Vision

9 Blockchain Use Cases You Should Know About

December 15, 2022 - 11 min read

Given the rapid technological advances and expanding use cases, Web3 is set to disrupt a number of major sectors in exciting ways.

9 Blockchain Use Cases on the Rise

Decentralized Finance

DeFi is a common shorthand reference for decentralized financial protocols which use automated smart contracts and blockchain ledgers for record keeping. Smart contracts facilitate peer-to-peer financial transactions which are settled periodically, with each new block of transactions being validated by a consensus of the network’s node participants. 

DeFi is characterized by public and transparent protocols, meaning that joining the network and accessing its services is easily done. That is, so long as participants meet the minimum hardware or software requirements, or have agreed to put up enough collateral to prove their stake in the protocol, which disincentivizes malicious behavior. 

Transactions, once settled, become permanently and immutably recorded on a blockchain’s ledger, since copies of the ledger’s official history are shared by distributed networks of nodes. Any attempts to manipulate the ledger’s history or otherwise submit fraudulent transactions would be immediately obvious by contrasting with the network’s ledger. The network’s nodes would reject the transactions via consensus since they would present inconsistencies with the collective knowledge of the master ledger’s contents. 

For many, earning money from investments or sending money online is as simple as sending an email, but that doesn’t apply to large swathes of underbanked individuals around the world. Not only do many lack access to online banking from legacy institutions, but those legacy systems are comparatively slow, expensive, and limited in their capacities anyways. 

Unfortunately, this creates a drag on their productivity, limiting their ability to gain economic traction. DeFi presents an exciting opportunity for underbanked individuals to access the most efficient financial instruments available, empowering them to participate more equally in the economic gains that their counterparts have been fortunate enough to enjoy.

Tokenization of Real Estate

Web3 also makes possible the digital securitization of real estate assets, also known as tokenization. Real-world assets can be effectively brought onto blockchains as tokens, increasing their overall liquidity. Real estate properties, real estate funds, their revenue streams, governance rights, and more can be easily financialized via tokenization. Investors all over the world can buy, sell, and collateralize their assets with greater precision and granularity, giving access to a much wider pool of investors and their capital. 

In addition, property management firms can more easily oversee their portfolios, particularly when they span across national boundaries or other disparate jurisdictions. Blockchain ledgers transparently maintain, secure, and transfer ownership of real assets. Smart contracts can automate and streamline rent collections and other payments, and reduce the burdens of performing due diligence throughout the process of real estate transactions. This saves investors both time and capital, and facilitates secure and more efficient decision-making as well.

Furthermore, blockchains will soon displace the use of paper deeds for recording ownership, replacing them with tokenized digital assets on immutable, yet highly liquid networks. This effectively makes real estate more accessible, increases investors’ confidence, unlocks untapped global liquidity and capital flows, and facilitates development in underserved communities. Sweden has already made strides in this regard by tokenizing real estate into a digital land registry platform, with a number of other jurisdictions in the planning and development stages.

Expansion of Video Gaming

GameFi is another Web3 shorthand reference, similar to DeFi, that refers to games built on blockchain technology. GameFi fundamentally embodies the play-to-earn (P2E) business model. A key differentiator in GameFi compared with common video games is that the players can actually own in-game items, providing the ability to subsequently trade them for cryptocurrencies, stablecoins, or other tokens. This provides gamers with added incentives to play and participate in larger communities, and provides even more lasting value to games long after their release.   

GameFi therefore represents new opportunities for artists or other creators to monetize their art as well. Their gaming efforts can therefore carry over to other blockchain games, or out into the real world by cashing in their digital assets into fiat money to be spent on essentials like food, shelter, or other necessities. When localities imposed lockdowns during the pandemic, individuals in the Philippines played blockchain games like Axie Infinity in order to generate income for themselves while unable to work.

The Metaverse Extended

At present, the metaverse encompasses a virtual world of digital avatars, representing humans or automated personalities, characterized by immersive, extended reality (XR) experiences. This not only includes virtual reality games and events using VR headsets, but also interactions with augmented-reality apps that utilize GPS data and phone cameras to overlay digital images onto the real world. Soon enough, developers will be using blockchain-based economies to integrate digital assets into virtual fantasy worlds in which users can remain immersed during gameplay, exploration, and the exchange of digital goods and commodities. 

