ensuring AI systems remain trustworthy, transparent, and aligned with organizational objectives and societal values.

References

¹ “Beyond Human: OpenAI’s o3 Wake-up Call.” Exponential View. https://www.exponentialview.co/p/beyond-human-openais-o3-wake-up-call

² “ISO 42001: What It Means For You.” Citadel AI. https://citadel-ai.com/blog/2024/01/26/iso-42001-what-it-means-for-you/

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OpenAI Raises the Bar: Is O3 the Dawn of AGI? https://seaportai.com/2025/03/20/openai-raises-the-bar-is-o3-the-dawn-of-agi/ Thu, 20 Mar 2025 07:53:15 +0000 https://seaportai.com/?p=4101 OpenAI Raises the Bar: Is O3 the Dawn of AGI? OpenAI has once again pushed the boundaries of artificial intelligence with the unveiling of their new model O3. This groundbreaking release showcases advanced reasoning capabilities that have the AI community buzzing with speculation about whether we’re approaching artificial general intelligence (AGI). O series performance¹ Remarkable… OpenAI Raises the Bar: Is O3 the Dawn of AGI?

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OpenAI Raises the Bar: Is O3 the Dawn of AGI?

OpenAI has once again pushed the boundaries of artificial intelligence with the unveiling of their new model O3. This groundbreaking release showcases advanced reasoning capabilities that have the AI community buzzing with speculation about whether we’re approaching artificial general intelligence (AGI).

o3

O series performance¹

Remarkable Performance Metrics

The performance metrics for O3 are nothing short of impressive:

Coding Excellence

Significant improvement in coding benchmarks where O3 performs better than top 1% human performers

99%

Mathematical Problem Solving

Demonstrated ability to solve tough mathematical problems with unprecedented accuracy

95%

O1 Comparison

Outperforms O1 by 20% across coding, math, and science tasks

O1
O3
20% Performance Increase

Human Threshold Benchmarks

Exceeds the human threshold of 85% on key benchmarks

85%
92%
Human Threshold O3 Performance

ARC-AGI Benchmark Excellence

Perhaps most notably, O3 has shown remarkable results on the Abstraction and Reasoning Corpus for Artificial General Intelligence (ARC-AGI) benchmark, which specifically measures an AI system's ability to efficiently learn new skills—a fundamental aspect of general intelligence.

The AGI Question

As we consider these advancements, a critical question emerges: Is O3 truly approaching artificial general intelligence? AGI is defined as human-level intelligence, and specifically as “the ability to efficiently acquire new skills.”

O3’s performance suggests we’re moving closer to this threshold, but the debate remains open in the AI research community.

Economic Implications of O3

Economic Implications

With such powerful capabilities, concerns naturally arise about O3's potential economic impact:
1
Economic Disruption at Scale

Can O3 replace humans at a scale that could disrupt economic activity across multiple sectors simultaneously?

Potential Impact High
2
Complex Job Automation

Advanced AI systems like O3 may automate increasingly complex roles previously considered "automation-proof".

Potential Impact Significant
3
Narrowing AI-Human Gap

The gap between current AI assistants and systems capable of performing complex knowledge work continues to narrow rapidly.

Potential Impact Very High

Availability and Looking Forward

Currently, O3 is not available for end users, likely as OpenAI continues to refine and assess the system’s capabilities and limitations.

As we witness these remarkable advancements, we find ourselves in interesting times indeed. The pace of AI progress continues to accelerate, raising profound questions about the future relationship between humans and increasingly capable artificial intelligence systems.

References

¹ “Beyond Human: OpenAI’s o3 Wake-up Call.” Exponential View. https://www.exponentialview.co/p/beyond-human-openais-o3-wake-up-call

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Evo 2: A Historic Breakthrough in Genomic AI https://seaportai.com/2025/03/18/evo2/ Tue, 18 Mar 2025 16:06:29 +0000 https://seaportai.com/?p=4107 Evo 2 Blog Title Evo 2 A Historic Breakthrough in Genomic AI Developed through a groundbreaking collaboration between Arc Institute, Stanford University, NVIDIA, UC Berkeley, and leading researchers, Evo 2 represents a monumental advancement in AI-driven genomics. This powerful new model is poised to redefine biological research, precision medicine, and synthetic biology. evo2 page NVIDIA¹… Evo 2: A Historic Breakthrough in Genomic AI

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Evo 2 Blog Title

Evo 2

A Historic Breakthrough in Genomic AI

Developed through a groundbreaking collaboration between Arc Institute, Stanford University, NVIDIA, UC Berkeley, and leading researchers, Evo 2 represents a monumental advancement in AI-driven genomics. This powerful new model is poised to redefine biological research, precision medicine, and synthetic biology.

evo2 page NVIDIA¹

Trained on an unprecedented 9.3 trillion DNA base pairs, Evo 2 pushes the boundaries of artificial intelligence in genomics, making it possible to predict, model, and even design biological systems across all domains of life.

