March 21, 2023

How finance and technology could work together

Potential finance and engineering collaboration to create the economic plumbing for as-a-service models in manufacturing industries.
Avatar Tom Acland

Fusion power, vertiports, the metaverse and crypto currency have one thing in common: the power to 10x an investment.

Yet radical ideas represent speculation on the future: a risky prospect with potential to grow capital and to destroy it, rapidly. Capitalism is ideally an engine for liquidity in the market for great ideas. The institutions of capital: banks, markets, and funds serve as virtual pipes, funneling future wealth to present-day opportunity.  Until we went meta and attempted to disrupt the future of finance with fantasy crypto coins. At this point, we unleashed an unfriendly eco-circularity: the kind with the power to torch more than 2tn of crypto assets in just a few months.

Yet unlike the East India trading company (1769) or Fanny Mae & Freddy Mac (2009), the likes of FTX (crypto-exchange) weren’t actually connected to the real economy. The contagious effects of a full-scale financial crash didn’t hit Main Street – perhaps because crypto has so far failed to become a major artery of our financial system. 

The connective tissue between crypto and the real economy is growing though. Tokenisation starts to get real when companies like Pollen apply crypto concepts to the physical infrastructure layer. Meanwhile, the widely supported Matter Consortium is adopting blockchain tech for its Distributed Compliance Ledger (DCL). The DCL is not (yet) a piece of financial infrastructure, capable of syphoning capital towards ideas, but it’s only a small step for a distributed ledger of compliance to become a distributed ledger of value. A manufacturer could offer a contract to supply future infrastructure, based on virtual contracts of compliance with the Matter specification. They’d essentially be offering an option to buy a future service level to buyers, for a price – enforceable by association with a blockchain-resident specification. Wouldn’t this be the kind of financial bet to spur innovation and investment in the real world?

Standards of interoperability like Matter are defining the interfaces between the Internet of Things and Internet media more generally.  While some people talk about Metaverses, engineers at groups like the Connected Vehicle Systems Alliance (COVESA) are building things like the Vehicle Signal Specification, that describes the interface between vehicles and user-centric services.

The Vehicle Signal Specification could be seen as a service catalogue for a future population looking to acquire transit. By leveraging this kind of service catalogue, planners could specify, orchestrate and even trade capacity in mobility infrastructure for citizens quite precisely.

Of course, buyers of service capacity might be private operators. Ride hailing and vehicle sharing services already optimize local supply using real-time demand pricing algorithms. These signals are siloed inside individual services and they do not reach manufacturers. Standardization of the interfaces between vehicles and experiences could achieve a better match between demand and the total volume of resources necessary to meet it. Thus leading to a more sustainable equilibrium between the needs of people and the impact on the environment. There is a lot of speculation in that idea, but what’s currently lacking in debates about mobility is not so much the vision of where we want to go but the practicality of how we’re going to get there.

In every perceivable domain consortia are developing these types of interoperability specifications, not to support Web3 explicitly, but to improve user experience and enable as-a-service business models. Since they’re usually implemented in code, these standards could become the way to codify cryptographic options to acquire access to services.  In other words, they might become a way to speculate on future version of the real world, where vertiports, fusion power, crypto-currency and the Metaverse co-exist.

So the next crypto-crash might be more damaging to the real world economy but the next crypto boom might also signify more value for people than pictures of apes. This evolution of Web3 might even be necessary to provide more radical economic ideas with a shortcut to market. The approach gives both investors and customers a way to encourage new offers.

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