Though a rudimentary example, Fortnite players are already familiar with in-app purchases for their digital avatars. Perhaps readers were one of the over 12 million attendees to Astronomical, Travis Scott’s VR concert. Singer Ariana Grande’s Rift Tour showings were also deemed to be massively successful, and were entirely free to attend. Lady Gaga, Billie Eilish, and the late hip hop artist Juice Wrld have also been rumored to be on deck as the next generation of metaverse-style concerts.

While Fortnite is technically offered via centralized platforms, they represent a glimpse into what the future metaverse will look like. Once the infrastructure is in place, we should expect to see a fully-integrated Web3 metaverse that represents a decentralized, borderless, and immersive world in which users pay, play, and have a stake in its success via their digital assets.

Decentralized Autonomous Organizations

Traditional leadership roles and organizational structures determine how decisions are made to optimize business operations, achieve goals, or pursue the best interests of shareholders and other participants. Existing leadership and governance structures, like corporations, have been criticized as either being opaque or otherwise difficult to participate in the decision-making process, particularly in comparison with blockchain-based governance models.

Decentralized Autonomous Organizations, or DAOs, are member-owned communities governed by network consensus, in contrast to centralized leadership structures. DAOs offer the transparency of blockchains and give members a greater stake in their chosen organizations via the distribution and application of governance tokens. DAOs have the potential to replace or complement the governance and operations of a variety of establishments like non-profits, housing and food cooperatives, political activist groups, sports teams, investment funds, and more.

DAOs make it easier for token holders to participate in voting on proposals by encoding company bylaws and policies into smart contracts. This could include the selection of board members, hiring software developers, or proposing ways to allocate funds from the DAO’s treasury to further the goals set out by community members. This type of blockchain-based cooperation has come to be known as on-chain governance.

A Creator’s Economy

Web3 has made possible for communities of artists, musicians, game developers, and other creative individuals to more directly connect with their supporters, enabling peer-to-peer cooperation and more efficient monetization of their work. This new creator economy enables novel business models which allows them to monetize their work online without it being copied and replicated by imitators. These new models involve using blockchains to share and permit access to gated content, subscription models, income streams, and the issuance of rewards to loyal followers.

Non-fungible tokens (NFTs) are digital assets characterized by their uniqueness and non-interchangeability. Think of rare pieces of art, a certificate of ownership tied to a rare item, or the VIN number on a motor vehicle. NFTs are most often associated with digital artwork with a specific identification number, which can be held in a crypto wallet, or exchanged with another compatible wallet for other digital assets. In other words, NFTs can be exchanged in the same manner as any other token, like ether (ETH), for instance.

NFTs facilitate the digital monetization of creative material while bypassing gatekeepers or other intermediaries. Users therefore have more direct financial means of interacting with each other, and fans can enjoy a direct stake in the success of those they support. 

Creators don’t need to worry about censorship or changes in monetization policies made by platforms, and fans can purchase associated digital assets which stand to gain value, which establishes their status as primary stakeholders. For example, imagine the increase in value that a Bruno Mars NFT would enjoy if a superfan purchased it before he became famous worldwide. Artists can also embed code within NFTs which earn them commissions on secondary sales, making it a win-win situation for creators and their fans alike.

Zero Knowledge Privacy Infrastructure

Though it’s often touted as a strength, the transparency of blockchains can also pose privacy risks to users. Protecting the personal data of users is crucial not only from a moral perspective, but also because it will open up the adoption of Web3 technology to a much broader audience, including major institutions. 

Of course, massive data breaches haven’t stopped people from using Web 2.0 applications, but they at least had privacy protocols in place before coming into mainstream use. Since blockchains are transparent by design, this will clearly make businesses and institutions balk at the idea of using these services until best practices for privacy and data protection have been established by developers. 

