Should the tech world care about NFTs and blockchain?

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If the first question out of people’s mouths about blockchain or NFTs is, “What exactly are they?” the second question is inevitable: “Is this something I should really care about?”

If you are an artist who makes a living selling art, the answer may be yes. But if you’re in the tech world, the potential benefits are much less obvious.

on the plate

A quick introduction to these buzzy technologies is helpful here. Most people have heard of blockchain, a distributed ledger technology famous as the basis for cryptocurrencies such as Bitcoin, which first appeared on the scene in 2008. The blockchain is capable of recording transactions and creating an immutable record without the participation of any kind from a centralized authority such as a bank or a government agency.

Blockchain also supports non-replaceable tokens – NFTs. Currently, NFTs are mainly used to prove ownership of a particular object or digital file. Often this is a 2D image, but it can be almost anything: a music file, a piece of writing, a video or even a 3D file.

If you’re an artist, you can see where this can be useful: you can put your art up for sale and a collector can buy an NFT that says they are the official owner of that work of art. (In theory, anyway – more on this in a bit.)

So, how can this apply to the tech software space?

‘I did that’

Unlike the individuals in the art world, people in the tech world generally don’t create 2D files and 3D files just for artistic expression and then try to sell them. They create these assets because they want to do something with those files, such as designing and manufacturing a real-world object.

So, touch one: there isn’t much use for NFTs and blockchain on that particular front. But maybe there is another application in the tech space, perhaps around intellectual property and documentation of the product development process?

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Imagine a manufacturer designing an innovative new bicycle. A mechanic is responsible for the bicycle frame. As they go through the development process, every time they create a new CAD file, they check it in the blockchain so that their work on this new product is documented on the blockchain. Years later, when for some reason they have to prove their work on this product, there’s a permanent, publicly available record for all to see, and the engineer can say, “I did.”

It sounds like a handy use case. But unfortunately, this is where the ‘theoretical’ benefits of blockchain quickly gain momentum.

Not so fast…

For starters, while there are a small handful of companies making technology that does this sort of thing, they are few and far between. In terms of the innovation adoption curve, this field is really still in its infancy – which is surprising considering the underlying technology has been around for nearly 15 years.

That’s not to say there aren’t many enthusiastic voices around the potential of blockchain and NFTs in the tech world — but not all of them have sacred motives. If someone has bought a boatload of Bitcoin or NFTs for purely speculative reasons, they will likely favor all things blockchain and its potential as it indirectly benefits the investments they have already made.

Then there is the issue of blockchain’s environmental impact. Even the newer, more evolved blockchain protocols like Ethereum still consume massive amounts of energy [subscription required] while recording and validating transactions in a distributed and decentralized ledger. With the proof of stake mechanism for validating submissions, this energy consumption is less of an issue, although it has other issues. The bottom line, however, is that on a rapidly warming planet [subscription required] If we ignore a climate emergency, blockchain is a technology that will be difficult to embrace unless transactions can be made radically more efficient.

All of this is to say nothing of the fact that much of what blockchain could enable the tech space is already possible — and much more easily accomplished — through existing methods. Want to show evidence of previous work on a product? Whenever you check in your CAD file into some CAD or PLM system, there is an audit trail of who opened, created, or modified the file. Need an indisputable patent? There’s a patent office that decides on those things.

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While it might be nice to get an “official” NFT that says the work in a CAD file is officially yours, that NFT doesn’t mean you legally own it. It’s just a digital signature that means something in “the world of blockchain”, but doesn’t necessarily mean anything legal.

The fact is that most of the things you can do with the blockchain, you can easily do without the blockchain by using a centralized database. All you lose is decentralization, which – frankly – may not be enough incentive for people to succumb to this new way of working, given all the potential drawbacks and inefficiencies.

Hope springs forever?

Clearly, the case for blockchain and NFTs is not a slam dunk in the tech space. But — there’s always a “but” with new, emerging technologies — if you look hard enough, you can spot its potential in several intriguing areas. One of these is smart contracts, which are essentially self-executing contracts embedded in the blockchain.

These contracts contain a series of customizable instructions that allow specific actions to be performed if certain conditions are met. For example, you can create a smart contract that tracks a digital asset — such as an NFT or other file — and executes instructions around payment, distribution rights, execution rights, or other factors.

In this way, smart contracts go significantly beyond what we see in traditional PLM systems. In addition, they offer the potential to cut out a whole layer of middlemen, which – in a world of more and more creators and creators – is of great value.

Another intriguing area for blockchains and NFTs revolves around the digital virtual worlds being built to create the so-called metaverse. Blockchains and NFTs are central to how ownership is assigned and how content is populated in this space. Creating NFTs and placing them on the blockchain is at the heart of creating this virtual infrastructure.

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Of course, this can lead to the need to get technical assets into these virtual worlds, whether it’s pulling in data for assessment or pushing it out at the end of the product development lifecycle when a digital asset is delivered. It may not be commonplace at the moment, but over time it will be worth monitoring what the demand for technical data is in these virtual worlds.

Keep a healthy dose of skepticism for now

Blockchain and NFTs have been shown to have some interesting uses for artists or those who just want to have some fun with speculative assets. When it comes to technical software, there are some potential uses around smart contracts and filling the metaverse – but overall, the jury is out.

Not a lot of serious technical work is being done with blockchain and NFTs right now – and there may be good reasons for this. At the moment it is mainly a solution to the problem-seeking solution, and it is not clear that its use will become more attractive or viable in the future without some major fundamental changes. For those in the tech world wondering, “Is this something I should care about?” The answer is: not currently. For now, a watchful but skeptical eye on this evolving field will suffice.

Jonathan Girroir is senior technical marketing manager at Tech Soft 3D.

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This post Should the tech world care about NFTs and blockchain?

was original published at “https://venturebeat.com/2022/07/24/does-the-engineering-world-need-to-care-about-nfts-and-blockchain/”

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