Currently Relevant: Edition #22

Welcome to Currently Relevant, THE RELEVANCE HOUSE’s regular roundup curating the best of news, views, and stories from the blockchain, crypto, and Web3 space.

This month: We have a bumper edition focussed on Web3 adoption, with Apple, Microsoft and Ford in the news over their blockchain plans. We also get you up to speed on Consensus’ new Web3 film platform, recent funding news, and recap on some of the US court cases affecting major crypto industry companies like Ripple and Gemini. 

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Apple’s “blockchain-ish” AI solution

Of all the big tech companies you would expect to be making a blockchain-related announcement, Apple would probably be last on the list. Thus, it set tongues wagging in the blockchain space this month when Apple announced that it would be ensuring “verifiable transparency” for all off-device AI computation using an “append-only and cryptographically tamper-proof transparency log.” In introducing the new AI system, dubbed Apple Intelligence, Craig Federighi described these security measures as “blockchain-ish”.

So is Apple embracing Web3 to protect the privacy of its users in the AI age? Well, it’s not quite as simple as that. Data privacy has been prominently emphasized in Apple advertising for some time to try to differentiate it from firms like Meta and Alphabet/Google. In this regard, AI poses a problem. Most mobile devices currently do not have the power to run generative AI applications such as large language models or image creation natively on device, which is why market leading services like OpenAI, Gemini and Midjourney run on more powerful cloud servers. 

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Apple’s goal is to be able to offload some AI tasks to external cloud servers, while retaining its credibility as a company that respects user privacy. To try to carry out this juggling act, it has set up its own, private web of dedicated servers known as Private Cloud Compute (PCC). Apple will publish the code of the software running on these servers to provide transparency and “prove” that all data is destroyed after processing. In addition, all user IP addresses will be anonymized to prevent tracking or fingerprinting of individuals.

While this sounds good, how can users be sure that they have connected with a genuine PCC server? This is where the “blockchain-ish” part comes into play. Each server will need to publish proof that it is running the correct, unmodified code by publishing its measurements in a “cryptographically tamper-proof”, append-only log. This should ensure that Apple users can only connect to servers that are using authorized code.

You might notice that despite all the mention of blockchain terminology here, one word is conspicuously absent: decentralization. There is no consensus mechanism and only one publisher in this system, Apple. In fact, the main purpose of the transparency log is to prove that nobody other than Apple has control over user data. For users who trust Apple but are wary of the cloud, this may be the reassurance they need. But for users in search of zero-trust architecture, this is not it. 

Nevertheless, it is good to see Apple taking steps to try to improve data privacy for AI computation and while Web3 advocates might quibble with the implementation, it once again demonstrates that blockchain is the gold-standard technology for user privacy. 

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Consensus brings Web3 to the big screen

Consensus, the US-based Ethereum development company, has launched a new startup that is using Web3 to try to bring fans and filmmakers closer together. Dubbed Film.io, the platform will enable filmmakers to crowdsource the funding and distribution costs of film projects and receive feedback from fans during development. It follows the release of films like 2020’s Mad Heidi, which was funded by fans using blockchain tokens. 

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Not your keys, not your car: Ford submits patent for blockchain-based vehicle entry

In future, you might be able to open your car and save your preferred settings with a blockchain-based key. This is the vision laid out in a recently published patent application by Ford. 

The proposed system would use blockchain to create personalized keys for specific drivers which allow access to the vehicle and determine which vehicle functions and services are enabled. In addition to providing drivers with additional security, industry analysts predict that this could be a particularly useful feature for car rental companies, who could create highly customizable car keys for limited time periods. This could even facilitate tiered pricing structures for the same vehicle. For example, the company could offer a lower rental price for vehicles in which sport mode is disabled.

Source: Ford Authority

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This is the latest in a number of blockchain initiatives and patents announced by Ford, which has also been exploring ways to use blockchain to track the provenance of the materials used in its EV batteries to ensure that they are ethically sourced.

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Fortune 500 execs betting on blockchain

A study commissioned by cryptocurrency exchange Coinbase has revealed that 56% of Fortune 500 executives are actively working on blockchain initiatives. Coinbase cites Bitcoin spot ETFs, tokenized real world assets, and tokenized government treasury bills as central drivers of adoption. The Fortune 500 is a ranking of the top 500 US companies by total revenue. The research, carried out by Block Pro Research, was based on publicly available information such as press releases and company filings. 

