We have the invention and evolution of technology to thank for some of humanity’s most significant advances. The invention of the telephone in 1876, the aeroplane in 1903, the computer in 1937, and the internet in 1974 all completely changed how we live our everyday lives. As technology advances, how can the likes of web3, the metaverse, blockchain and DeFi change the future of fintech?
Continuing our focus on decentralised finance (DeFi), virtual assets and blockchain, The Fintech Times asked a number of industry experts what are the most common misconceptions of blockchain, and what are unexpected use cases we may see come into play in the future.
‘A key weapon in a financial institution’s armoury’
Antonina Skrypnyk is the director digital business solutions at SoftServe, the financial and banking solution provider. Skrypnyk discusses how blockchain’s potential continues to grow, serving a wide range of businesses.
“Blockchain is becoming a key weapon in a financial institution’s armoury to optimise costs, tighten security and improve efficiency, and is no longer just a gimmick spinoff from the crypto space that many originally positioned it as.
“That is not to say it has suddenly become part of mainstream IT thinking or infrastructure, but it is steadily proving itself to be a valuable, flexible, and highly practical technology that can support diverse business needs across the enterprise.
“By leveraging blockchain-ready infrastructure bank and insurance IT innovators can now be ready to bring novel business ideas through rapid and safe validation in a blockchain sandbox, without disrupting existing IT systems. It can become a key instrument to efficiently help connect the dots of business objectives using the best available technology.
“A sandbox significantly lowers the price (and risk) of entry for the testing of new initiatives, enabling rapid, safe and cost-efficient innovation. SoftServe’s blockchain sandbox not only serves our own needs but helps our customers quickly deploy innovation and hypothesis validations. The solution includes rapidly deployed blockchain-ready infrastructure; basic functionality for Ether, Hedera and Polygon and leverages a library of smart contracts to support a wide range of use cases, including instant payments, digital asset management, as well as crypto wallets and tokens.
“Irrespective of the use case that runs in the sandbox once proven users can switch smoothly from the isolated environment without compromising safety and with minimal additional effort. This helps businesses meet long-term strategic goals while managing cost optimisation pressures and other short-term priorities.”
‘Set to change how players experience games’
Nicolas Gilot is the founder and CEO of Ultra, the blockchain-enabled entertainment platform. Gilot explains how blockchain is typically associated solely with cryptocurrency, but how it could change the gaming landscape.
“The most prevalent misconception around blockchain is that cryptocurrency is the sole use-case for blockchain. Although it was the first, the technology has developed well beyond the encryption of a digital currency.
“One of the more promising and unexpected use cases for blockchain relates to gaming. This technology is set to change how players experience games and how they perceive games. Gamers can now truly own their in-game assets through tokenisation: the process of turning a digital file into an encrypted token.
“True ownership of game assets means players are not limited to the data system of the game they’re playing, but now they have access to a network of gamers who may well be interested in any assets you’ve attained.”
‘Blockchain is going to change the world’
Toby Gilbert, CEO and co-founder of Coinweb, discusses how blockchain technology may be suffering due to an unfair unfortunate reputation. Gilbert explains how blockchain tech could actually revolutionise the world we live in.
“Blockchain is going to change the world, put everything on the blockchain and all real-life assets will soon be tokenised are some misconceptions that are regularly banded around the market. Usually, put out by projects looking to hype their tokens and gain traction, which in most cases leads to over-promising and massive under-delivery, further miring the reputation of the space and making it considerably harder for legitimate projects to gain the attention and support they need.
“The reality of the situation is that blockchain technology whilst revolutionary in its ability to deliver trust and transparency by decentralising processes, as well as the promise to automate cumbersome processes and create direct value by tokenisation, can actually be viewed as an upgrade to existing technology, legacy processes and systems.
“Unexpected use cases to demonstrate this include the ability to tokenise existing payment processes that are subject to expensive credit card processing. In this flow, users can be incentivised to buy bundles of tokens (existing feature) that have an intrinsic value as they are tradable (new feature) and the end user has ultimate custody and ownership (new feature) to pay for a merchant’s services. The funds received from the user are held on yield-earning accounts offsetting high processing fees. This makes otherwise loss-making businesses profitable and encourages new innovative start-ups to build on blockchain.”
‘Blockchain can introduce proof of provenance’
Marta Piekarska, senior DAO strategist at ConsenSys, explained her view on misconceptions regarding blockchain and what a reality using blockchain technology really looks like:
“Blockchain is often seen as a panacea for every problem that ever existed. On the other hand, it is also seen as a buzzword, a gimmick that overpromises and underdelivers. The reality is that it is a technology just like any other and can be used to improve efficiency and decrease the need for trust in systems. While this is a need that most industries have, the cost of switching is often too high compared to the gains made with the switch. I think the greatest and most interesting use case for blockchain is provable provenance.
“Our world is fully connected, quite digital, but the internet is missing a layer – one that allows us to prove the connection between data sent and what was received. If I send you an email – how do you know it is the same email you receive and someone didn’t spoof it? If you download new software, how do you know that the app is the one that the developers put up?
“This need for trust is what leads to many inefficiencies and a lack of trust in supply chains (meaning sending a thing from one place to another). Blockchain can resolve it and introduce proof of provenance as a default.”
‘Blockchain’s most novel use cases lie in social media and community’
Rick Porter is CEO and co-founder of DSCVR, a decentralised social media network that enables users to maintain ownership over their content and social identities online.
“One common misconception about blockchain is that it is synonymous with cryptocurrency. While blockchain is indeed the technology that underlies many cryptocurrencies, it has many other potential use cases far beyond them – for instance, in supply chain management, digital identity verification, voting systems, and more.
“Another misconception is that blockchain is completely anonymous and private. While it is true that transactions on a blockchain are pseudonymous, meaning that a user’s identity is not directly linked to their public address, it is still possible to trace transactions back to their source with certain techniques.
“Blockchain’s most novel use cases lie in social media and community. For instance, decentralised social networks can utilise blockchains to allow communities to organise DAOs and participate in the economics of the social platform. Creators can build communities which can raise assets from their members, or earn assets from traditional sources like advertising, tips and brand deals. These assets can even be distributed back to the most active community members. Communities around a variety of subjects from commerce (Community owned and driven eBay) and investing to entertainment and political action. Web2 platforms do not currently enable such direct social financial action.
“Many of these platforms, including DSCVR, are gaining popularity in recent years as users want more control and economic participation for their communities than traditional social media platforms.”
Blockchain use cases ‘can make a big difference for businesses’
Billy Sebell, executive director at XDC Foundation, also commented on the wide range of blockchain use cases.
Sebell said: “The range of blockchain use cases that can make a big difference for businesses is so much wider than people think. Blockchain allows for a new set of applications to be built on decentralised networks. These dApps allow for cheap access to shared data as well as offer a host of financial instruments that can be automated, such as NFTs and cryptocurrencies.
“NFTs can act as a unit of account or a representation of an object to be exchanged as a derivative on the blockchain network and automate its rules within the network’s smart contract. Blockchain technology ultimately allows for the free exchange of value and data between a dApp’s users as well as the ability to be hosted without a central server to maintain the system.
“Think of the use cases that blockchain can do on a local level. For example, real estate tokenisation is emerging as a more localised or regional use case. Land registry has a utility that can make a big difference on the blockchain when it comes to costs for communities managing deeds and associated disputes. In the past, someone could forge a deed because there wasn’t an immutable method for recording these transactions. So go to local offices, work with regional officials and look for ways to incorporate blockchain into those local municipalities. From there you can take that model and build it across the country.”