Introduction

In recent years, businesses and organizations have devoted time and resources to adapting their traditional business models to incorporate cryptocurrency (“crypto”) and other disruptive technologies like AI, cloud computing and big data. Crypto offers benefits such as speed, resilience, transparency, cost efficiency and accessibility. While there are critics who remain skeptical, most people understand that crypto has utility beyond speculation.

The overarching mission of crypto is to foster a more equitable and inclusive digital economy built upon decentralized, trust-minimized blockchain infrastructure. Unlocking new capabilities and streamlining information sharing in an individual-centric approach, crypto is a fundamentally new tech paradigm that transforms the ways in which we create and share value.

However, a valid criticism is that the industry’s proponents often conflate the end state with the current state of adoption by making forward promises about crypto’s utility.

Crypto is facing the cold start problem – the underlying technology is still in the early development stages and its adoption faces significant barriers including customer education, trust gaps, and regulatory uncertainty, along with UX challenges to interacting with decentralized applications. Widespread adoption requires products and services must be intuitive and accessible. However, improvements to performance, scalability and reliability are constantly being made to the infrastructure layer to make it even easier to launch and scale new useful products, which then can create network effects that add to the value of crypto platforms.

While the crypto industry has a long way to go achieve its overarching vision, it has already achieved product-market-fit (PMF) in several use cases across various verticals.

Money

Store of Value

Bitcoin, often referred to as “gold with wings,” is a digitally scarce asset with advantages such as divisibility and transportability over a decentralized, permissionless global network. Bitcoin and other crypto assets serve as a hedge against uncertainty in monetary systems, the credibility of central banks, authoritarian regimes with strict capital controls, and unstable financial systems due to strong value transfer and property rights. Bitcoin has been adopted across various end markets, including retail, institutional, corporate, government, and nation- states as an emerging market currency, seizure-resistant asset, and treasury asset.

Stablecoins democratize access to programmable digital cash instruments and other digital representations of value such as currency buckets or gold. Despite the lack of comprehensive federal regulation of stablecoins across major economies, many individuals from emerging markets hold stablecoins to hedge against fluctuations in their local currencies.

Remittances & Payroll

Crypto enables significant cost savings to money transmitter businesses and individuals that rely on international remittances and other cross-border transactions which are subject to high fees. Traditional methods of transferring money through established money transmitter organizations incur significant costs, averaging 6.3% of the amount sent, according to estimates by The World Bank. In contrast, crypto offers a more accessible alternative with borderless, permissionless, and 24/7 transaction capabilities, often at lower cost and faster settlement times. Furthermore, the scalability of blockchain technology allows for efficient processing of both large and small transfers, including micropayments that may not be possible through traditional channels.

Crypto also facilitates swift data aggregation, validation, and social coordination, making it an effective tool for distributing income, claims or social benefits, particularly to marginalized groups. By encouraging participation in the financial system, crypto contributes to expanded financial inclusion, benefitting workers across borders and those facing challenges in unbanked regions.

Payments (Merchant Acceptance)

The acceptance of crypto as a medium of exchange continues to rise with an increasing number of merchants now able to accept payments in crypto. This trend has been propelled by mainstream payment service providers such as PayPal, Shopify and Square, who have integrated support for crypto into their platforms. Major players in the payments industry like Visa and Mastercard have included crypto card programs including crypto debit, prepaid, and credit cards backed by crypto, as well as rewards programs in crypto. Furthermore, Visa and Mastercard have expanded their capabilities to enable the settlement of select digital currencies, including central bank digital currencies (CBDCs), directly over their networks.

By leveraging crypto payment rails, merchants can realize significant cost savings by bypassing traditional checkout intermediaries such as banks, card networks and processors. This enables them to offer competitive pricing to consumers while avoiding bank fees and reducing risk of fraudulent chargebacks, as crypto transactions are irreversible. Crypto payments provide merchants with real-time access to funds and enhanced control over working capital, liquidity, and liability protection.

Financial Services

Capital Markets

Tokenization of real-world assets (RWAs) is the process of issuing blockchain-based tokens that represent tangible physical or financial assets such as stocks, bonds, real estate, commodities and art. RWAs deliver the benefits of the open crypto economy to familiar off- chain assets, enhancing their liquidity, utility and efficiency. They offer broader accessibility to investments, reduce lock-up periods, and improve price discovery over a 24/7 market.

Though tokenization efforts are still in the early stages of development, the issuance of RWAs by trusted traditional finance brands can accelerate the adoption of crypto by new users and investors. Despite the vast potential of the multi-trillion-dollar market, only a fraction of financial assets (approximately $1.5 billion) has been tokenized on public blockchains, indicating significant growth opportunities in the market. Tokenization stands out as one of crypto’s most promising use cases and will continue to shape the industry’s trajectory.