Why Evo 2 is a Game-Changer

Unmatched Scale & Precision
  • 7B & 40B parameters
  • 1M-token context window
  • Single-nucleotide resolution
Industry-Leading
Breakthrough Mutation Prediction
  • Extraordinary accuracy in identifying functional impacts of genetic mutations
Medical Breakthrough
AI-Powered Genome Design
  • First-of-its-kind AI that synthesizes mitochondrial, prokaryotic & eukaryotic genomes
Revolutionary
Biological Intelligence Unlocked
  • Autonomously learns exon-intron boundaries, transcription factor sites & protein structures
Autonomous Learning
Open-Source Revolution
  • The entire model, training code & OpenGenome2 dataset are freely available for researchers
Community-Driven

Evo 2 Technical Specifications

Evo 2 is a biological foundation model with 40 billion parameters, making it the largest AI model for biology to date. It integrates information over long genomic sequences while maintaining sensitivity to single-nucleotide changes. The model understands the genetic code for all domains of life and was trained on nearly 9 trillion nucleotides.

40B
Parameters
9T
Nucleotides in Training Data

Architecture Details

  • Architecture Type: Generative Neural Network
  • Network Architecture: StripedHyena
  • Input: DNA Sequences (with optional taxonomy prompts)
  • Output: DNA Sequences

Evo 2 operates across all domains of life, processing genomic data at single-nucleotide resolution while maintaining context across long sequences.

Capabilities

  • Zero-shot function prediction for genes
  • Multi-element generation tasks, such as generating synthetic CRISPR-Cas molecular complexes
  • Prediction of gene essentiality at nucleotide resolution
  • Generation of coding-rich sequences up to at least 1M kb in length

The Future of AI-Driven Biology is Here

Released on February 19, 2025, Evo 2 is commercially ready and globally available. Built on PyTorch and Transformer Engine, it’s optimized for NVIDIA Hopper architecture and can run on H200 and H100 GPUs.

As advancements in multi-modal and multi-scale learning continue with Evo, we’re witnessing a promising path toward improving our understanding and control of biology across multiple levels of complexity.

How do you see Evo 2 shaping the next medical and biotechnological breakthroughs?

References

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Embracing the New Frontier: Agentic AI https://seaportai.com/2025/03/08/agentic-ai/ Sat, 08 Mar 2025 18:23:36 +0000 https://seaportai.com/?p=4082 Embracing the New Frontier Agentic AI In the rapidly evolving world of artificial intelligence, one emerging concept stands poised to redefine the way we work and innovate: Agentic AI. This revolutionary approach represents not just an incremental improvement but a fundamental transformation in how we think about and utilize artificial intelligence. Try Agentic AI Enter… Embracing the New Frontier: Agentic AI

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Embracing the New Frontier

Agentic AI

In the rapidly evolving world of artificial intelligence, one emerging concept stands poised to redefine the way we work and innovate: Agentic AI. This revolutionary approach represents not just an incremental improvement but a fundamental transformation in how we think about and utilize artificial intelligence.

Try Agentic AI

Enter a task and see how multiple AI agents work together:

Search
Analyze
Write
Review

A New Paradigm

Traditional AI systems have largely functioned as passive tools, but Agentic AI introduces a dramatic shift in this dynamic. This new paradigm shifts AI from passive tools to autonomous “teams” that set their own goals. This isn’t just an incremental improvement—it’s a fundamental overhaul of AI’s role.

Understanding Agentic AI vs AI Agents

It’s important to clarify the distinction: Agentic AI is the concept of AI systems that can act independently and achieve goals, while AI agents are the individual components that perform specific tasks within those systems.

Agentic AI builds upon generative AI but focuses on operational decision-making rather than content generation. While generative AI excels at creating content, agentic systems excel at automating complex workflows and enhancing efficiency in business processes.

 

how-ai-works

This diagram shows a typical architecture for an agentic AI system.¹

Real-World Impact: Transforming Industries

The impact of Agentic AI is becoming visible across multiple sectors:

AI Agent Evolution Blocks

Software Development

💻

AI coding assistants transform into tools that autonomously write and review large portions of code. DevOps workflows integrated with agents automate testing and code approval.

⚡ Autonomous Code Generation
🔄 Automated Code Reviews
🚀 DevOps Integration
Python
# AI Agent generating code def generate_ui_component(requirements): ai_agent = CodeAssistant() code = ai_agent.generate( spec=requirements, review=True, optimize=True ) return code

Advanced Robotic Process Automation (RPA)

🤖

Moving beyond simple rule-based automation to handle complex exceptions and decision-making. Advanced RPA agents can adapt to changing conditions and make informed choices.

🧠 Exception Handling
📊 Complex Decision Trees
🔄 Adaptive Learning
JavaScript
// Advanced RPA with decision making async function processInvoice(invoice) { try { const validation = await validateDocument(invoice); if (validation.exceptions.length > 0) { // AI agent handles exceptions return await intelligentExceptionHandler( validation.exceptions, invoice ); } return await standardProcessing(invoice); } catch (error) { console.error("Processing error:", error); } }

Customer Support Automation

🎧

Evolved chatbots handle multistep, reason-based tasks. They can process contextual customer requests like transferring money between accounts intelligently, understanding user intent and executing complex operations.

💬 Contextual Understanding
🔒 Secure Transactions
🧩 Multi-step Problem Solving
TypeScript
// Customer support agent handling fund transfer type TransferRequest = { sourceAccount: string; destinationAccount: string; amount: number; reason?: string; }; async function handleTransferRequest( userMessage: string ): Promise<Response> { // Extract intent and details from natural language const intent = await nlpProcessor.extractIntent(userMessage); if (intent.type === "TRANSFER") { const request = await buildTransferRequest(userMessage); return await processTransferWithVerification(request); } return generateHelpfulResponse(userMessage); }

Key Challenges to Consider

Agentic AI Implementation Challenges
🔍

Identifying Optimal Use Cases

Organizations may struggle to identify the best use cases initially, leading to misallocated resources and limited return on investment.