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Microsoft drops hint on AI blockchain plans

With AI constantly in the news in recent months, there has been increasing discussion about the use of “digital agents”. An agent is a digital representation of a human being trained on specific data. For instance, a celebrity’s digital agent might learn from all the speeches, books and interviews they have ever published.

Microsoft's director of digital transformation, Yorke Rhodes, outlined at a recent roundtable a future where people could deploy multiple digital agents to represent themselves in online contexts like the metaverse. 

Trust will inevitably be a key issue in such a scenario. For AI agents to have any credibility, users would need reliable ways to distinguish between an authorized agent of a well-known person and a copycat. Rhodes contends that blockchain can play an important role in creating trust and verifying the identity of AI agents in future, predicting that Microsoft will aim to take a lead on working on such solutions.

The comments come after a period of retrenchment in Microsoft’s Web3 positions. After closing its Azure blockchain-as-a-service platform in 2021, it laid off its industrial metaverse team in February 2023. Thus, it will be interesting to follow whether these statements translate into further Web3 investments.   

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Swiss digital asset issuances on SDX reach CHF 1 billion

SDX, the Swiss digital asset exchange launched in 2021, has announced that it has issued over CHF 1 billion in digital assets. The announcement comes after the exchange completed a CHF 200 million bond issuance by the World Bank. The 7-year bond will be settled using the wholesale Swiss Central Bank Digital Currency (CBDC) which is coordinated and run by the Swiss National Bank.

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EU MiCA legislation comes into effect on June 30 

A new era of EU digital asset regulation will begin to take shape on June 30 when a key deadline for the implementation of the Markets in Crypto Assets regulation (MiCA) passes. MiCA will govern the issuance and operation of stablecoins and set up a licensing regime for crypto asset service providers (CASPs). After the June deadline, entities categorized as CASPs will need to comply with the registration and KYC/AML requirements defined in the legislation. The final phase of implementation will follow in December, when operators will also need to comply with specified capital and reserve obligations. 

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Funding news

Digital asset investment firm Paradigm has announced that it has raised $850 million in its third round. The firm, which was co-founded by Matt Huang and Fred Ehrsam, invests in Web3 companies, protocols and cryptocurrencies. In other funding news, Avail, which pitches itself as “the unification layer of Web3”, raised $43 million in a Series A funding round involving Dragonfly Capital and Peter Thiel’s Founders Fund. Avail provides modular infrastructure aimed at improving interoperability between blockchains. 

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Crypto in the Courts

Gemini Earn Burn: Crypto giant reaches $50M settlement with NYAG 

The cryptocurrency exchange founded by the Winklevoss twins, Gemini, has reached a $50-million settlement with the New York Attorney General’s office. Gemini had been accused of “defrauding investors” through the Gemini Earn program, which the Securities and Exchange Commission (SEC) has labeled an unregistered security. As a consequence of the settlement, Gemini is now barred from offering crypto lending services in New York.

A $4-billion farewell: Terraform Labs to cease operations after SEC settlement

Terraform Labs is closing down after reaching a $4.47-billion settlement with the SEC. The move comes after a jury found Terraform’s co-founder liable for the collapse of the Terra ecosystem, which led to $40 billion of investor assets becoming unretrievable. Terra’s failure in May 2022 led to two digital assets TerraUSD (UST) and Luna (LUNA) becoming almost worthless over the span of one week, causing a wider slump in the entire digital asset market. 

SEC rejects Ripple’s penalty appeal arguments

The SEC has criticized Ripple's appeal to reduce its $876.3-million civil penalty for alleged securities violations. Ripple argued that the penalty should be no more than $10 million based on the precedent set by a civil penalty handed out to Terraform Labs as part of its SEC settlement (mentioned above). The SEC has responded by claiming that the two cases are not comparable due to Ripple's greater profits and wealth and the fact that Terraform Labs is ceasing operations.   

US Supreme Court to review Nvidia crypto claims

The US Supreme Court has agreed to hear an appeal case by the US chipmaker Nvidia. A class-action lawsuit brought by Nvidia shareholders to a lower court accused the company of securities fraud by understating how much of its revenue derived from the cryptocurrency mining industry.