The Professional Engineering licensure is holding on by a thread – albeit a very strong thread – called State Government regulations supported by the Banks and Insurance companies. However, that may change soon – not because of something that the government or the engineers are doing, rather, there is a huge technological changes occurring in Financial Services sector. This article describes how changes in the financial system may impact Professional Engineers.
How FinTech Impacts Engineers
The change is being driven by something called Bitcoin – well, not actually a coin, but the cryptographic process – called Blockchain protocol (BCP). The Blockchain Protocol is being called by some one of the greatest achievements of the human intellect since Calculus. Don’t take this lightly – anything that impacts finance, impact engineering, and vice versa.
While the mechanics of the blockchain protocol are extremely complex, an easy way to understand the impact begins with a short history on databases.
Early on, data was stored on tape machines and the computer told the machine to retrieve a bit of data, say, 11 meters down the tape and another bit of data 18 meters in the other direction so that some computation can be performed.
Today modern databases contain all sorts of data about every aspect of their business such as accounting, financial, HR, vendor, client, product, sales data, etc. Modern data systems are incredibly efficient except when one database needs to talk to another database, then things start to get resource intensive.
But over time we have adapted to this problem with a burgeoning service sector that helps databases communicate. These include mortgage brokers, insurance brokers, real estate brokers, multiple layers of management who bring the data to market. Then we developed APIs that help convert the data so that Google, Amazon, or Facebook, can of sell certain parts of their database to partners. Finally, platforms such as Uber and AirBnB are pure brokers of data.
In fact, Uber is the world’s largest Taxi but owns no cars, AirBnB is the worlds biggest hotel but owns no property, Facebook is the worlds biggest media company but writes no content. These are the mega brokers because they can withhold information from a market and are worth Billions upon Billions of dollars. Meanwhile it is impossible for me to email you 26 dollars because the fees to do so are 25 dollars. Money can be withheld at will. So if you can withhold information, you and create scarcity which drives price.
So what if you could eliminate the brokers? Not because they are bad or wrong, just because they are inefficient and introduce a great deal of friction to a free market. well, there are basically 2 ways to do this.
You can combine data bases of two or more organizations. This happens with many mergers and acquisitions and nearly always result in surplus labor (i.e., brokers).
The other way is for many organizations to share a common database. This is the general idea of decentralization – it all happens outside the construct of what we now know of as a Corporation.
The Digital Engineering Stamp
The new problem that emerges with decentralization is how do you secure the data? Who is going to take responsibility for maintaining the database? What is to keep someone from giving themselves a raise, or double spending an account entry, or accessing private information, etc.?
This is precisely the problem that the Blockchain protocol solves. In fact, the blockchain protocol, is the digital analog to the professional engineer’s stamp, signature, assurance, or design. So this is clearly not trivial.