Since the creation of the blockchain, with a currency use case in 2009, there has been a myriad of applications of the technology ranging from stablecoins to NFTs and more. Several of these use cases have gained more attention with real life applications than others.
For example, while NFTs don’t mean much to a coffee seller in Argentina, using Binance to accept ETH as payment for coffee is great.
Vitalik Buterin, one of the co-founders of Ethereum, which is one of the largest blockchain, explained in a blog post that several use cases of the blockchain, with focus on Ethereum, will become more relevant than others.
Writing about what the future of blockchain will be, the Ethereum creator said that while the non-financial applications of blockchain don’t accrue billions of dollars in a short time, they will be the most important in the long-term.
He cited an example with how the LUNA project attracted a valuation of $30 billion before crashing while several stablecoins projects struggle to gain a strong foundation and acceptance. Why? “There is less excitement and less short-term profit to be earned around them,” he said.
Vitalik went on to explain that there are five specific areas that Ethereum, and blockchain as a whole will transform the world the most in the future – money, DeFi, the identity ecosystem, DAOs, and hybrid applications.
Money-based application
Speaking about money, the co-creator of Ethereum noted that stablecoins are designed as centralized stablecoins, DAO-governed real-world-asset-backed stablecoins, and governance-minimized crypto-backed stablecoins. He added that while on-chain stablecoins have certain advantages, there is a need to “keep working on other alternatives.”
He also highlighted that apart from creating stablecoins as alternatives to make transactions easier and better, “scaling technology such as optimistic and ZK rollups is proceeding quickly, social recovery, multisig wallets with account abstraction” show that on-chain payment systems can be better.
DeFi applications
For DeFi, he explained that while he sees stablecoins as the important application of DeFi, prediction markets and collateralization of assets are other aspects of DeFi that will be important.
“Decentralized finance is, in my view, a category that started off honorable but limited, turned into somewhat of an overcapitalized monster that relied on unsustainable forms of yield farming,” he said. However, it is gradually becoming more stable and reliable with a focus on security and creation of useful applications.
Digital identity, DAOs and Hybrid applications
“For a long time, I have been bullish on blockchain identity but bearish on blockchain identity platforms,” he said. Vitalik explained that the greatest challenge for the digital identity world is privacy.
On DAOs, he mentioned that the two questions to answer when thinking about the development and future of DAOs are: What kinds of governance structures make sense, and for what use cases? And does it make sense to implement those structures as a DAO or through regular incorporation and legal contracts?
Lastly, he believes that there are hybrid applications that will flourish by being partially on-chain. Some of them include voting, government registries, corporate accounting, games (such as Dark Forest), supply chain applications, and tracking access authorization. The advantage is that it will help improve the trust models of this application, he added.
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