Potential Solutions

+
1
Start with processes that have clear metrics and boundaries
2
Create a value assessment framework for AI initiatives
3
Implement small-scale pilot projects before full deployment
🔄

System Integration Complexity

Seamless integration with ERP, CRM, and BI systems is crucial for Agentic AI to deliver value across the organization.

Potential Solutions

+
1
Build standardized API layers for legacy systems
2
Establish data standardization protocols across systems
3
Implement robust error handling for integration failures
⚙

Governance and Multi-Agent Coordination

Combining multiple agents and refining governance frameworks will be essential as AI systems become more autonomous.

Potential Solutions

+
1
Create clear hierarchies and decision boundaries
2
Implement comprehensive monitoring and audit trails
3
Develop human-in-the-loop oversight for critical decisions

The Emerging Frontier

This shift represents more than just a technological advancement—it’s a fundamental overhaul of AI’s role in our professional and personal lives. As we stand at this emerging frontier, understanding the principles, applications, and ethical considerations of Agentic AI will be critical in shaping our future.

From supply chains to R&D, efficiency and innovation will soar as these systems become more prevalent. The companies and professionals who embrace this paradigm shift early will likely find themselves at the forefront of innovation in the coming years.

 

References

¹ “What is Agentic AI?” NVIDIA Blog. https://blogs.nvidia.com/blog/what-is-agentic-ai/

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DeepSeek: How a Chinese AI Lab Challenged ChatGPT for Just $5 Million https://seaportai.com/2025/03/01/deepseek/ Sat, 01 Mar 2025 06:50:39 +0000 https://seaportai.com/?p=4038   Introduction DeepSeek has rapidly emerged as a significant player in the AI landscape, presenting a formidable challenge to established models like ChatGPT. What makes DeepSeek particularly remarkable is not just its performance, but how it achieved comparable results with significantly fewer resources than typical AI labs. This executive summary explores DeepSeek’s development, technical approach,… DeepSeek: How a Chinese AI Lab Challenged ChatGPT for Just $5 Million

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Introduction

DeepSeek has rapidly emerged as a significant player in the AI landscape, presenting a formidable challenge to established models like ChatGPT. What makes DeepSeek particularly remarkable is not just its performance, but how it achieved comparable results with significantly fewer resources than typical AI labs. This executive summary explores DeepSeek’s development, technical approach, and potential impact on the AI industry.

What is DeepSeek?

DeepSeek made headlines in December 2024 with the release of a 671-billion-parameter AI model that was trained for just $5.58 million—a fraction of what larger AI labs typically spend on model development. Despite these resource constraints, the model demonstrated performance rivaling GPT-4 and Claude 3.5 Sonnet in benchmarks.

More recently, DeepSeek introduced DeepSeek-R1, a model that excels specifically in mathematical and logical reasoning tasks. The company’s app has also gained significant traction, becoming the most downloaded free application on Apple’s App Store in the U.S.

DeepSeek launched a 671-billion-parameter AI model trained for just $5.58 million

DeepSeek vs. ChatGPT: A Technical Comparison

Feature ChatGPT (e.g., GPT-4) DeepSeek-R1
Architecture Transformer-based language models with billions of parameters Focused on reasoning tasks with a hybrid reward model
Training Data Diverse datasets from the internet, focusing on general-purpose tasks High-quality synthetic data with selective human post-processing
Fine-Tuning Reinforcement Learning with Human Feedback (RLHF) for alignment Iterative RL and Supervised Fine-Tuning (SFT) for improved reasoning capabilities
Reward Model Primarily neural-based, leveraging human-labeled data for feedback Combines rule-based (deterministic) and neural approaches
Accessibility Proprietary and commercialized, not fully open source Fully open-source, enabling broader experimentation and usage

DeepSeek’s app became the most downloaded free app on Apple’s App Store in the U.S.

Market & Strategy
Concerns & Theories
Key Techniques

Market & Strategic Implications

Efficiency Revolution
DeepSeek demonstrates that high-performing AI can be developed with fewer resources, challenging prior cost assumptions. Cost-Effective
China's AI Progress
Despite U.S. GPU export restrictions, DeepSeek highlights China's significant progress in AI development. Competition
Market Disruption
Free high-quality models like DeepSeek are likely to drive down AI costs across the industry. Economics
Strategic Importance
There's a growing call for the U.S. to recognize AI leadership's strategic importance for economic and military dominance. Policy
The model reportedly demonstrates performance rivaling GPT-4 and Claude 3.5 Sonnet.

Conspiracy Theories & Concerns

Government Backing
Suggestions of significant Chinese government support behind DeepSeek's rapid development. Funding
Data Privacy Risks
Concerns about potential transmission of U.S. user data to China. Security
Censorship Compliance
Reports indicate the model avoids sensitive topics, suggesting adherence to Chinese government censorship policies. Freedom
Development Skepticism
Some doubt the transparency and authenticity of DeepSeek's reported development process. Verification

Key Techniques in DeepSeek-R1

Chain of Thought (CoT) Reasoning
Prompts the model to "think out loud" and explain reasoning step-by-step, helping in self-evaluating mistakes and improving accuracy. Reasoning
Reinforcement Learning (RL)
DeepSeek uses Group Relative Policy Optimization (GRPO) to stabilize training and minimize drastic policy changes. Training
Model Distillation
Trains smaller models (e.g., Llama 3) using the larger DeepSeek-R1 model. These smaller models achieve similar performance at reduced computational costs. Efficiency

Conclusion

DeepSeek represents a significant milestone in AI development, demonstrating that competitive models can be created with substantially fewer resources than previously thought possible. While questions remain about its backing and development process, its technical achievements and market impact are undeniable. As AI development continues to accelerate globally, DeepSeek may well represent a turning point in how we approach building and deploying large language models.

