7 min read

The Web3 and AI Newsletter 5

The Web3 and AI Newsletter 5
Image generated using OpenAI's DALL-E 3

Hello again, everyone, and welcome to all new subscribers!

This is the Web3 + AI newsletter, where we explore the intersection of blockchain and artificial intelligence. This week, I have gathered some exiciting startup updates, investment announcements, and regulatory news items for you. I have also added a book review as a bonus for my fellow book nerds 🤗

Thank you for being here! Let's dive in!

What's New in the Web3 + AI Startup World?

Bosch, Fetch.ai, peaq Collaborate to Build Smart City Ecosystem

Blockchain companies Fetch.ai and peaq have joined forces with manufacturing giant Bosch to create a decentralized physical infrastructure (DePIN) to collect live data and to help data owners monetize it. “The Bosch XDK110 is a compact all-in-one sensor kit capable of measuring various environmental factors such as temperature and light pollution. It features a self-sovereign peaq ID, connecting it with multiple decentralized physical infrastructure networks (DePINs) on peaq. The device also incorporates a Fetch.ai AI agent, which autonomously selects its owner’s most rewarding DePIN connection”.

The group believes this collaboration marks a significant step towards an ‘open smart city paradigm,’ where data-based goods and services are exchanged without centralized intermediaries.

A similar undertaking was previously made by the Helium Network, which also supports Internet of Things (IoT) devices and has almost a million hotspots. It was backed by Tiger Global, Andreessen Horowitz, Goodyear Ventures, Liberty Global, and Deutsche Telekom.

Bosch sensor device to be used for AI, web3 crowdsourced physical data - Ledger Insights - blockchain for enterprise
A multi sensor Bosch device will be used for Decentralized Physical Infrastructure Networks (DePINs) using peaq blockchain and fetch.ai

Cyber.Fund to Back Blockchain, AI, and IoT Companies

The investment firm Cyber.Fund has announced it is to invest $100M in firms operating in the intersection of blockchain, artificial intelligence, and Internet of Things (IoT), aimed at growing “the cybernetic economy”. It describes cybernetic as an interconnected and automated economic framework around which blockchain, AI, and IoT converge.

Early Ethereum Backers Cyber.Fund to Invest $100M in ‘Cybernetic Economy’
Cyber.Fund, which also backed Cosmos, Solana and Polkadot, is focused growing the “cybernetic economy,” in which blockchain is the bedrock

Cyber.Fund was an early investor in Ethereum, and has also backed Solana, Cosmos, Polkadot, and more.

Image generated using OpenAI's DALL-E 3

Noteworthy Podcasts, Articles, Events

The EU Reaches Political Agreement on AI Act

Last Friday, December 8th, after three days of intensive negotiations, the EU finally achieved a political agreement on its “world-leading” AI Act. Although this is a provisional accord and the final text has not been published yet, the act's fundamental provisions are more or less clear. First and foremost, it forbids several AI applications such as manipulative techniques, systems exploiting vulnerabilities, social scoring, and predictive policing software to assess an individual’s risk for committing future crimes based on personal traits.

Check out this AI Act Cheat Sheet to go over the main AI uses categorized as banned or high-risk:

Oliver Patel, CIPP/E on LinkedIn: 💥🇪🇺 EU AI ACT CHEAT SHEET 💥🇪🇺 Understand the key elements of the AI… | 223 comments
💥🇪🇺 EU AI ACT CHEAT SHEET 💥🇪🇺 Understand the key elements of the AI Act in 1 minute and get prepared for this landmark regulatory development. Now the… | 223 comments on LinkedIn

Link to the original post

Also, listen to the Privacy Advisor Podcast featuring Euractiv's technology editor Luca Bertuzzi who was diligently reporting throughout the whole negotiation process and has loads of background information to share:

In the best-case scenario, the act is expected to come into force as early as 2026 whereas many things could happen in the AI world until then. What is more, it is still not clear how these measures will get enforced across 27 member states, although, as you have seen above, financial penalties for violating the act have already been determined and they are quite steep.

Link to the original post

Moreover, the political bloc reached another agreement concerning AI - to update its Product Liability Directive (PLD) to cover software and artificial intelligence. What that means is that European citizens can now seek damages from software builders if they deem a product somewhat defective:

A product is deemed defective when it does not provide the safety a person is entitled to expect based on the reasonable foreseeable use, legal requirements, and the specific needs of the group of users for whom the product is intended.

