Celestial Payments and Other Advances
By Tom Alford, Deputy Editor, TMI
J.P. Morgan tested the world’s first bank-led tokenised value transfer in space in 2020. In doing so, it signalled the start of what could become the subject of the next space race: satellite payments. Tyrone Lobban, Head of Blockchain Launch at J.P. Morgan’s Onyx business, updates TMI on this and other innovative developments within the bank.
With its early experiments in space with Danish nanosatellite manufacturer GomSpace, Onyx proved it could run blockchain in space, and that satellites could send secure transactions to each other and back down to corresponding Earth stations.
The basic mechanics of ‘payments in space’ have thus been proven. The fascination generated by this endeavour has endured because it marks a new use for blockchain and, in all honesty, because banks are supposed to be rather staid and very much earthbound operations, not space pioneers.
“We have many clients who are curious and want to find out more about this work, and we’ve had a lot of interest from people in the space industry too – start-ups and larger players – wanting to explore how they might leverage this opportunity,” says Lobban.
The challenge now is to take the positive results of payments testing and progress it to the next stage. Onyx aims to see if the same technology can be used to execute a payment for a ‘real service’ because, so far, the experiment has been based around abstract transactions. “The idea we have is to request a satellite to take a specified image of Earth, return that image, and then receive a payment for that service,” explains Lobban.
The project is obviously at a very early stage and its likely direction, and the timing of it, is yet to be decided. However, the hope is for space payments to eventually become both a consumer and corporate service.
Individuals may wish to purchase an image of a particular property and its current environs, for example, because free internet-based maps do not offer the latest view. Similarly, a business may wish to explore a development site in another country before investing too heavily.
Another commercial use case Lobban says is being investigated by Onyx is how satellite imaging and blockchain technology can combine to ratify corporate compliance with specific environmental requirements of a sustainable funding contract. With current and irrefutable verification from space, funders, investors and other stakeholders can seek reassurance that the target business is on track.
Satellite-to-satellite payments using a blockchain mechanism, with subsequent sharing of data with Earth stations, clearly works in principle. What’s needed in the vastness of space is scale, says Lobban. This, he believes, will come as the distribution of constellations of satellites (such as Tesla’s Starlink) deliver speed and reliability through closer-proximity communication.
“It starts to make the broader satellite and space economy more accessible,” comments Lobban. “If projects of this nature are taken forward with ‘real’ intent, there’s no reason why it couldn’t one day be available to consumers.”
One area where greater accessibility could be leveraged is in the use of digital payments in very remote areas where, for example, satellite-based broadband services are the only option. Payments made to an orbiting mesh of satellites removes the need for ground-based infrastructure.
The use of space payments opens up an interesting discourse on the nature of space as both a commercial proposition and as a legal jurisdiction. International agreement prohibits any nation claiming ownership of space or celestial bodies. By default, it is international territory without border.
Onyx has created a highly decentralised system that does not rely on any one central body to support a payments network. As such, the currency to be used internationally from a space-economy perspective is not clear-cut, notes Lobban.
Having grasped the technical issues with its exploration partner GomSpace, Onyx knows that further expansion begins to stray into the territory of governmental discussions, with deeper philosophical and theoretical enquiry necessary. Indeed, the matter of currency, or even the resolution of payments disputes, for example, is a potential challenge.
It may be that an international digital currency is required to overcome such issues. Or it may be that the satellites themselves are classified as legal outposts of the nation that launched them, and therefore become subject to ‘local’ legal requirements.
“As we move further down the line with the general space economy, this becomes more of an issue that needs to be addressed,” comments Lobban. “The advantage of blockchain is that it supports borderless transactions in new forms of value transfer and new currencies, and maybe therefore can support a mechanism that does not align to any one particular jurisdiction.”
While the democratisation of satellite activity is still very much in its infancy, Onyx is engaging with other advances. Already crossovers are apparent. Indeed, the work it has already undertaken with its space payments experiments supports its efforts in the field of IoT (Internet of Things) and machine-to-machine activity, says Lobban.
“It’s an extension of the notion that machines can communicate with each other, even in very remote and decentralised ways, and that blockchain can enable payments between different devices.”
Back to Earth
Meanwhile, Onyx’s work on earthbound frontier ideas continues. Two concepts in particular stand out. The first is how to leverage blockchain to create new token-based (digitised) applications. This is looking at how real-world, or even digitally native assets (such as digital ‘collectibles’), can be represented on a blockchain, and how payments can be subsequently enabled.
In response, a project, based on intraday repos, went live in December 2020 on the Onyx Digital Assets platform. “The idea creates a better way for treasurers and banks and broker-dealers to gain access to secured liquidity during the day,” explains Lobban.
With intraday repos, borrowers can put up collateral by tokenising securities, such as Treasury bonds, and then automatically receive the funding for a specified intraday period. “It’s very cost-efficient,” he says, adding that tokenising other kinds of assets through the platform is now on the cards.
The second interesting area of exploration within the Onyx team is in the realm of digital identity. With the fintech and Big Tech communities making deeper forays into identity management in general, Onyx is aiming to provide customers with more trust around who their business partners are.
“Blockchain’s innate capability around digital signatures can better prove that I am who I say I am, but more importantly that I have the authority to execute a specific transaction,” explains Lobban. The blockchain notion of ‘self-sovereign identity’ (SSI) can be used to enable secure portability of personal data across different agencies, companies and geographies.
In practice, it means that an individual’s personal history and reputation is never reset from one scenario to another. It has distinct professional advantages, especially for treasury and banking system sign-ons, but for consumer’s especially, identity control helps when sharing personal data online. The Onyx team is now studying how and where SSI can be expanded and leveraged.
Through a combination of keeping abreast with market trends from a broader thematic perspective, and meeting internal business unit and client criteria, the body of Onyx’s work continues to develop and expand, says Lobban.
“We work with our businesses across the bank to understand their specific challenges, but we also get to have a different kind of conversation with our clients because we can consult with them at an early stage as we create new platforms and solutions to meet their changing needs.”
Onyx may, as part of its remit, be devising advanced tools for the space-economy, but its forward-looking approach will never see it working in a vacuum.