Borrow & Lend

Crypto allows individuals to leverage any financial asset as collateral or lend passive assets to earn interest. Smart contracts can be programmed to automate processes such as loan issuance, repayment, and liquidations based on pre-defined conditions. This offers distinct advantages over traditional banks & credit institutions:

• Borrowers and lenders are connected directly. Depositors on a DeFi lending platform can earn a larger share of the interest paid by borrowers than at a bank.
• Automated decision making. There’s no lengthy credit application process. Borrowers can access liquidity immediately. This means there is no preferential treatment or repayment negotiations for any borrower to avoid liquidation (e.g., 3AC repaid Aave loans before repaying CeFi creditors).
• Other benefits: permissionless access/listings, composability, non-custodial, more resilient than CEX (ideally). Also enables features like flash loans, a type of uncollateralized loan in DeFi where assets are borrowed and returned within the same transaction, requiring no upfront collateral.

Risk Management

Crypto offers full transparency into counterparties’ holdings, allowing for easy verification and traceability at any given time. Participants can actively monitor for any mismanagement of customer funds. Leveraging decentralized, immutable infrastructure ensures data authenticity, while programmable smart contracts enable self-execution of decision making across a wide range of processes.

These characteristics provide significant risk management advantages for financial applications in crypto compared to traditional finance (“TradFi”). Market participants can obtain performance insights into counterparties in real-time (rather than having to wait monthly or even quarterly on a lagged basis for companies to report basis), manage collateral efficiently, and hedge risk positions across a broad spectrum of customized products/markets. Crypto unlocks new risk management use cases for real-time monitoring (e.g., ‘Proof of Reserves’ for custodial businesses), insurance and auditing in decentralized marketplaces.

Consumer, Media & Entertainment

Commerce & Loyalty

Loyalty rewards programs serve as strategic marketing investments to boost sales and customer engagement. Many businesses have achieved successful loyalty programs through different types of mechanisms – such as Starbucks Rewards with points- and mission-based programs, cash back credit card programs, or airline miles and spend-based programs to achieve elite status. However, many of these loyalty programs suffer from inefficiencies – reward points are fragmented across closed systems and customers face an overwhelming number of offerings across brands, which resulting in low redemption rates, account inactivity, and increased customer churn.

Blockchains enable brands to address many of the inefficiencies and unlock greater versatility of loyalty rewards for their customers. Digital wallets & blockchain-based digital collectibles enable loyalty benefits that are earnable, redeemable, and transferrable. With participating agents of loyalty rewards programs interacting in one system, customers have greater control over their accumulated points and rewards. For brands, blockchains offer streamlined execution for cost savings, increased reach, programmable rewards, and community-driven incentives to amplify programs. In addition, leading consumer brands have been looking to meet their customers in the ~metaverse~ as they adapt to the web3 paradigm to drive new forms of digital commerce.

Gaming & GameFi

Blockchain-based gaming presents gamers with the opportunity to earn and own in-game assets (e.g., avatars, weapons, collectibles, land, currencies etc.) which are typically in the form of NFTs. Specifically, blockchains enable traditional games to add in player-owned economics with the ability to spend in-game rewards with other players across NFT marketplaces and in certain cases, the value of these in-game assets may be expanded across gaming platforms. Blockchain games can offer other advantages over traditional games such as the ability to build open-ended economies to connect gamers, giving them more value and control over their assets.

GameFi (play-to-earn) combines online gaming with DeFi concepts, which can potentially drive higher engagement through play-to-earn (‘P2E’) mechanics. For example, Move-to-earn (‘M2E’) games incentivize users with crypto rewards for physical activity. Using fitness trackers to track step counts or calories burned, M2E apps encourage positive human behavior (e.g., exercise) with financial incentives to encourage greater engagement levels.

Social Media

“DeSoc”, short for decentralized social media, uses blockchain infrastructure and crypto incentives to build interactive online communities. Compared to centralized alternatives, DeSoc can enhance censorship resistance, user verifiability, and data sovereignty. Users have control over their data, including how and where it is shared, which is a significant departure from the data practices of many existing social media platforms. User data is stored on a distributed ledger, which mitigates risks associated with single points of failure, censorship and central control. Crypto also enables users to seamlessly interact and share content across multiple platforms while offering innovative ways to build communities and monetize data.

A unique feature of DeSoc is the concept of users owning their data and being able to create “social graphs.” These graphs map a user’s interactions and relationships within the platform, providing a digital fingerprint of their social presence. With user permission, these graphs can be shared or integrated across different applications, facilitating a more interconnected and user-controlled experience.