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Advanced Techniques in Fraud Detection: Insights from Top Research https://seaportai.com/2024/09/01/advanced-techniques-in-fraud-detection-insights-from-top-research/ Sun, 01 Sep 2024 17:13:54 +0000 https://seaportai.com/?p=3910 Stay ahead in the fight against fraud with these innovative approaches.

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In today’s digital age, fraud detection has become a critical aspect of maintaining the integrity of financial systems. The rise in sophisticated fraudulent activities necessitates advanced detection methods to protect assets and ensure regulatory compliance. In an era where financial transactions can be completed in the blink of an eye, the ability to detect and prevent fraudulent activities in real-time has become a cornerstone of economic security. This article reviews prominent research papers on fraud detection, highlighting the various techniques and algorithms to tackle this issue.

The financial sector is heavily impacted by credit card fraud, making it crucial to develop effective detection mechanisms. This study explores the use of various machine learning algorithms on the Kaggle Credit Card Fraud Detection dataset, which is highly imbalanced. Techniques like SMOTE (Synthetic Minority Over-sampling Technique) were employed to address this imbalance. The key algorithms analyzed include:

  • Logistic Regression (LR): A statistical model that estimates the probability of a transaction being fraudulent.
  • Random Forest (RF): An ensemble method that creates multiple decision trees to improve prediction accuracy.
  • Naive Bayes (NB): A probabilistic classifier based on Bayes’ theorem, assuming feature independence.
  • Multilayer Perceptron (MLP): A type of neural network with multiple layers that can learn complex patterns in data. Random Forest outperformed other models, achieving a balance between precision, recall, and accuracy, making it the preferred choice for this application.

Java’s versatility makes it an ideal platform for integrating AI technologies into fraud detection systems. This paper discusses the implementation of:

  • Predictive Models: Developed using Java libraries like Weka and Deeplearning4j to predict fraudulent activities.
  • Anomaly Detection Algorithms: Used to identify deviations from normal behavior, signaling potential fraud.
  • Behavioral Analysis Models: Analyze user behavior over time to detect anomalies. Java’s scalability and security features enable the creation of robust, real-time fraud detection systems that can adapt to emerging threats.

Generative Adversarial Networks (GANs) offer a novel approach to addressing class imbalance in fraud detection. This study proposes using GANs to generate synthetic examples of fraudulent transactions, enhancing the classifier’s ability to detect fraud. The key steps include:

  • Training GANs: On the minority class (fraudulent transactions) to create synthetic examples.
  • Augmented Training Set: Merging these synthetic examples with the original dataset for better training. This approach significantly improves the model’s sensitivity in detecting fraud, though it slightly increases the rate of false positives.

This paper explores the efficacy of deep learning techniques, specifically Artificial Neural Networks (ANN), in fraud detection. The study compares ANN with other machine learning algorithms like Support Vector Machine (SVM) and k-Nearest Neighbor (k-NN). Key highlights include:

  • ANN Architecture: Featuring 15 hidden layers, the model uses the Rectified Linear Unit (ReLU) activation function to learn complex transaction patterns.
  • Performance: The ANN model achieved an accuracy of 99.92%, outperforming SVM and k-NN in detecting fraudulent transactions.

Hybrid models like AdaBoost and Majority Voting are explored in this study for their potential to enhance fraud detection. Key mechanisms include:

  • AdaBoost: Sequentially trains weak learners, each focusing on the errors made by the previous model, to improve overall accuracy.
  • Majority Voting: Combines predictions from multiple classifiers, reducing the likelihood of errors by relying on consensus. These methods significantly improve detection accuracy, particularly in scenarios with noisy data.

Deep Convolutional Neural Networks (DCNNs) are employed in this study to handle large-scale, real-time fraud detection tasks. The key components include:

  • Convolutional Layers: Capture hierarchical patterns in transaction data, such as temporal dependencies.
  • Memory Cell Layers: Retain information over extended periods, crucial for detecting evolving fraud patterns. The DCNN model achieved an impressive accuracy of 99%, outperforming traditional machine learning models in both speed and precision.

This paper presents an Optimized Light Gradient Boosting Machine (OLightGBM), integrating Bayesian-based Hyperparameter Optimization to fine-tune model performance. Key techniques include:

  • Gradient-Based One-Side Sampling (GOSS): Focuses on significant data points to improve efficiency without sacrificing accuracy.
  • Bayesian Optimization: Probabilistically selects hyperparameters to enhance model performance. OLightGBM outperformed traditional models, offering superior accuracy and efficiency in detecting fraudulent transactions.

