It’s said that fish don’t know what water is. Our own sense of reality is changing as we immerse ourselves more deeply in a world that blends the physical and digital worlds. Some of us are happy to dive deeper while others are struggling like a fish out of water. Are you sinking or swimming?

The digital production era has delivered high (extraordinarily high) volumes of uniform, interchangeable ‘things’ with identical quality and appearance. Your digital representation of the Mona Lisa is indistinguishable from mine.

The first generation of digital things lacked irrefutable identity and existence. They were merely easily copied and modified (ie fungible) representations of things defined by zeros and ones instead of pen and ink. Although you could detect different underlying zero and one formats of the same representation (e.g. jpg, png, mov, mp4…), there was no digital equivalent of a unique configuration of atoms existing physically at a place in time.

New methods like block chains have arisen to support verifiably unique, non-fungible instances of digital things. However, rather than each instance being in a unique place in time, the tokens on these chains are in everyplace on the network at the same time. If you accept the environmental ‘physics’ behind this it’s possible to make a credible claim that digital things can now ‘exist’ uniquely in a universe that observes those laws.

People tend to firstly apply new technologies as updated tools for old work. It takes time for the transformative impacts to emerge as society internalises the opportunities afforded in unforeseen ways (adoption, exaptation and evolution).

The first era of Web 3.0 has been a pretty clumsy crawl out of the primordial digital swamp toward the real benefits and long term impacts of accepting the existence of digital ‘things’. It’s been laughable to watch the move from one extreme where people thought of digital things being free and infinitely reproducible to thinking that they could be ‘scarce’ and highly valuable like rare gems.

Software as we (as I) know it has been evolving slowly for more than 75 years. Web 3.0 introduced ‘smart contracts’ which are essentially pieces of code that should (environment permitting) execute reliably, can be viewed by many, but cannot be changed (but can be replaced). Nothing there is that ‘smart’. Parties who enter these contracts are kind of anonymous and agree to be bound by the performance of the software with no court of appeal. Is that smart? I don’t know, some people think so.

In theory, you don’t have to trust the other parties to a smart contract because they cannot influence the performance, you just have to trust the software and the execution environment. In practice, real people have in fact gone to real courts to overrule these contracts because the ‘real world’ of people and contracts has yet to evolve into a blended digital and physical context.

Beyond smart contracts, we already trust software in more tangible things like ‘smart’ cars and doorbells which extend functionality and extend the trust we place in their manufacturers. This trust is personal and even though the software may be the same, we rely on that software working with our specific personal instance of a physical thing.

Specific physical things need specific unique identifiers. Cars have VIN plates and electronic keys and doorbells have unique identifiers held in the chips inside. The digital and physical context is getting closer, but until material science evolves much further, there will continue to be an ‘air gap’ between the physical and digital.

On the physical side, sensors, communication and augmented visualisations can give things new capabilities and characteristics that redefine the scope of our experience and change our sense of what something is and can be.

Over time, the genuine practical benefits (and risks) of non-fungible digital things will emerge more fully as we start to delegate responsibility and trust those digital things to perform functions we depend upon in our ‘real’ world. The gap between the digital and physical will close in our minds through changes in our sense of what’s real long before the real air-gap closes.