Killer applications for Blockchains thus far

Blockchains, and cryptocurrencies by extension, have captured the imagination of almost everyone. Hardly a day goes by without Bitcoin being mentioned in the news.

By and large, most things in this industry are based in speculation, but if you look abit further out and abit deeper in, you will see the seeds of something incredible happening before our very eyes!

In this short article, I highlight some of the “killer products” for blockchains, beyond the speculative trading of Bitcoin. Coincidentally enough, some of these use-cases fly in the face of Bitcoin maximalists who posit that blockchains are only good as money and shouldn’t be used for anything else - the derision from this group of maximalists is always “you might as well use AWS for X,Y,Z“, but as you will see, using AWS for some of these functionalities misses some of the unique cryptographic properties offered by blockchains.

Here are, in my opinion, some of the main themes and killer products/applications of blockchains thus far:

1. Non-state issued Money (Bitcoin, stablecoins)

First breakthrough product for blockchains was money (Bitcoin). To be more specific, non-state sponsored money.

Bitcoin has gone on to evolve as a store of value, and another blockchain-based money product has taken over - stablecoins. Predominantly built on the Ethereum blockchains, stablecoin issuers have expanded to other blockchains such as Tron, Solana, etc.

These privately created monies, pegged to Fiat currencies, have blossomed and become the life-blood of the crypto markets.

The BIS (Bank for International Settlements), a kinda central bank for central banks, even posited that these stablecoins can co-exist with CBDCs (central bank digital currencies).

Make no mistake - Bitcoin, and by extension stablecoins, have pushed the digitization of banks faster than anything.

Akin to how Tesla pushed the electrification of vehicles- at first they laughed, then scorned and now every car company is suddenly speaking as experts, as if they always knew and had plans for electrification - utter nonsense! The same is the case with digitization - COVID may have been the fuel, but Bitcoin, and broader crypto ecosystem, was/is the fire!

2. Fundraising (ICO, IEO, IDO)

A second breakthrough product for blockchains was fundraising mechanisms which became all the craze in 2017. This became an alternative to IPOs for companies to raise money from the public and an extension of crowdfunding, for projects to raise money.

EOSIO blockchain developer Block.One raised over $4 billion in their year-long ICO. There have since been variations of the ICO model, namely:

• ICO - initial coin offering

• IEO - initial exchange offering

• IDO - initial dex offering

The raises range from hundreds of thousands of dollars to hundreds of millions. It’s crowdfunding on epic proportions.

3. Provable ownership of digital goods (NFT)

Another killer product for blockchains emerged during the same phase as the fundraising - provable ownership via means of games like cryptokitties.

NFTs have grown to be a wildly popular killer product for blockchains, especially in 2021. Cryptographically provable ownership of digital goods (art, games & items) will continue to grow in popularity, outside the niche crypto ecosystem. We have seen art auction houses such as Sothebys list NFT art that gets sold for millions.

Outside of the niche crypto ecosystem, NFTs are by far the biggest killer product. Dapper Labs, the company behind Cryptokitties, which also created the NFT standard on Ethereum, also have an NFT based platform that is huge outside of crypto - NBATopShot, among others. They create officially licensed digital collectibles, which have become absolute hits among sports fans and stars alike. Dapper have also created their own blockchain - Flow.

Patents as NTFs is the next logical extension of this. Music, art and many more - all digital content that could be on chain, will be on-chain.

4. Decentralized Financial Services (Defi)

While Bitcoin & stablecoins, as money, was the killer use case for blockchains, it wasn’t until circa 2020 when Ethereum-based Defi came along that another killer product was realized - financial services such as lending, borrowing, market making, etc - some key primitives.

Defi, while for the most part currently speculative, has painted a picture of the world to come - financial services without the middle man, relying on smart contracts. A digital wallet essentially becomes your bank - akin to what Mpesa and others around the world have already done. This continues to be a huge deal.

Products such as Compound and Aave have ballooned to be massive borrow/lending protocols utilizing billions of dollars.

Dexes (decentralized exchanges) also became huge, as of the financial services primitives allowing for listing & market marking for almost anything imaginable. Uniswap is big (within crypto) and there have been many more Dexes doing incredible volume, listing fantastic stuff.

5. Advancements of privacy technologies

This may sound like a stretch here, but bear with me while I make this case : privacy, via cryptographic means, has been brought to the fore with blockchains. Zcash and Monero are the two most-known blockchains that offer real privacy when transacting. They use different cryptographic primitives such as Confidential transactions, pedersen commitments, bulletproofs and zero knowledge proofs (ZKP), and others.

As already covered in my previous post, zero knowledge proofs were mostly theoretical for close to 30-40 years, up until blockchains arrived and not only implemented but also advanced this field of ZKPs. I would recommend you read through that earlier post to see how much bigger the applications of ZKPs are - from currencies, to cybersecurity and verifiable identities.

I firmly believe ZKPs haven’t come onto their own yet, but will be a big part of daily interactions in the future. They will be a big deal.