This paper adapts Light Gradient Boosting Machine (LGBM) for detecting fraudulent transactions within Ethereum’s decentralized platform. Key features include:

  • Gradient-Based One-Sided Sampling (GOSS): Prioritizes critical data points, speeding up training while maintaining accuracy.
  • Exclusive Feature Bundling (EFB): Reduces computational complexity by bundling mutually exclusive features. LGBM achieved a 99.03% accuracy, outperforming other models like Random Forest and XGBoost in detecting fraudulent activities on the Ethereum network.

CONCLUSION                                                                                                                                                   The research highlights advanced fraud detection techniques, from traditional models like Random Forest to innovative deep learning methods like GANs and DCNNs. As fraud evolves, so must our detection strategies, making ongoing research essential to securing financial systems in the digital age.

REFERENCES

[1] Varmedja, D., Karanovic, M., Sladojevic, S., Arsenovic, M. and Anderla, A., 2019, March. Credit card fraud detection-machine learning methods. In 2019 18th International Symposium INFOTEH-JAHORINA (INFOTEH) (pp. 1-5). IEEE.

[2] Vyas, B., 2023. Java in Action: AI for Fraud Detection and Prevention. International Journal of Scientific Research in Computer Science, Engineering and Information Technology, pp.58-69.

[3] Fiore, U., De Santis, A., Perla, F., Zanetti, P. and Palmieri, F., 2019. Using generative adversarial networks for improving classification effectiveness in credit card fraud detection. Information Sciences479, pp.448-455.

[4] Asha, R.B. and KR, S.K., 2021. Credit card fraud detection using artificial neural network. Global Transitions Proceedings2(1), pp.35-41.

[5] Randhawa, K., Loo, C.K., Seera, M., Lim, C.P. and Nandi, A.K., 2018. Credit card fraud detection using AdaBoost and majority voting. IEEE access6, pp.14277-14284.

[6] Chen, J.I.Z. and Lai, K.L., 2021. Deep convolution neural network model for credit-card fraud detection and alert. Journal of Artificial Intelligence3(02), pp.101-112.

[7] Taha, A.A. and Malebary, S.J., 2020. An intelligent approach to credit card fraud detection using an optimized light gradient boosting machine. IEEE access8, pp.25579-25587.

[8] Aziz, R.M., Baluch, M.F., Patel, S. and Ganie, A.H., 2022. LGBM: a machine learning approach for Ethereum fraud detection. International Journal of Information Technology14(7), pp.3321-3331.

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Liquid Neural Networks https://seaportai.com/2024/08/01/liquid-neural-networks/ Thu, 01 Aug 2024 05:50:22 +0000 https://seaportai.com/?p=3887   Liquid Neural Networks   “This is a way forward for the future of robot control, natural language processing, video processing — any form of time series data processing,” says Ramin Hasani, the lead author of the study in MIT which led to the development of LNNs. A liquid neural network (LNN) is a time-continuous… Liquid Neural Networks

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Liquid Neural Networks

 

“This is a way forward for the future of robot control, natural language processing, video processing — any form of time series data processing,” says Ramin Hasani, the lead author of the study in MIT which led to the development of LNNs. A liquid neural network (LNN) is a time-continuous recurrent neural network built with a dynamic architecture of neurons. These neurons are able to process time-series data while making predictions based on observations and continuously adapting to new inputs. Their adaptable nature gives them the ability to continually learn and adapt and, ultimately, process time-series data more effectively than traditional neural networks. LNNs were originally developed by the Computer Science and Artificial Intelligence Laboratory at MIT (CSAIL), which attempted to make a machine learning (ML) solution capable of learning on the job and adapting to new inputs. The concept was inspired by the microscopic nematode C.elegans, a worm that only has 302 neurons in its nervous system but still manages to respond dynamically to its environment.

Working of LNNs:

Liquid Neural Networks are a class of Recurrent Neural Networks (RNNs) that are time-continuous. LNNs are made up of first-order dynamical systems controlled by non-linear interlinked gates. The end model is a dynamic system with varying time constants in a hidden state. This is an improvement of Recurrent Neural Networks where time-dependent independent states are introduced. Numerical differential equation solvers compute the outputs. Each differential equation represents a node of that system. The closed-form solution makes sure that they perform well with a smaller number of neurons. This gives rise to fewer and richer nodes. They show stable and bounded behavior with improved performance on time series data. The differential equation solver updates the algorithm as per the below-given rules.

 

 

 

 

 

 

 

 

 

Advantages:

  1. Real-time decision-making capabilities;
  2. The ability to process time series data;
  3. Respond quickly to a wide range of data distributions;
  4. Resilient and able to filter out anomalous or noisy data;
  5. More interpretability than a black-box machine learning algorithm;
  6. Reduced computational costs.

Disadvantages:

  1. Liquid neural networks face a vanishing gradient problem.
  2. Hyperparameter tuning is very difficult as there is a high number of parameters inside the liquid layer due to randomness.
  3. This is still a research problem, and hence a smaller number of resources are available to get started with these.
  4. They require time-series data and don’t work properly on regular tabular data.
  5. They are very slow in real-world scenarios.

Applications:

  1. Autonomous drones
  2. Medical diagnosis
  3. Self – driving cars
  4. Natural language processing
  5. Image and video processing

Liquid Neural Networks (LNNs) offer a dynamic and adaptable alternative to traditional neural networks. By embracing the concept of liquid dynamics, LNNs excel in tasks involving non-stationary data, exhibit robustness against noise, and enable the exploration of diverse solution spaces. With the provided code implementation and visualizations, researchers and practitioners can further explore LNNs and leverage their capabilities in solving complex real-world problems.