Fortunately, novel innovations in cryptography have made it possible to mathematically prove the ownership and validity of sensitive data without revealing the information itself. This is broadly known as zero knowledge (ZK) proofs. For instance, users could provide cryptographic proof to an application of their password without storing the contents of the password itself on a server, which could be targeted by malicious actors. 

While ZK proofs address and protect users’ privacy concerns, the details of how it is achieved requires certain tradeoffs by developers regarding the speed at which the proof is completed, the creation of a proof’s keys, and issues of scalability. This also means that regulatory compliance can not only be achieved, but streamlined and optimized, all without corresponding privacy risks.

Anti-Money Laundering & Know Your Customer

Traditionally, banks and other financial institutions need to hire teams of workers to manually conduct their own identity checks for AML/KYC. Consequently, it remains both time-consuming and costly to perform these duties and remain compliant with local and international regulations. 

Furthermore, AML/KYC practices vary by jurisdiction, and often change over time. This necessitates tedious and redundant work by compliance departments, meaning that the time and resources needed to properly carry out the job creates a drag on productivity. For customers, they’re subjected to lengthy onboarding processes for each institution at which they interact with, meaning they’re forced to trust that their sensitive data is properly maintained in multiple locations. Lastly, user data can often change due to life events, like residential addresses and even passport numbers, meaning that the data collected during AML/KYC checks can become outdated and therefore inaccurate.

Fortunately, advances in Web3 architecture facilitates the collection of this data into decentralized and cryptographically secure digital IDs. By making use of blockchain Oracles and ZK proofs, users can provide their AML/KYC data for verification without the need for each individual institution to manually request and check for authenticity. That is to say, automated smart contracts can periodically ping requests for updated ID checks using zero knowledge cryptography, and a user’s wallet can provide proof of identification while protecting the privacy of their sensitive data. 

Oracles can subsequently be used to verify and confirm the validity of the ID check by pinging its data sources to run cross-checks, and confirm the integrity of the user’s data without compromising its contents. Not only is the entire process automated, but its transparency allows for third parties to audit and verify its integrity.

Banking, Stablecoins, and CBDCs

Stablecoins are tokens which are pegged to the value of other assets, like commodities (gold and oil) or fiat currencies (USD or JPY). They are normally brought onto blockchains by private issuers using direct collateralization with off-chain reserves, though algorithmic stablecoins are not uncommon. Directly collateralized stablecoins maintain currency reserves that exactly match the amount of stablecoins issued on-chain. Stablecoins offer users the ability to sell more volatile digital assets for fiat currencies while continuing to enjoy the 24/7 liquidity of using Web3. This makes stablecoins incredibly useful since they serve as digital mediums of on-chain exchange. 

In contrast to privately-issued stablecoins, central bank digital currencies (CBDCs) are issued by sovereign governments. CBDCs offer the same benefits of stablecoins, although they raise significant privacy and security concerns for users. For example, CBDCs could be used to track and trace all transactions, directly tax users, or even freeze accounts based on political or other arbitrary justifications. Nigeria, the Bahamas, Jamaica, and the Eastern Caribbean Currency Union have all officially launched CBDCs, though many more central banks are in advanced stages of their own pilot programs. The US recently announced their plans for piloting their own CBDC system called FedNow.

About SupraOracles

Blockchain is here to stay. As more businesses and projects start to embrace decentralization, the need for fast, secure and reliable off-chain data through oracles is crucial to providing useful features and widespread adoption. From DeFi to the metaverse, almost every digital project will need to be connected to other data sources. That’s where we come in.

Our solution provides cross-chain interoperability, 3-5 second finality, and cutting edge zero knowledge cryptography—all backed by thousands of hours of R&D and simulations. Welcome to the next generation of oracles.

RECENT POSTS

Get news, insights, and more.

Sign up for the SupraOracles newsletter for company news, industry insights, and more. You’ll also be the first to know when we come out of stealth mode.

EXPLORE

Vision

SOCIAL

PrivacyTerms of UseWebsite Data Usage & CookiesBug DisclosureBiometric Information Privacy Policy

©2023 SupraOracles. All Rights Reserved.