6 best uses for blockchain technology

6 best uses for blockchain technology

Most IT enthusiasts agree that blockchain technology will change most of the world’s industries for the better. While disruption is still in its early phase, there are several use cases that we can look at to better understand blockchain’s value proposition over the long-term.

Long may crypto reign

The first relevant example of blockchain technology usage came from the cryptocurrency market. With a total market capitalization exceeding $1 trillion, digital currencies are rapidly becoming a central part of the worldwide financial system.

Without efficiently employing blockchain technology, digital assets like Bitcoin would’ve never reached the mainstream market. No crypto can hope to achieve decentralization, transparency, immutability, security, or efficiency without recording all transactions on a blockchain ledger.

Nowadays, the crypto market is reaching new heights. We’re currently witnessing the appearance of disruptive digital assets that facilitate wealth growth and preservation. Gaining exposure to the financial markets has never been easier, as blockchain effectively eliminates the need for expensive and unreliable middlemen, while countering ineffective and debt-inducing monetary policies. With crypto in power, people worldwide will access an inclusive system that’s built on code, rather than ever-changing laws that do not serve the common good.

Enter decentralized finance

Speaking of unreliable middlemen, blockchain is the core infrastructure behind the decentralized finance (DeFi) movement. DeFi aims to replace banks by providing customers with a frictionless financial experience. Users can easily leverage the power of the blockchain network to access loans and to earn interest on their crypto. Unlike centralized banks that run credit checks and are extremely careful about who they work with, DeFi protocols function anywhere in the world and do not entail identity verification or credit checks. Anyone can take on a loan as long as they deposit collateral. DeFi also provides superior interest rates, often ranging between 5% and 12% on a yearly basis. The exact rate will vary from platform to platform, depending on the cryptocurrency that’s being deposited.

DeFi offers a myriad of other opportunities. Decentralized exchanges that work as automatic market makers (AMMs) facilitate secure, private, and cheap swaps between popular trading pairs, as well as monetary incentives for liquidity providers.

So far, DeFi has turned into a multi-billion market, with $33.64B worth of crypto locked into DeFi contracts. This number is bound to continue its uptrend, as DeFi innovators come up with revolutionary concepts like yield farming, liquidity mining, composability, money legos, wrapped cryptocurrencies, and more. The possibilities are virtually endless, and DeFi is just getting started!

The dawn of decentralized apps

Until recently, most of the world’s digital apps were centrally controlled, giving users little freedom regarding what they could and could not do. By leveraging the power of blockchain technology and smart contracts, developers are building dApps (decentralized apps) that forgo the need of middlemen, whilst providing users with transactional efficiency, hard-coded rules, and great incentives. Most dApps work via smart contracts, which are self-executing agreements that carry out predetermined instructions once specific conditions are met.

As dApps enter the mainstream, they’ll form trustless relationships between users and developers, leading to significant value growth and the fulfillment of innovative use cases.

Governing new collective entities

For years, businesses have had a hierarchical structure with clear responsibilities and policies. Blockchain technology is now leading to the appearance of decentralized autonomous organizations, where control is spread out, rather than being concentrated in the hands of a few. DAOs often entail remote teams that collaborate towards attaining specific goals, with decisions being taken through the means of consensus. Thanks to blockchain governance, DAO members can leverage voting coins to express their intentions concerning new proposals. So far, studies have shown that running a DAO is oftentimes cheaper and more rewarding as opposed to running a traditional company.

Those involved are partners rather than employees, thereby forming a flat structure. As the digital economy continues to evolve, numerous new DAOs will be formed in an attempt to build next-gen products and services.

Building digital identities

In today’s globalized economy, data protection and digital identity management are more important than ever. In light of data insecurity, identity theft, and shameless data mining by big corporations, people worldwide require access to innovative data management services. By combining decentralized identifiers, management solutions, and cryptographic encryption, blockchain technology could create fully-fledged digital identities that would forever change the game.

These data avatars could include all relevant information about a specific person, such as names, addresses, financial information, medical history, shopping preferences, and much more. Specific datasets could be provided on-demand, without unveiling all other details.

In return, blockchain-based digital identities could create opportunities for data portability, data monetization, and protection.

Supply chain management

Blockchain has the potential of completely revolutionizing the world’s supply chain industry. Some of its main issues include constant inefficiency, the inability to accurately track produce as it travels the world, health risks, partner relationship management, and more.

Through the deployment of blockchain technology, the supply chain industry could become more transparent, resilient, and streamlined. Since the blockchain can record everything, the ledger will store valuable data on shipping status, payment processing, storage needs, originating batches, and more. Over the long run, blockchain can enhance trust within the supply chain market, whilst providing the end customers with safer foods, cheaper products, and potentially quicker delivery.

Final insights

With these aspects in mind, blockchain’s value proposition is undeniable. Its scope far exceeds the cryptocurrency market, as experts predict blockchain to have valuable contributions to multiple other industries, including the Internet-of-Things (IoT), micropayments, healthcare, gaming, and others. The future is now!