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Explainable AI https://seaportai.com/2024/08/01/explainable-ai/ Thu, 01 Aug 2024 05:47:43 +0000 https://seaportai.com/?p=3884   Explainable AI   This article delves into the concept of Explainable AI (XAI), a set of techniques and methods designed to make the outputs of machine learning models understandable and reliable for human users. We will explore why explainability is essential, categorize explainability techniques into global and local approaches, and provide an overview of… Explainable AI

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Explainable AI

 

This article delves into the concept of Explainable AI (XAI), a set of techniques and methods designed to make the outputs of machine learning models understandable and reliable for human users. We will explore why explainability is essential, categorize explainability techniques into global and local approaches, and provide an overview of key XAI methods like LIME, SHAP, ELI5, Partial Dependence Plots, and Accumulated Local Effects. Additionally, we will examine the architecture of XAI, which includes the machine learning model, explanation algorithm, and interface, and discuss the advantages and limitations of implementing XAI.

Explainable artificial intelligence (XAI) refers to a collection of procedures and techniques that enable machine learning algorithms to produce output and results that are understandable and reliable for human users. The need for explainable AI arises from the fact that traditional machine learning models are often difficult to understand and interpret. These models are typically black boxes that make predictions based on input data but do not provide any insight into the reasoning behind their predictions.

The explainability techniques are mainly divided into two categories:

  • Global: they explain the model in general, noting its generic operating rules.
  • Local: They explain for every single data, how the model reasoned and the rules that led to a certain output.

Techniques:

  1. LIME (Local Interpretable Model-agnostic Explanations): LIME is a popular XAI approach that uses a local approximation of the model to provide interpretable and explainable insights into the factors that are most relevant and influential in the model’s predictions. To implement LIME in python, you can use the lime package, which provides a range of tools and functions for generating and interpreting LIME explanations.
  2. SHAP (SHapley Additive exPlanations): SHAP is an XAI approach that uses the Shapley value from game theory to provide interpretable and explainable insights into the factors that are most relevant and influential in the model’s predictions. To implement SHAP in python, you can use the shap package, which provides a range of tools and functions for generating and interpreting SHAP explanations.

  1. ELI5 (Explain Like I’m 5): ELI5 is an XAI approach that provides interpretable and explainable insights into the factors that are most relevant and influential in the model’s predictions, using a simple and intuitive language that can be understood by non-experts. To implement ELI5 in python, you can use the eli5 package, which provides a range of tools and functions for generating and interpreting ELI5 explanations.
  2. Partial Dependence Plot: The partial dependence plot (short PDP or PD plot) shows the marginal effect one or two features have on the predicted outcome of a machine learning model. A partial dependence plot can show whether the relationship between the target and a feature is linear, monotonic or more complex. For a perturbation-based interpretability method, it is relatively quick. PDP assumes independence between the features and can be misleading interpretability-wise when this is not met.
  3. Accumulated Local Effects (ALE): Accumulated Local Effects (ALE) is a method for computing feature effects. The algorithm provides model-agnostic (black box) global explanations for classification and regression models on tabular data. ALE addresses some key shortcomings of Partial Dependence Plots (PDP).

Explainable AI (XAI) architecture consists of three main components:

  1. Machine Learning Model: The core component that uses algorithms and techniques (like supervised, unsupervised, or reinforcement learning) to make predictions from data across various applications such as medical imaging and natural language processing.
  2. Explanation Algorithm: This component provides insights into the factors influencing the model’s predictions. It employs approaches like feature importance, attribution, and visualization to elucidate the model’s workings.
  3. Interface: This component presents the insights generated by the explanation algorithm to users. It leverages technologies such as web applications and visualizations to offer an intuitive and user-friendly way to access and interact with the information.

These components work together to enhance the transparency, interpretability, and trustworthiness of machine learning models across different domains​

Advantages:

  1. Makes AI more trustworthy.
  2. Provides insight against adversarial attacks.
  3. Improved decision-making.
  4. Reduced risks and liabilities.

Limitations:

  1. Oversimplification.
  2. Limited scope and domain-specificity.
  3. Lack of standardization and interoperability.

Explainable AI (XAI) bridges the gap between complex machine learning models and human understanding, enhancing transparency, interpretability, and trustworthiness. By leveraging techniques such as LIME, SHAP, and ELI5, and understanding the architecture of XAI systems, stakeholders can gain valuable insights into AI decision-making processes. Despite its challenges, including potential oversimplification and domain-specific limitations, XAI plays a crucial role in improving decision-making, mitigating risks, and fostering trust in AI applications across various domains.

