Commonly Cited Blockchain Applications
In the original Whitepaper for Ethereum (one of the most popular blockchains), founder Vitalik Buterin mentions some of the most commonly cited blockchain applications. Some of these applications were a reflection of the current state of the Bitcoin blockchain, but in large part the types of applications are largely still relevant today.
Indeed, the Ethereum Whitepaper is something of a prophecy and there are examples of blockchain applications in each of the types that were mentioned.
“Colored Coins”
In the beginning…
There were colored coins, which are special tokens created on the Bitcoin blockchain. Since, it is possible to track the origin of any given Bitcoin, there is the ability to “color” a Bitcoin in order to create alternative currencies as well as a number of other financial instruments.
There are many different use cases for “colored coins,” of which can be the foundation for many other applications built on blockchain technology.
These days however, the protocol isn’t used as much, but they represent the initial concept for many modern applications on the blockchain.
Smart Property
Smart phones, smart homes, and now… Smart property. The blockchain gives birth to physical objects which can only be operated via the use of a digital signature executed via the block chain and represents ownership of an underlying physical device.
For example, Let’s say a car company needs a way to digitally manage ownership of a car. The company may want to assign one token per car, and that car might need a signature to own and operate. We aren’t quite there yet, but steps have been laid out to note how it would be possible.
Non-Fungible assets such as domain names
First off… What does “non-fungible” even mean? Well the word fungible means “replaceable” and to say something is non-fungible, is basically a fancy way to say that something is unique.
By now you’ve probably heard of non-fungible tokens (NFTs) and may even be familiar with what an NFT is exactly. In a very small nutshell, NFTs represent a new form of digital ownership, where a block in the blockchain stores metadata that links to a digital asset.
Today, NFTs can carry many different use cases. Some examples of NFTs include (but are most definitely not limited to:
- Collectibles — An example would be like “moments” in NBATopShot. Top Shot is an NFT marketplace built on the FLOW blockchain.
- Digital Art — In its basic form, Profile Picture (PFP) NFTs, like Bored Ape Yacht Club are pieces of digital art that people can use to represent themselves. As many people now know, Twitter even offers users to use NFTs as their profile picture.
- Digital Albums — Yes, music can be distributed as NFTs. For example, Kings of Leon’s Album When You See Yourself was released as an NF
- Domain Names — Like the ones you can purchase on Unstoppable Domains.
Another point about domain names…
One problem with the current state of the Internet is that a domain name could potentially be seized, de-platformed, and thus censored by a central authority. But imagine a world where the internet wasn’t needed to access a website.
That’s one of the goals of new outfits like Unstoppable Domains (and forgotten cryptocurrencies like Namecoin). They aim to eliminate the need of a third party to own and operate a domain name. And NFT domains are just that, owned and not rented.
Digital assets controlled by code (Smart Contracts)
Consider a vending machine. What does it actually do? A vending machine is essentially a piece of hardware implementing a smart contract that ensures that the breach of the “contract” (breaking into the machine) is more expensive than the price of goods that a customer would receive if they were to simply follow the rules.
This is, in essence, what a “smart contract” is. Smart contracts empower both customers and producers with economically viable, dynamic functionality as it pertains to ownership, or control, of assets(whether they are digital or IRL).
Eliminating unnecessary costs is a big win for “smart contracts.” Furthermore, like vending machines, smart contracts work 24/7. Other examples of smart contracts in blockchain technology can include:
- Real Estate — Record keeping, title transfers, and streamlining rental, mortgage, and credit agreements can all be potentially done by executing smart contracts. For example, blockchain based real estate company, Propy, has a mission to achieve “self-driving transactions for home buyers, brokerages, agents, and sellers.” With Propy, you can close any deal with fiat, crypto, or as an NFT transaction. With Propy, you can literally “NFT your home.”
- Legal Matters — Many business agreements are governed by legally binding contracts. The state of Arizona already allows legal agreements that can be enforced to create and manage smart contracts. And one interesting use case would be to set up an LLC via a smart contract. For example, Ricardian LLC aims to give people the ability to create “1-click LLCs.”
Blockchain based decentralized autonomous organizations (DAOs)
First it was NFTs, and now it’s DAOs, many say. And indeed, there are many people out there that believe that DAOs are the next big to go mainstream.
But what is a DAO? Basically, an organization or community is considered a DAO if it creates or obtains a structure where a majority of the rules of that community are structured in a decentralized fashion. These rules are usually automated, built with smart contracts, and the rules are set for many different organizational aspects of the community including:
- communication
- voting
- funds management
- among others
One other common property of DAOs is that to become a member you usually have two ways to become a member: either hold a token (permissionless and anyone can join), or shared-based (permissioned and requires approval).
The majority of DAOs have both centralized and decentralized structures within them, and they are really only as decentralized as their most centralized system.
There are many different examples of types of DAOs including Protocol DAOs (like CompoundFinance), Curator DAOs (like FLAMINGO), Tokenized Communities (like $FWB), Investor DAOs (like The LAO), and Activist/Hedge Fund DAOs (like Chairman).
The first DAO…
Maybe the most famous DAO was the first, which was aptly named... The DAO.
The DAO was set up on the Ethereum Blockchain in 2016 as an investor-directed venture capital fund. Although it raised $150 million, it ultimately failed as it was hacked and faced legal troubles.
The details of this event have recently been canonized… In her newly released book, The Cryptopians, author Laura Shin goes into amazing detail on how the DAO hack actually went down and all of the events that took place.
Future Blockchain Application Examples
The next suite of blockchain applications have yet to be “minted.” The possibilities are endless, and as the digital world and real world become ever more entangled, smart contracts and smart property will become a bigger part of our everyday lives.
