Blockchain technology and DLT systems in general are beginning to be used in a growing number of industries. It all started in 2009 with the launch of the Bitcoin Network - a virtual database on which transactions are recorded and verified in a completely decentralized manner. By combining computer science, cryptography, p2p data exchange, economics and game theory, blockchain technology represents a system that is more efficient, secure, fairer and more affordable than the existing one. With every innovation in technology comes a big hype, a trend in which new technology is trying to be sold as a solution to each of our problems (how many coins do we have and how many do we actually use?).
Chronologically, we can start from innovations in transport and the establishment of the first stock exchanges, all the way to internet bubbles and the collapse of the real estate market in 2008. Each of the mentioned cycles eventually brought improvements but also a lot of fraud, scams and unusable products. In the following, I will try to isolate certain sectors in the industry that I think will be significantly improved by the use of blockchain technology. I will not categorize the entire industry but will single out examples of cases that I use and that I plan to use in the future.
1. Lending and borrowing
Lending and borrowing was the first real use case for the DeFi industry. At the beginning of my operations in crypto space I was forced to sell my crypto-assets to remain solvent in business. Creation of protocol like Compound and Aave gives crypto-assets owners the opportunity to use it as collateral for a loan. Thus, for example, crypto miners could save mined Bitcoin or Ethereum and at the same time cover the costs of their business, and even expand their mining facilities. Although due to the unregulated market and high volatility of cryptocurrencies this method is used mostly for trading and speculation, I think it will be useful in the future for wide-range of businesses. Compared to traditional finance where the financial institution acts as an intermediary in the reallocation of funds, DeFi projects (protocols) rely on smart contracts. This means that the possibility of corrupt practices is potentially ruled out, services are accelerated and reduced in price, and individuals are in true ownership of their assets.
2. Real Estate tokenization
Simply put, tokenization (and consequently fractionalization) of real estate drastically increases liquidity in that market. You can easily put yourself in a position to sell a property. Searching for a buyer who is potentially interested in just that property is a very difficult job if you take into account the high price and preference of the buyer. That is why many people decide to hire a real estate agency, which brings a new problem - high brokerage fees. Blockchain technology can solve these problems by tokenizing a property (we will take as an example a property worth $ 100,000) by setting a dollar to token ratio of 1: 1. By publicly offering tokens on the blockchain platform, more investors of different purchasing power are reached. A person with a few dollars can participate in a public sale just like a person with $ 10,000, thus increasing the number of potential investors. Real estate management can be regulated by the DAO system of entities where decisions on monetization, maintenance, advertising are made by voting on the principle of 1 token = 1 vote. If you put yourself in the position of a buyer / investor who cannot afford to buy the entire property, you get the opportunity to manage as much as your budget and risk management allows. Although the example I have given is superficial and such investment methods are still far from full feasibility, but it is only a matter of time before they will be available.
3. Business governance
The problem of business management in the current traditional system is a strict hierarchy and centralization in the flow of ideas. The problem is clearly visible in the public sector where decisions are made by individuals who do not have “skin in the game”. This means that regardless of the quality of their decisions, these “elected individuals” receive monetary compensation for their work. So in many cases, decisions are made in favor of individuals instead of the long-term interest of the company or organization. Blockchain technology enables the establishment of decentralized autonomous organizations (DAO) where proposed decisions are made by voting of protocol users. A situation is created where the users of the protocol (token holders) are in some way its "owners". Just owning a governance token creates an economic incentive for the owner to vote for a proposal that brings value to the protocol. Blockchain technology will bring positive improvements in the areas of gambling, betting, fundraising, donations, etc. The most important issue is the reaction of state institutions, which in most cases have the role of intermediaries, as well as the lobbying of private companies that act as intermediaries in the exchange of values.