Cathy Barrera, a CoinDesk columnist, is a founding economist at Prysm Group, an economic advisory group, and was chief economist at ZipRecruiter. She has a PhD in business economics from Harvard.
From Italian startups to local school districts, many groups have adopted 3D printing technologies to fill the urgent global need for ventilator components and personal protective equipment (PPE). In times of crisis, the gap between supply and demand grows and becomes more apparent. 3D printing is a perfect solution to address these issues.
Currently, these critical shortfalls are being addressed in an ad hoc manner. This is inefficient and wrong. Instead, the U.S. needs robust 3D printing production capabilities nationwide so we can seamlessly increase the availability of needed supplies. Although it is clearly impossible for this to occur during this current pandemic, such capabilities should be developed before the next crisis hits. While prior efforts – including an initiative by President Obama – have stalled, we now have the tools and resources needed to accomplish this task. The remaining challenge to achieving this goal is economic rather than technical in nature. Crucially, blockchain will play a key role in overcoming that challenge.
One way to prepare for these acute crisis-induced problems is to create stockpiles. But as we have seen (and our health care workers have experienced firsthand), stockpiles can fail due to the non-durability of essential supplies. Another plausible path is to satisfy demand for some types of supplies through 3D printing.
3D printing technology has three primary characteristics that make it perfect for addressing an unexpected mismatch between supply and demand.
First, relative to traditional manufacturing techniques, 3D printing is more flexible. The same machine without any reconfiguration can be used to produce (almost) whatever is needed, as long as there is access to the proper raw materials and designs. Second, with 3D printing, production can be located close to where the goods will be used. This reduces transportation costs and allows for production decisions to be made based on local needs. Finally, 3D printed goods can be produced on demand and used almost immediately. While the actual production times vary, eliminating reconfiguration and transportation times makes the overall speed to addressing a shortage is faster.
Even though these benefits exist, 3D printing is only a ~$12.1 billion industry, representing 0.90 percent of United States durable goods GDP (0.06 percent of United States total GDP). It has largely failed to deliver on its promise of enabling at-home manufacturing. But lack of adoption can hardly be blamed on technical issues anymore. The production capabilities of 3D printers have improved greatly in the last 10 years. Currently, the best 3D printers can use more than 250 different raw materials, are 100 times faster than previous 3D printers and can achieve 90 percent material efficiency. Instead, the barriers to achieving a robust market of 3D printed goods are economic in nature.
IP headaches
The main challenge to enabling large scale 3D printing manufacturing – particularly with remote production – is protecting the property rights of those creating product designs.
Digital goods are notoriously difficult to protect. For example, in the late 1990s/early 2000s, the digitization of music and the power of the internet enabled millions of copies of songs to be pirated (e.g., Napster). Similar issues have arisen for digitized movies and books. If rights to 3D printing designs can’t be protected, there is not enough of an incentive for suppliers to distribute innovative, socially useful designs.
This problem has been tackled before through digital rights management (DRM) schemes. The recurring issue with these schemes was that each relied on a single intermediary to enforce the property rights. This single intermediary is problematic for both buyers and sellers on a platform, who are all dependent on that intermediary’s continued support. Apple’s iTunes DRM is one famous example. Apple successfully defended itself against a lawsuit claiming it was using its DRM to exclude competing music sellers from the iPod. Apple argued the updates that resulted in competitors being locked out were needed in order to meaningfully improve the media player software.
Blockchain shows promise as a technology that can manage property rights without an intermediary. In contrast to the DRM solutions that have been attempted in the past, a decentralized, ledger-based system would more easily allow honest users to access the same content across various platforms and formats. While it isn’t a DRM panacea, in combination with encryption a distributed ledger that records each content purchase and transfer will likely make it easier to detect and assign blame for copyright violation. Even if a blockchain can’t fully eliminate piracy for 3D printing designs, a technologically and economically well-designed, blockchain-based platform would raise the costs required to get around DRM, making it more attractive to many 3D printing manufacturers to simply pay for the designs.
Digital property rights need to be addressed to support increased usage of 3D printing production. With enforceable property rights, together with well-designed contracts and proper two-sided marketplace design, buyers can trust sellers and sellers can be properly incentivized to participate in the digital marketplace. Once these economic challenges are surmounted, we will be able to build out our 3D printing capabilities for use during “normal” times. The flexibility, locality and timeliness that 3D printing enables in our most vital supply chains will leave us well prepared for the next big crisis.