Are you keeping up with blockchain innovations? Simply knowing about the technology is not enough to take advantage of it. You may have heard of a few concepts like DeFi or NFTs. But do you know what they mean? More importantly, do you know how your business can benefit from them?
In this article, we’ll explain the four big blockchain opportunities to you. You will understand what they are and what difference they make. You might even recognize an opportunity for implementing these into your own business concept.
What Are the Big Four?
The most common use cases of blockchain are still cryptocurrencies. In the past year, the market cap of the whole crypto market has grown by more than 750%. There are numerous factors to this. A major factor is institutional interest. Payment facilitators like Square, PayPal, and MasterCard have all shown interest in crypto. Users of these services can now use cryptocurrencies alongside traditional fiat currencies, which will help adoption.
- Enterprise Blockchain
Enterprise-level blockchain solutions are making waves in many industries. One example comes from the Coke One North America Services (CONA), owned by the major Coca Cola bottling companies. CONA is now using enterprise Ethereum Baseline Protocol to optimize its supply chain.
Many blockchain innovations have happened in the finance sector as well. Many banks are considering Central Bank Digital Currencies (CBDCs). The central bank of Bahamas has already launched their own CBDC. Fnality is another example. It was founded by an international consortium of banks for the purpose of using blockchain to create a network of distributed Financial Market Infrastructures. Its founders include banks like Santander, Barclays, Credit Suisse, and many others.
DeFi, short for decentralized finance, has seen rapid growth in the past year. One of its biggest innovations are decentralized exchanges. Instead of an exchange acting as the middleman for funds, decentralized exchanges like Uniswap only serve as automated liquidity providers. In other words, there is no order book and no centralized middleman. This reduces the risk from exchange hacks, as the funds are not stored in the exchange’s wallets. It also keeps exchanges from simulating trades to seem more popular, a manipulation method known as wash trading. Finally, decentralized exchanges aim for censorship resistance.
Another example of DeFi in action comes from Chainlink. This project bridges the gap between real-world data and blockchain through so-called oracles. Its decentralized oracle network feeds data to the blockchain and its smart contracts automatically. Decentralization means that the data must be the same across the majority of oracles to be deemed correct. This reduces the risk of single-point failure. Chainlink can run on any blockchain, meaning it can help automate these processes across many industries.
Finally, Aave is another example of DeFi innovation. It is a decentralized, peer-to-peer lending system running on Ethereum. Users can lend, borrow, and earn interest on crypto through this platform without needing to trust a central authority.
NFTs stand for non-fungible tokens. They are unique tokens that are most often used as collectables. At the moment, they’re most often used to sell digital art, as they are currently the only failsafe method that proves the digital art has not been compromised or stolen. You can still own the art itself, but not the original that is in the NFT. This is like the difference between owning a print and the original artwork.
So Why Should I Use Any of These?
All four of these categories can bring some sort of innovation into your business. The type you get depends on what you need. Let’s take a look at some of the most common objections.
- Crypto: there will be a correction! This is true. Corrections in cryptocurrency prices can be brutal. Price swings can wipe out trillions in total market cap of the industry. However, crypto now has a superpower: institutional interest. With big names taking advantage of the benefit crypto offers, the industry is not going anywhere.
- Enterprise blockchain: who is using these, anyway? Here’s a list of the top 50 enterprise blockchain users. To get on this list, these companies had to have a revenue of USD 1 billion or more. This is not to mention smaller companies that didn’t make it on the list. Check out our articles on mainstream adoption and industry use to learn more!
- DeFi: nobody would use this when you have the comfort of centralized exchanges. This isn’t really true. The aforementioned Uniswap has a 24-hour volume of USD 1.28 billion. Its total liquidity exceeds USD 9 billion. There are hundreds of thousands of transactions occurring within 24-hour time frames. The situation is similar with PancakeSwap, another popular decentralized exchange: USD 1.47 billion has been traded in 24 hours at the time of writing. Its total liquidity is approaching USD 3 billion.
- NFTs: what is the point when I can just download the art? It’s true, but you can also print out a Monet—but you still won’t own the original. The very fact that NFTs go for crazy amounts of money shows that the interest is real. Recently, a Beeple NFT sold for USD 69 million at a Christie’s auction!
What Can I Do?
This depends on your business needs. Accepting cryptocurrency payments could bring you more customers. Implementing a blockchain solution could speed up your internal processes. Using DeFi solutions could facilitate trust between you and your customers. Even just offering NFT collectables can set you apart from the crowd as someone who recognizes opportunities in blockchain innovations.
Do you want to stay on top of these trends? Check out This Week in Blockchain. You can listen to it at weekinblockchain.com or via your preferred podcast platform, watch on watch.weekinblockchain.com, and discuss it every Monday at 12pm EST / 5pm GMT on Clubhouse.
Have you already tried implementing any of these solutions? Let us know how it worked for you and what advice you have for others interested in the same.