Summary of use cases for Smart Contract Blockchains
Blockchain is a revolutionary technology creating a decentralised network of databases and computational power — Blockchains like Etherum, Cardano and Solano have the ability to provide deterministic automation with Smart Contracts.
As an example, I could write a smart contract to pay you 1 Bitcoin if you transfer me an asset like keys to a car. The smart contracts have the ability to process if/when/then statements that are written into code on the Blockchain. As soon as the transfer of keys are confirmed, the 1 Bitcon can be automatically transferred.
There are a large number of organisations building applications to work on Smart Contract Blockchains and here is a summary of some of the use cases that I’ve learned about recently:
- Decentralised Finance (DeFi)— probably the most well known but don’t underestimate how important of a use case this is. Today all FIAT currency products are handled centrally by large banking institutions and require a large amount of KYC (know your customer) for regulatory purposes like money laundering and anti terrorist financing. DeFi organisations like UniSwap or SundaeSwap are allowing anyone with an internet connection and a crypto wallet to participate in financing activities like borrowing, lending, trading, staking and much more.
- NFTs (Non Fungible Tokens) are digital assets (pictures, gifs, audio and video files) which are stored on the Blockchain. The Blockchain is used to authenticate the asset and its owner so originality can be proved. The value is created here by the authentication provided by the Blockchain and the demand for the digital asset. Crypto punks are 10,000 punks created on the Etherum Blockchain and are valuable because they were one of the first NFTs and considered a collectors item.
- Community — Provided you own an NFT that is part of a particular collection, there have been many examples of communities offering various benefits to its NFT owners. The Bored Ape Yacht Club (BAYC) is a collection of 10,000 bored ape pictures on the Etherum Blockchain. Owners include Eminem, Justin Bieber and Neymar Jr. The community organise in-person meet ups for BAYC owners, access to merchandise and early access to new NFT projects before they are available to the public. There is a Flyfish NFT which organise private dining experiences for their members as well as the FancyBearsMeta NFT which have giveaways and hold get togethers in the metaverse.
- DAO — Decentralised Autonomous Organisations are ‘incorporated’ by owners of a DAO token (similar to a crypto currency) and perform tasks using the DAO owners for the benefit of the DAO. DAOs are initially set up through selling DAO tokens and the funds (in ETH or the respective crypto currency / blockchain they were created on) are held as a treasury for the projects and tasks the DAO vote to execute upon. The discussion on what tasks should be executed are discussed via Discord typically. Tasks are then voted on by the DAO membership and executed via Smart Contracts on the Blockchain. Tasks can be anything but are usually to do with deploying the treasury funds on things like marketing and investments to make the DAO token more valuable.
- Supply Chain management — To ensure products are not counterfeited and end consumers are assured of the quality of the product they purchase; QR codes and Blockchains can be used to track products from the factory to the consumer recording every step of the product through the supply chain. The Cardano blockchain allows the metadata of the supply chain (producer, location, category etc.) to be recorded on the Blockchain and provides transparency for all users via the Scantrust QR identifier which is applied to every product generated from the factory.
- Real Estate Financing — Real Estate companies can launch their own staking pools (by selling a digital currency or NFT) for exposure to real estate and the chance of earning returns. Companies like Empowa are using the Cardano Blockchain to attract investment into their staking pools which can be used to finance property development in Africa. Rent is then earned and returned to staking pool members.
Smart Contract Blockchains as a technology clearly have some incredible use cases and some use cases which are difficult to comprehend.
DeFi is taking off and likely to experience many challenges from the plethora of regulation and red tape which surround the traditional finance system.
NFTs were mostly about flexing when I first started to educate myself on them. When you buy a Bentley or a Rolex, you aren’t just buying a transport vehicle or a way to tell the time — you are flexing your status to your friends, family & community. NFTs as a mere jpeg can be considered the same which makes them collectable.
However, when you start to see some of the NFT projects trying to create real communities and offer benefits to its members or using the money they generated from the sale of the NFTs to make investments and giveaways — clearly there is much more utility to these collectable tokens in some cases.
Finally, having recently learned about some real world integrations of the Cardano blockchain into supply chain management and real estate financing — it really opens the use cases available for this technology for bringing decentralised transparency to many real world processes that could benefit all types of consumers and investors. Not to say we want to track all products on the Blockchain but it does provide a way for us to make some of the publicly funded goods and services more traceable which can only be a good thing.
Useful links for projects mentioned above: