Tag: fungible

Things are getting real

Chief Pixie

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.

Are You a Responsible Owner?

Chief Pixie

A transition has begun in many parts of the world from mass production and consumption to responsible ownership. Interest in sustainability is raising awareness of the life story of individual products from sourcing to disposal. In this story, ours is just one of the hundreds of chapters throughout the life of the things we own.

(This is one of a series of Why Pixies, Why Now posts)

Mass production and distribution have enabled generations of consumers to experience an ever wider choice of higher quality less expensive products. Economies of scale across globally extended and integrated supply chains have dramatically lowered individual unit production and transportation costs.

In this environment, little attention is given to individual product units – we focus on categories and models because each individual unit within these sets is the same. It’s hard to feel attached to something that lacks identity and so we don’t care as much about throwing it away; particularly if you can replace it with a new model which does a better job and costs less.

Products in this category are ‘fungible’ – they can be substituted with a similar product without impacting the utility for the owner. I don’t care if you replace my can of beans with another of the same type and brand.

Recently, people have become increasingly concerned about the social and environmental impact of their mass consumption. More people care about their role as responsible consumers in areas such as ethical & geographical sourcing and production, the provenance of their food, brand (and in theory quality) authenticity, product safety, support for circular supply chains, and a product’s net cost to the environment – not just the cost of buying it.

The good news is that because mass production and distribution utilise digital channels, and the cost of data processing is close to zero, individual product item data is now being generated as a by-product of integrated supply and service chains without compromising economies of scale. The more people care about their responsibility, the more this data will be sought as an assurance of the history and qualities of the goods and services they consume. Brands that serve this need will benefit through greater loyalty and trust.

Of course, there are some kinds of products that people have always cared about. Art, antiques, collectables and bespoke hand-crafted items are examples of things with unique qualities that make them ‘non-fungible’ – i.e. difficult or impossible to substitute or exchange with something equivalent or identical.

Today, like mass-produced products, even these unique items have acquired a digital footprint as a byproduct of the digital communication and documentation generated by the people who care about them.

Uniqueness arises through a combination of identifying features, characteristics and history. As it becomes easier to establish context through a blend of physical and digital evidence, it will be more common to think about all the ‘things’ we care about as having unique ‘non-fungible’ identities. The more we see something as unique, the more likely we are to look after it.

To blend physical and digital evidence, there needs to be a common point of reference. Being self-centred consumers, we like to think that the common reference is us. But in fact, the life of a product extends over hundreds of stakeholders and our relationship with that product is just one of many in a product’s lifetime. To see the whole story, we need a through-life view with the product – not the consumer – at the centre.

The data for mass-produced items are scattered across supply, distribution, retail and service chains. Non-mass-produced item data is scattered across retail records, current and past owners, historical studies and informal interest groups. The common thread in both cases is the custody-oriented view of the data – who owns & services the item rather than the unique journey of the item through the hands of many interested stakeholders across many events.

As we gain a better appreciation of our role as responsible consumers, service providers, distributors and manufacturers, we’ll see the emergence of a new, product-centric perspective. That is, from the product’s point of view – events and contexts through its life, recorded in a verifiable, authoritative digital trail of history and stakeholder interactions.