Fnality's blockchain-based Wholesale Payments; S&P Global Stablecoin Stability Assessment; Coinbase Project Diamond for Tokenization; OpenAI and more!
Hi Everyone,
Welcome to QX Snapshots - a weekly recap of the key news on emerging technologies. In this newsletter, you will get a "digest" of the latest info on Enterprise Blockchain, AI, Quantum Technology, and Metaverse.
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[Blockchain] Fnality's blockchain-based Wholesale Payments; S&P Global Stablecoin Stability Assessment; Coinbase Project Diamond for Tokenization. Fnality, a blockchain payments company, completed the first live transactions representing funds held in a Bank of England account. The transactions used an "Omnibus Account" introduced by the central bank in 2021 to enable innovation in payments. Shareholders including Lloyds, Santander, and UBS participated. Fnality aims to improve efficiency in wholesale payments across borders and enable 24/7 settlement. It plans to expand operations with more banks and currencies. While a significant milestone, Fnality emphasized these are initial transactions to test functionality and build volume and complexity gradually under the central bank's oversight. Fnality's focus for 2024 is scaling operations under the Bank of England's framework, including regulated blockchain-based payment systems for other major currencies. Meanwhile, Coinbase and its asset management arm launched Project Diamond, a platform for institutions to create, buy and sell digitally native assets on blockchain. It leverages Coinbase's technology like its Base layer-2 blockchain and USDC stablecoin. Project Diamond aims to bring efficiency gains to financial markets where only 0.25% of assets use blockchain currently. The initial focus is providing compliant solutions for institutions outside the US amid Coinbase's legal issues with the SEC. Also, S&P Global released stability ratings for major stablecoins. USDC, Pax Dollar, and Gemini Dollar received 'strong' scores of 2 out of 5, while market leader Tether got a constrained 4 due to lack of transparency. Tether's reserves composition and details of custodians, counterparties and bank accounts remain unclear. In contrast, USDC and Pax Dollar provide good transparency into assets backing the coins. However, USDC's legal structure offers less protection to investors in bankruptcy scenarios. Overall, S&P sees increased adoption of stablecoins as an bridge between digital and real-world assets, but notes they still carry risks like those facing traditional assets.
[AI] OpenAI’s deal with Axel Springer; European Commission Q&A on the AI Act; UK CDEI AI Assurance Portfolio OpenAI signed a content sharing deal with Axel Springer, parent company of Business Insider and Politico. The agreement allows ChatGPT to access and cite articles from Axel Springer publications to improve responses to user prompts, while providing links back to full stories. In return, Axel Springer gains abilities to utilize OpenAI's technology. Premium paywalled Business Insider content will be available to ChatGPT but not Politico Pro's subscription stories. Axel Springer said the partnership creates new financial opportunities. Media companies have taken varied approaches to AI content use - some like AP and Forbes embrace it, while others including NYT and Vox Media block crawler access over copyright concerns. Meanwhile, the European Commission published a comprehensive Q&A on the AI Act, emphasizing the need to balance AI's benefits with inherent risks. The Act has broad applicability, covering providers, deployers and importers of AI systems marketed or used in the EU. High-risk systems like those in healthcare and law enforcement require conformity assessments before market introduction to ensure trustworthiness. Unacceptable risk systems like certain biometric identification are banned. Transparency obligations apply to systems like chatbots interacting with humans. Providers of powerful general-purpose models have disclosure duties around training data and must respect copyright. Implementation oversight bodies and substantial fines of up to 7% of turnover indicate the EU's serious stance on regulation. Systems must be unbiased and auditable. In parallel, the Centre for Data Ethics and Innovation (CDEI) has updated its Portfolio of AI Assurance Techniques with 18 new real-world case studies. The portfolio showcases practical examples of assurance methods used by organizations to build trust in AI systems during design, development, and deployment. It covers tools for measuring, assessing, and communicating AI trustworthiness across industries. The update includes submissions from Holistic AI, NVIDIA, EY, and others.?
[Quantum Technology] Deloitte Foresees 2024 PQC Adoption Surge, Advances in Quantum Networks, and IBM's Quantum Processor Innovations. Deloitte predicts 2024 will see a major breakthrough in the adoption of post-quantum cryptography (PQC), driven by upcoming PQC standards from the National Institute of Standards and Technology (NIST). More organizations, starting with federal and financial entities, will assess crypto exposure and advance quantum readiness plans. While unsure if regulators will immediately mandate NIST's 2024 PQC standards or wait, Deloitte cautions against relying solely on regulations to drive PQC adoption. Industries leading in quantum-readiness include government and financial sectors, with healthcare, tech vendors, telecoms and space ops also now recognizing the critical need to prepare. Meanwhile, Researchers from Brazil, Switzerland and the Netherlands have paved the way for advanced quantum computing and communications networks. Their study focused on using nanoscale optomechanical cavities to transmit information coherently from microwave to infrared frequencies. These nanoresonators enable interaction between high-frequency mechanical vibrations and infrared light used in telecom networks. They act as bridges between superconducting quantum circuits promising for quantum computing, and low-noise optical fibers that transmit data over long distances. This offers prospects for constructing high-speed quantum networks and enabling future research into precisely manipulating mechanical modes and mitigating optical nonlinearities. Also, IBM released two new quantum processors—Condor and Heron. Condor has over 1000 qubits, building on previous Osprey chip. A focus was simplifying wiring to enable scaling. Heron uses a new tunable coupler architecture for better connectivity, first tested in 2021's Egret chip. While Condor pushes hardware/software scalability as a research quest, Heron marks major improvements in performance-critical for computations.?