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Gated Recurrent Unit https://seaportai.com/2024/07/22/gated-recurrent-unit/ Mon, 22 Jul 2024 07:34:39 +0000 https://seaportai.com/?p=3844   Gated Recurrent Unit M K Sumana   In this article we will be discussing about GRUs, which are simple alternatives to LSTMs. We will learn about their architecture, working, their advantages over LSTMs, their pros and cons and applications. Recurrent Neural Networks (RNNs) have emerged as a powerful deep learning algorithm for processing sequential… Gated Recurrent Unit

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Gated Recurrent Unit

M K Sumana

 

In this article we will be discussing about GRUs, which are simple alternatives to LSTMs. We will learn about their architecture, working, their advantages over LSTMs, their pros and cons and applications. Recurrent Neural Networks (RNNs) have emerged as a powerful deep learning algorithm for processing sequential data. However, RNNs struggle with long-term dependencies within sequences. This is where Gated Recurrent Units (GRUs) come in. As a type of RNN equipped with a specific learning algorithm, GRUs address this limitation by utilizing gating mechanisms to control information flow, making them a valuable tool for various tasks in machine learning.[i] Gated Recurrent Unit (GRU) is a type of recurrent neural network (RNN) that was introduced by Cho et al. in 2014 as a simpler alternative to Long Short-Term Memory (LSTM) networks. Like LSTM, GRU can process sequential data such as text, speech, and time-series data. The basic idea behind GRU is to use gating mechanisms to selectively update the hidden state of the network at each time step.[ii]

GRU Architecture

 

 

 

 

 

The GRU architecture consists of the following components:

  1. Input layer: The input layer takes in sequential data, such as a sequence of words or a time series of values, and feeds it into the GRU.

  2. Hidden layer: The hidden layer is where the recurrent computation occurs. At each time step, the hidden state is updated based on the current input and the previous hidden state. The hidden state is a vector of numbers that represents the network’s “memory” of the previous inputs.

  3. Reset gate: The reset gate determines how much of the previous hidden state to forget. It takes as input the previous hidden state and the current input, and produces a vector of numbers between 0 and 1 that controls the degree to which the previous hidden state is “reset” at the current time step.

  4. Update gate: The update gate determines how much of the candidate activation vector to incorporate into the new hidden state. It takes as input the previous hidden state and the current input, and produces a vector of numbers between 0 and 1 that controls the degree to which the candidate activation vector is incorporated into the new hidden state.

  5. Candidate activation vector: The candidate activation vector is a modified version of the previous hidden state that is “reset” by the reset gate and combined with the current input. It is computed using a tanh activation function that squashes its output between -1 and 1.

  6. Output layer: The output layer takes the final hidden state as input and produces the network’s output. This could be a single number, a sequence of numbers, or a probability distribution over classes, depending on the task at hand. [iii]

Working of GRUs:

  1. Calculate the update gate z_t for time step t using the formula:


    When x_t is plugged into the network unit, it is multiplied by its own weight W(z). The same goes for h_(t-1) which holds the information for the previous t-1 units and is multiplied by its own weight U(z). Both results are added together and a sigmoid activation function is applied to squash the result between 0 and 1.

  2. As before, we plug in h_(t-1) and x_t , multiply them with their corresponding weights, sum the results and apply the sigmoid function. Calculate reset gate using the formula:


  3. Do an element-wise multiplication of h_(t-1) and r_t and then sum the result with the input x_t. Finally, tanh is used to produce h’_t, a memory content which will use the reset gate to store the relevant information from the past. It is calculated as follows:



  4. Next, we calculate h_t — vector which holds information for the current unit and passes it down to the network. It determines what to collect from the current memory content — h’_t and what from the previous steps — h_(t-1). That is done as follows:

    [iv]

Comparison of GRUs and LSTMs:

Primarily, GRUs have two gates compared to the three gates in LSTM cells. A notable aspect of GRU networks is that they do not include a separate cell state (C_t​), unlike LSTMs. Instead, GRUs only maintain a hidden state (H_t​). This simpler architecture allows GRUs to train faster. In GRUs, a single update gate manages both the historical information (H_{t-1}​) and the new information from the candidate state, unlike LSTMs, which use separate gates for these functions. [v]

 

Applications of GRUs in Real-World Scenarios:

  1. In speech recognition systems, GRUs are employed for tasks like speech-to-text conversion, phoneme recognition, and speaker identification.
  2. GRUs are also utilized in time series prediction tasks, including financial forecasting, stock market analysis, and weather prediction.
  3. Their ability to capture temporal dependencies and handle sequential data makes GRUs suitable for applications in video analysis, gesture recognition, and action recognition.
  4. In healthcare, GRUs are used for patient monitoring, disease prediction, and medical image analysis, leveraging sequential patient data for diagnosis and treatment planning. [vi]

 

Advantages:

  1. Faster training and efficiency compared to LSTMs.
  2. Effective for sequential tasks: Their gating mechanisms allow them to selectively remember or forget information, leading to better performance on tasks like machine translation or forecasting.
  3. Less Prone to Gradient Problems: The gating mechanisms in GRUs help mitigate the vanishing/exploding gradient problems that plague standard RNNs. [vii]

Disadvantages:

  1. May be more prone to overfitting than LSTMs, especially on smaller datasets.
  2. Their simpler gating mechanism can limit their ability to capture very complex relationships or long-term dependencies in certain scenarios.
  3. GRU networks require careful tuning of hyperparameters, such as the number of hidden units and learning rate, to achieve good performance.
  4. Not as interpretable as other machine learning models due to the gating mechanism. [viii] [ix]

Gated Recurrent Units (GRUs) offer a streamlined and efficient alternative to Long Short-Term Memory (LSTM) networks for processing sequential data. Their simpler architecture, featuring only two gates and a combined hidden state, results in faster training times without significantly compromising performance. GRUs excel in tasks where quick training and effective handling of temporal dependencies are crucial, such as speech recognition, time series forecasting, and healthcare applications. Although they may not capture very long-term dependencies as effectively as LSTMs, GRUs balance simplicity and power, making them a versatile tool in the machine learning toolkit. This balance allows GRUs to address the limitations of traditional RNNs while offering a practical solution for many sequential data challenges.

