Digital Twins: Linking the Physical and Cyber Worlds
A Banksy piece was recently purchased for $95k. It was then lit on fire. This destruction was filmed, turned into an NFT and then sold for $380k (link).
This feels like peak bubble, right? Or is this a clear inflection point preceding a rapid move from the physical world to the metaverse?
I dont think it’s either.
We have the framework, and infrastructure, to support the linking of physical items with its digital equivalent, or its “digital twin.” Businesses have already been built around creating digital objects based on their physical equivalent. Artists are now reversing this path by bringing their digital art, tokenized with a NFT, into the physical world. Companies can learn from these artists by taking a digital first approach, with a paired physical product, to create amazing new experiences for customers.
Tell me more about a business built on digital twins
Digital twins are defined by IBM as, “…the virtual representation of a physical object or system across its life-cycle. It uses real-time data and other sources to enable learning, reasoning, and dynamically recalibrating for improved decision making.”
GE Aviation has been operating an “Engines-as-a-Service” business in the Aviation industry for several years. With this model, GE is responsible for the engine operation on whatever airplane it is mounted. They make more money by hitting certain efficiency targets. In order to optimize this business there needs to be the following:
- Flight history
- Clear chain of custody
- Single thread of all supply systems involved, at each customer company
- Real time engine readings
David Havera, blockchain CTO of the GE Aviation Digital Group, estimated in this Coindesk article that,
“over a five-year period, some 60 percent of [the airplane parts] change hands, making documentation and certifications important. As soon as the custody chain is broken on one of those parts, and it isn’t 100% clear who worked on the engine, how it was worked on and even how it was stored the part has to be scrapped.”
In addition to tracking parts, which could be presumably solved with a robust non-blockchain software solution, they have worked a digital twin into their solution.
Deep in the GE public archives I found a case study where the real time monitoring of an engine, kicked off a high-priority inspection in the field, which found a broken turbine blade. This isn’t exactly a $69M NFT but it is surprisingly relevant to the creator economy.
How can digital twins be used in the art world?
The most common objection to digital art NFTs from my last post was, “It isn’t like normal art. There is no real-world equivalency. I can’t even hang it on my wall.”
First of all, now you can hang it on your wall, with the Samsung “Frame” product here (not an ad, but I should be paid for this)
Second, artists are now working back into the physical world with their digital creations.
NFT collectors and artists are exploring ways to bring their digital work into the traditional art world by lending their tokenized artworks to museums. Beeple, in an interview with the Journal after his sale, mentioned interest in museums calling him to borrow/buy his works.
NFTs are also helping collectors of physical art prove their purchase, as well as track the chain of custody. Christies experimented with this hybrid last October when it sold an NFT attached to Robert Alice’s disc-like painted wall relief, “Block 21.” The work, which sold for $131,250, was part of the artist’s “Portraits of a Mind” 40-piece series that painted the founding code behind Bitcoin.
Digital twins have traditionally been used to represent existing physical items on the net. NFTs are helping to reverse this paradigm by creating scarce digital goods that the owners/creators are excited to physically represent. This flexibility empowers creators, unlocks new potential uses cases for this technology and removes friction created by traditional gatekeepers.
How does a digital first approach unlock new use cases for business?
I love this business idea from Scott Galloway,
“If I were Chanel…I would issue a million coins and expand it by just 20,000 new coins a year. And I’d say, ‘Anyone who owns a coin gets the following: They are the only ones in the world who are allowed to buy Chanel products. They’re assigned a fashion adviser, who has much better taste than them, who is available 24/7 and says, ‘I’m going to give you everything from your lipstick to your luggage to the right color blouse that brings out the color of your eyes.’ ” You get invited to special events. You have proprietary access to fashion shows and trips to Paris to the Chanel factory. You are the only person, or one of the few people, in Delray Beach who gets to wear Chanel.”
We might not all be flying headlong into the metaverse, but tokens and NFTs are unlocking ways for customers to become more engaged with their favorite products, businesses and artists. Keep an eye on this technology as it creates entirely new business models in the near future.
Have an interesting use case I missed? Let me know I would love to hear it!
Note — If you want to deepen your relationship with the metaverse here are some must-reads: Neuromancer, SnowCrash, Ready Player One