[Metaverse] Worldline Innovates Metaverse Shopping Hub, Renault Group's 'Re-Industry' Plan Powered by Industrial Metaverse. ?Payments company Worldline launched an upgraded metaverse shopping solution for merchants on the Spatial platform. The Worldline Metaverse Shopping Hub offers enhanced graphics and accessibility across devices including VR. Worldline notes projections of a $2.6 trillion metaverse commerce market by 2030. The hub lets merchants without a virtual presence engage shoppers through activities like virtual scavenger hunts for rewards. Spatial provides multi-device access. Worldline's solution also enables 150 payment methods in the metaverse. This extends Worldline's existing metaverse mall in Decentraland. The company sees major untapped potential for the metaverse to fuel payment innovation and customer experience, requiring easy and secure virtual payment options just like the real world. Meanwhile, Renault Group announced an ambitious plan to transform its industrial operations by 2027, called Re-Industry. It aims to reduce production costs per vehicle by 30% for internal combustion and 50% for electric vehicles. This will be enabled by accelerating the digitalization and efficiency of its manufacturing through Renault Group's Industrial Metaverse . By connecting systems and leveraging data and AI, the Metaverse drives predictive maintenance, energy savings, quality control innovations and more. Combined with increased manufacturing flexibility and agility, Renault Group expects to halve vehicle delivery times, boost competitiveness and sustainability, and reinvent automotive production to shape the industry's future.
[General technology] ?DeepSouth Neuromorphic Supercomputer to Simulate Human Brain, SpaceX's Starlink Mobile Service Trial Approved by FCC. ?A new neuromorphic supercomputer called DeepSouth, set to switch on in 2024, will be capable of simulating an entire human brain. Built via a partnership between the International Centre for Neuromorphic Systems (ICNS), Intel and Dell, DeepSouth will perform 228 trillion synaptic operations per second - on par with estimates of the human brain. Unlike ordinary computers, neuromorphic chips are designed to mimic biological neural networks and synapses. While not the most powerful supercomputer, DeepSouth will be the largest neuromorphic system to date. ICNS leader Andre van Schaik says for the first time, it will enable real-time simulation of spiking neural networks at the scale of the human brain. This will advance the understanding of both neuromorphic computing and biological brains. Meanwhile, SpaceX has received approval from the U.S. Federal Communications Commission (FCC) to test its Starlink mobile phone service . It will partner with T-Mobile to provide direct satellite-to-cell phone connectivity in areas lacking coverage. The 180-day trial involves deploying 840 Starlink satellites to act as cell towers in orbit, delivering data to about 2,000 unmodified test phones across 25 locations. This follows previous FCC authorization just to test satellite antenna functionality. The new approval enables testing the core service functionality - delivering data to phones on Earth. It will help assess potential interference issues that have concerned other carriers. SpaceX plans to launch the commercial Starlink mobile service with T-Mobile and others in 2024.
Last week, I had the pleasure of hosting Steffen Schacher , UDPN Lead GFT Technologies , and Tim Bailey , VP of Global Business & Operations at Red Date Technology . Our conversation explored how the Universal Digital Payments Network (UDPN) aims to address the growing need for interoperability between digital currency systems. UDPN is developing a common messaging standard and decentralized network to facilitate seamless cross-border transactions between CBDCs, stablecoins, and legacy payment systems.
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We discussed:
? The challenges and pain points in the global payment infrastructure today.
? Why do current technologies fall short in addressing these challenges?
? How the UDPN leverages blockchain technology to address those pain points/ improve the global payment infrastructure.
? An overview of the UDPN's proposed approach, architecture, and governance model.
? The roadmap for integrating digital currencies as they continue to launch
FEATURED: LayerZero
By: Ryan Zarick; Bryan Pellegrino; Isaac Zhang; Thomas Kim; Caleb Banister
“In this paper, we present the first instrinsically secure and semantically universal omnichain interoperability protocol: LayerZero. Utilizing an immutable endpoint, append-only verification modules, and fully-configurable verification infrastructure, LayerZero provides the security, configurability, and extensibility necessary to achieve omnichain interoperability. LayerZero enforces strict application-exclusive ownership of protocol security and cost through its novel trust-minimized modular security framework which is designed to universally support all blockchains and use cases. Omnichain applications (OApps) built on the LayerZero protocol achieve frictionless blockchain-agnostic interoperation through LayerZero's universal network semantics.
Blockchain interoperability represents an ever-growing challenge as the diversity of chains continues to grow, and the importance of connecting the fragmented blockchain landscape is increasing as applications seek to reach users across a progressively wider set of chains. We present LayerZero, the first omnichain messaging protocol (OMP) to achieve a fully-connected mesh network that is scalable to all blockchains and use cases. In contrast to the monolithic security model of other cross-chain messaging services, the LayerZero protocol uses a novel modular security model to immutably implement security. This approach can still be extended to support new features and verification algorithms. Intrinsic security against censorship, replay attacks, denial of service, and in-place code modifications is designed into immutable Endpoints. Less fundamental extrinsic aspects of security (e.g., signature schemes) are isolated into independently-immutable modules. As a protocol, LayerZero is not bound to any infrastructure or blockchain; all components other than the endpoint can be interchanged and configured by applications built on LayerZero. We illustrate the omnichain fully-connected mesh network in Figure 1.?
LayerZero’s isolation of execution features from packet verification allows a near-unlimited degree of freedom to implement additional features without affecting security. In addition, the separation of execution and verification in LayerZero reduces engineering costs, attack surfaces, and improves overall protocol liveness. Together, these components create a highly extensible protocol that can provide universal messaging semantics across existing and future blockchains. LayerZero is the protocol that brings consistency and simplicity to a landscape of scattered, ad-hoc messaging services, and lays the foundation for the fully-connected omnichain mesh network of the future.”
Read the full paper: here .
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