6 Emerging Categories for Blockchain Use Cases
Disclaimer: This is not investment advice.
May 12, 2015. That was the day I purchased my first bitcoin after a few months of researching and discussing ‘Bitcoin’ with friends working in the startup space. Since then, I have ventured down the preverbal ‘rabbit hole’*
*The term used to describe when a person catches the ‘blockchain bug’ and begins learning as much as they can about the field.
Why are people so interested in it? It can change the world and people have the opportunity to profit handsomely.
As people venture into the space, it is important to stay informed. My co-founder and I, in doing our part to share information, we made a chatbot (with over 150 videos and articles on the blockchain), a podcast (with 100+ experts speaking about innovation and blockchain), and created a post explaining ICOs.
Recently we began to dive deeper by conducted extensive research on specific ‘cryptoassets’ and the teams behind the technology. We found blockchain applications are still a nascent — but categories of use cases are emerging. Below is a simplified list of use-case categories with working applications or MVPs (minimum viable product). *Just because we have identified them, does not mean we recommend investing in any of these projects.*
Use Case Categories
1 — Currencies — Acting as a store of value — referred to as ‘currencies’ or ‘digital money’. They are being traded for fiat currencies and used as a means of exchanging goods and services. The best example is Bitcoin — while naysayers harp on the limited transaction speeds — at the moment it is the most popular and trusted blockchain technology used as a ‘digital currency’.
2 — Marketplaces — Providing more efficient coordination between suppliers and customers. An example of a marketplace is the startup Storj. They offer secure digital cloud storage and coordinate between those who have excess storage space and those who want to securely store digital files. In addition Storj coordinates payment between the customers (those paying to store files) and providers (those providing storage).
3 — ‘Stocks’ for Physical Assets — Using digital tokens or ‘stocks’ to represent a portion of a physical asset. Rally Rd. uses a centralized application for people to purchase a ‘stock’ in collectable cars. While what Rally Rd. offers is not actually a ‘stock’ (aka token) — it digitally represents a portion of the car and as the car appreciates (or depreciates) in value so does the token. Rally Rd. acts as the custodian and vets, acquires, insures, maintains and monitors the car.
4 — Digital Assets — Using digital tokens to purchase digital assets. The most popular example is the game Cryptokitties and recently launched World of Ether. Ethereum, currently the second largest cryptoasset by market cap, is used to pay for digital ‘kittens’ or ‘monster eggs’ for your entertainment.
5 — Operational Efficiencies — Replacing internal processes more seamless to lower costs. The world’s largest shipping company, Maersk, is using a private blockchain project between leading firms called the Hyperledger Fabric framework to track containers and freight flows. Shipping locations broadcast receiving information to the blockchain when the containers are accepted. This creates a more secure and transparent alternative to a centralized tracking system. The savings potential for this project is undefined, but this is one of many examples where companies are moving to use blockchain internally to lower operating costs.
6 — Gambling — Most of the tokens and cryptoassets created (regardless of the developing teams original intent) are currently being used as high risk speculative investments. People interested in short term gains are purchasing tokens/currencies, waiting for follow-on-buyers to pay a higher price and buy more tokens causing the price to rise, and (if the price rises) selling the tokens shortly thereafter. These tokens may or may not be tied to the economic model of the business.
There are many other categories of use cases beyond those mentioned that have potential including crowdfunding equity investments (securitized tokens), memberships, identity verification, voting, and bartering, but for now the categories detailed are the most common ‘live’ use cases beyond the ‘concept/idea’ phase.
We look forward to sharing more research as we advance. Please share your thoughts and comments.