Considering how often AI systems act unexpectedly and surprise even their creators, these measures may seriously limit companies' go-to-market strategies.

EU updates product liability regime to include software, Artificial Intelligence
EU policymakers reached a political agreement on Thursday (14 December) on legislation to bring the bloc’s product liability regime in line with technological developments, notably covering digital products like software, which includes Artificial Intelligence.

Fortunately, open-source and non-commercial software are exempt from the directive. As for its timeline, all companies operating in the European market will need to start complying 24 months after PLD enters into force.

Two Men Indicted for $25M AI Crypto Scam

Two individuals have been operating a $25M crypto Ponzi scheme while pretending to employ AI-automated trading bots to optimize clients' earnings, the US Department of Justice (DOJ) alleges. In reality, Australian national David Gilbert Saffron and Los Angeles resident Vincent Anthony Mazzotta Jr. spent users' deposits for lavish personal experiences.

Two individuals indicted for $25M AI crypto trading scam: DOJ
The two individuals face a variety of wire fraud and conspiracy charges.
The defendants are also accused of concealing the victims’ cryptocurrency investments through interchain swaps and using cryptocurrency mixers to evade detection. The scheme operated under various names, such as Circle Society, Bitcoin Wealth Management, Omicron Trust, Mind Capital, Federal Crypto Reserve, and Cloud9Capital.

Ledger Hack Affects DeFi Ecosystem

Ledger, the hardware wallet provider, was hacked on Thursday after a former employee was targeted in a phishing attack which resulted in a malicious code being inserted in a widely-used GitHub library. The hackers stole $484K, but probably the worst part is that the exploit potentially impacts protocols like Sushi, Lido, Metamask, and Coinbase.

Link to the original tweet

Although Ledger quickly introduced a fix, many websites remain affected, thus users are advised not to interact with any dApps (decentralized applications).

Link to the original tweet

Fortunately, if you haven't used your wallet over the last few days, your funds are most probably safe. Find some tips below on how to protect yourselves going forward:

7 Safety/Legal Tips To Take After Today’s Ledger Security Breach
In light of the Ledger security breach, here are 7 safety/legal steps you can take to protect yourself moving forward: #1: Do not respond to any emails, texts or calls that claim to be from Ledger or other cryptocurrency-related entities. These are likely phishing attempts that try to trick you into

Focus on Bulgaria: Amazon Invests $1M in INSAIT

Amazon Web Services (AWS) announced a $1M donation to Bulgaria's Institute for Computer Science, Artificial Intelligence and Technology (INSAIT) aimed at research program development. The US tech behemoth recognizes INSAIT as the first AI Institute in Eastern Europe that follows the model of leading global research institutions.

“In a short period, INSAIT has been able to attract outstanding international researchers in computer vision and machine learning, as well as strong Ph.D. students from around the world,” Amazon Web Services stated.
Amazon Backs Bulgaria’s INSAIT with $1M for Research Program Development
Only have 1 minute? Here are 3 key takeaways: • Amazon Web Services has announced a donation of $1M for Bulgaria’s first AI Institute INSAIT. • The

“The cooperation also establishes a strategic partnership between the researchers and engineers of INSAIT and AWS, and will help the institute attract top researchers in the field of artificial intelligence and formal methods”.

Book Review: “The Coming Wave” by Mustafa Suleyman

For those of you who have missed it, here is my review of Mustafa Suleyman and Michael Bhaskar's book “The Coming Wave: AI, Power, and the 21st Century's Greatest Dilemma”. Suleyman is a prominent figure in the AI space, co-founder of both DeepMind and Inflection AI, and that is why I consider it important to discuss his views on AI development and progress. Check out the full article to understand why I was disappointed with the book and generally disagree with Suleyman's opinions:

Book Review: “The Coming Wave” by Mustafa Suleyman
Sharing my impressions of one of 2023 top AI books - “The Coming Wave” by DeepMind’s and Inflections AI’s Mustafa Suleyman.

Disclaimer: None of this should or could be considered financial advice. You should not take my words for granted, rather, do your own research (DYOR) and share your thoughts to create a fruitful discussion.