What are the Use Cases for Blockchain

One of the biggest complaints that some people have with crypto/blockchain is that “it is useless” or “it has no intrinsic value”. These claims are not true!

NB: Nothing in this post is financial advice. Investing has significant risks and everyone must do their own research to make educated and informed decisions.

Over the last few months, I’ve started learning more about cryptocurrencies and blockchain technology. One of the confusing elements of this industry is figuring out what each project and coin does. There are so many people producing content about crypto/blockchain and I sometimes find it hard to figure out who is correct and which project/coin has the most potential and value. However, I believe that this industry has a lot of potential, so I am determined to learn as much as possible about it.

There are at least four broad categories of use cases for crypto/blockchain and before I briefly outline them, here are a few important basic explanations:

• Decentralized: Decentralized means that there is no authority controlling something and in the context of blockchain, it means that each user can interact directly with the blockchain network, that code is open-source, and that all data is publicly available.
• Smart Contract: A smart contract is a piece of code that enforces a set of rules. Because these rules are written into the code, parties who don’t know or trust each other can trust the transaction — a “trustless transaction”.
• NFT: An NFT is a Non-Fungible Token. “Non-fungible” means that it is unique, one of a kind. An NFT is a unique token for which transactions can be recorded on the blockchain. This token can be art like a graphic, music, or video and as it is created and then bought/sold. These transactions are recorded on the blockchain.

Here are some broad categories of use cases for crypto/blockchain:

1. Store of Value: Deflation is the loss of purchasing power of money which means that what you can buy today with $100 is more than what you will be able to buy in a year or a few years with a $100. Cryptocurrencies like Bitcoin are deflationary because there is a fixed number of coins and no more coins can be created. This is different from fiat (non-digital) currencies which can be printed by governments. People and companies who/which want to protect the cash in their bank accounts/on their balance sheets from losing value because of inflation could convert their cash to a cryptocurrency like Bitcoin and this could protect the value and purchasing power of their cash.
2. Decentralized Finance (DeFi): Decentralized finance is one of the biggest and fastest-growing parts of the blockchain ecosystem. Decentralization (see the explanation above) has huge implications for finance. A blockchain like Ethereum enables permissionless transactions through smart contracts (see the explanation above). Permissionless means that there is no person or company giving permission for you to transact, there is only code. Have you ever applied for a loan from a bank and experienced delays, discrimination, inefficiency, or lack of clarity for what criteria you need to fill? Using a DeFi loan service, you can borrow money in minutes by interacting with a smart contract. This is just one, simple, example. Today, using DeFi services, you can exchange different cryptocurrencies, send money and earn interest on money in your account in minutes. DeFi removes the middleman and the above are just a few examples of the beginning of this industry. DeFi is growing exponentially and the potential is gigantic.
3. Intellectual Property (IP): Protecting the intellectual property rights of creators and creator compensation and incentives are being fundamentally shifted by blockchain. NFTs (see the explanation above) allow us to track the owner of a piece of IP and using smart contracts (see the explanation above), we can enforce a fee being paid to the original creator of the NFT every time the IP is bought/sold. For example, if a person creates a new song and someone else wants to buy it, the creator can turn that song into an NFT and sell it. If the buyer wants to sell it to someone else, they can do so, but a small percentage of the fee they charge can be automatically allocated to the original creator. This is a significant improvement for creators and it is just the beginning. Crypto social networks like Bitclout are enabling creators to own their audiences and capture that value instead of letting that value be captured by the platform, like Facebook or Twitter. This space is changing quickly and it is very exciting!
4. Blockchain in Business: A blockchain is essentially a gigantic verification service. It offers trust to parties that don’t know enough to trust each other. This concept has wide application — think about insurance companies, accounting for companies, and health care. A number of big industries have important tasks which can be done more efficiently and/or more reliably using blockchain.

These four categories are very broad and the uses for crypto/blockchain are expanding rapidly. The uses, services, products, and projects being built in the blockchain world are challenging the way we’ve done things for a long time. Change is often how we improve ourselves and the world and blockchain is a mega change in the world across many industries. It will make the world a better place and we are at the beginning of this story in history.