Papers which provide deeper insights into GRUs:

  1. Gate-Variants of Gated Recurrent Unit (GRU) Neural Networks: https://arxiv.org/pdf/1701.05923
  2. Deep Learning with Gated Recurrent Unit Networks for Financial Sequence Predictions: https://www.sciencedirect.com/science/article/pii/S1877050918306781
  3. Comparative analysis of Gated Recurrent Units (GRU), long Short-Term memory (LSTM) cells, autoregressive Integrated moving average (ARIMA), seasonal autoregressive Integrated moving average (SARIMA) for forecasting COVID-19 trends: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9453185/

References:


[i] Analytics Vidhya

[ii] Geeksforgeeks

[iii] Medium – anishnama20

[iv] Towards Data Science

[v] Analytics Vidhya

[vi] Medium – harshedabdulla

[vii] Analytics Vidhya

[viii] Analytics Vidhya

[ix] Medium – anishnama20

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Privacy Preserved Machine Learning https://seaportai.com/2024/07/22/privacy-preserved-machine-learning/ Mon, 22 Jul 2024 07:16:25 +0000 https://seaportai.com/?p=3831   Privacy Preserved Machine Learning   Privacy-Preserving Machine Learning is a step-by-step approach to preventing data leakage in machine learning algorithms. Large-scale data collection practices can lead to Exposure of sensitive personal information, Algorithmic bias and discrimination, Surveillance and social control, etc. PPML allows many privacy-enhancing strategies to allow multiple input sources to train ML… Privacy Preserved Machine Learning

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Privacy Preserved Machine Learning

 

Privacy-Preserving Machine Learning is a step-by-step approach to preventing data leakage in machine learning algorithms. Large-scale data collection practices can lead to Exposure of sensitive personal information, Algorithmic bias and discrimination, Surveillance and social control, etc. PPML allows many privacy-enhancing strategies to allow multiple input sources to train ML models cooperatively without exposing their private data in its original form. In this article we will be discussing 4 techniques of PPML which have shown great potential in incorporating privacy mechanisms.

  1. Differential Privacy (DP)
    Differential Privacy is a data aggregation method that adds randomized “noise” to the data. The data cannot be reverse engineered to understand the original inputs. While DP is used by Microsoft and open-source libraries to protect privacy in the creation and tuning of ML models, there is a distinct trade-off when it comes to the data’s reliability. Given that the accuracy of ML models depends on the quality of the data, the amount of noise added to the underlying dataset is inversely proportional to the accuracy and certainty/reliability of that data, and of the entire model. In machine learning scenarios DP works through adding small amounts of statistical random noise during training, the purpose of which is to conceal contributions of individual parties. When DP is employed, a mathematical proof ensures that the final ML model learns only general trends in the data without acquiring information specific to individual ones. To expand the scope of scenarios where DP can be successfully applied, we push the boundaries of the state of the art in DP training algorithms to address the issues of scalability, efficiency, and privacy/utility trade-offs.











  2. Zero-Knowledge Machine Learning (ZKML)
    A zero-knowledge proof system (ZKP) is a method allowing a prover P to convince a verifier V about the truth of a statement without disclosing any information apart from the statement’s veracity. To affirm the statement’s truth, P produces a proof π for V to review, enabling V to be convinced of the statement’s truthfulness.

    ZKPs are applicable during training to validate N’s correct execution on a labelled dataset A. Here, A serves as the public input, with an arithmetic circuit C depicting the neural network N. The training process requires an additional arithmetic circuit to implement the optimization function, minimizing the loss function. For each training epoch i, a proof π_i is generated, confirming the algorithm’s accurate execution through epochs 1 to i-1, including the validity of the preceding epoch’s proof. The training culminates with a compressed proof π, proving the correct training over dataset A.












  3. Federated Learning (FL)

    In Federated Learning or FL we look to train a global model using a dataset that is distributed in multiple servers with local data samples but without each server sharing their local data. In FL there is a global objective function that is being optimized which is defined as

    where n is the number of servers, each variable is the set of parameters as viewed by the server i, and each function is a local objective function of server i. FL tries to find the best set of values that optimizes f.
    Process:

    1. Initialization. An initial global model is created and distributed by a central server to all other servers.
    2. Local training. Each server trains the model using their local data. This ensures data privacy and security.
    3. Model update. After training, each server shares with the central server their local updates like gradients and parameters.
    4. Aggregation. The central server receives all local updates and aggregates them into the global model, for example, using averaging.
    5. Model distribution. The updated model is distributed again with local servers and the previous steps are repeated until a desired level of performance is achieve by the global model.












  4. Fully Homomorphic Encryption based Machine Learning (FHEML)
    It is a way where we implement machine learning algorithms that utilize fully homomorphic encryption schemes. It enables computations to be carried out on encrypted data, ensuring the confidentiality of the data which is being processed.









    Steps in the training process:

    1. Encrypt the dataset using the public key. 
    2. Initialize the neural network with initial weights.
    3. Perform forward passes on encrypted data.
    4. Approximate activation functions using polynomials.
    5. Compute the loss on encrypted data.
    6. Perform backward passes to calculate gradients.
    7. Update the weights on encrypted data.
    8. Repeat the process for multiple training iterations.
    9. Keep weights encrypted throughout training.
    10. Data owner decrypts the final trained weights using the private key.

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