DeSoc is one of crypto’s most powerful use cases with the potential to drive mass adoption of the technology. DeSoc applications mentioned on this slide have had 7.5m user sign-ups and enabled 75m on-chain transactions in total through 3/31/24.

Creator Economy & IP Management

Content creators, influencers and independent artists in the creator economy currently rely on centralized platforms, facing challenges such as unfavorable revenue sharing agreements and lack of content ownership. In addition, limited ownership of content and portability of community bases create platform dependence. Crypto empowers creators to take greater ownership of their content and control over their social graphs, removing reliance on extractive centralized platforms and enabling more direct artist-audience relationships. Creators in the web3 economy can monetize, manage and distribute their content more effectively to their super fans, who can now self-identify and support their favorite artists financially.

Creators utilize blockchains for the management, distribution, and fractionalization of their intellectual property (content) through NFTs and decentralized platforms/marketplaces. Blockchains provide time- stamped and verifiable records, enhancing creators’ ability to protect their work and prevent unauthorized distribution. Smart contracts enable automated streaming royalties and licensing agreements, while decentralized marketplaces facilitate transactions for fans to support their favorite artists, ensuring creators can monetize their work seamlessly.

Speciality Use Cases

Identity & Verification

About one-seventh of the world’s population are unable to attain physical identification documentation which limits their ability to open bank accounts, vote in elections, own property or find employment. Even citizens with forms of identification lack complete control over their identities and face verification frictions across numerous online accounts across various service providers, many of which are subjected to frequent hacks of sensitive user data. In addition, identity fraud has become a growing problem as insecure verification systems can be spoofed.

By leveraging blockchains and strong cryptography (i.e., zero knowledge proofs) for decentralized identity (DID), individuals can have greater control over their own online profiles without depending on a specific service provider. DID systems are trust-minimized, immutable systems that may facilitate identity verification without revealing sensitive user data. This offers benefits such as tamper-proof documentation, streamlined verification, and reduced risk of ID theft / fraud from data breaches. Verifiable identity sources may include new web3-based credentials (e.g., digital signatures or non-transferrable tokens) to coordinate and build reputation systems. Other extensions of blockchain-based identity management systems include democratic DAO voting (one-person, one-vote), equitable airdrops, and the ability to efficiently distribute value on a global scale.

DePIN & AI

Decentralized Physical Infrastructure Networks (DePIN) leverage crypto’s financial infrastructure and token incentives to establish impartial physical infrastructure networks, facilitating the distribution of ownership. DePINs can offer more cost-effective solutions by disrupting the high-margin models of established players and passing on savings to users. DePIN provides a new avenue for capital formation in historically capital-intensive industries such as telecommunications and cloud services. Individuals can earn compensation for contributing resources to the supply side of DePIN networks, including hardware devices, energy, data, and computing power.

An emerging category of DePIN projects integrates AI workflows, utilizing tokens to incentivize various use cases such as (1) supplying hardware for AI processes (2) data storage and indexing for model training and inferencing , and (3) providing feedback for model fine-tuning through reinforced human learning.

Storage & File Sharing

Cloud computing offers hosted data storage and shared computing storage services to businesses and organizations, reducing the cost and complexity of operating data centers. While widely adopted, the leading centralized cloud providers (e.g., AWS, Microsoft Azure, Google Cloud) have had a rich history of security incidents and privacy risks – they employed predatory pricing tactics, profited immensely off cloud-stored user data, and suffered downtimes resulting in productivity losses amounting to billions of dollars.

Decentralized storage is critical infrastructure to ensure storage clouds and node operators align with the decentralized principles underpinning Web3. These protocols aim to address many of the issues associated with centralized providers by competing on censorship-resistance, resilience (data redundancy; eliminate single point of control / failure), security & privacy, and operating efficiencies (e.g., cost & data retrieval).

• IPFS (The InterPlanetary File System) enables users to store and retrieve cryptographically-verified content across data storage system, centralized or decentralized.
• Filecoin and Arweave are decentralized storage platforms that offer censorship-resistant data storage and access. Filecoin charges clients in a leasing model based on amount of data stored and duration, while Arweave features a permanent data storage.

Outside of improving data resilience, other use cases in decentralized storage & file sharing include content collaboration (including decentralized science), security of voter data, and serving as raw data for training AI models.

Outlook

While many crypto applications and use cases are still relatively new and gaining traction over the past few years, the underlying public blockchain and related infrastructure has been in existence even longer. As the infrastructure layer continues to improve, more applications will be developed with greater utility unlocked. Significant industry progress has been made in speed, scale and network resiliency in just the last year alone. Ongoing technical research areas are focused on privacy (i.e., separating sensitive information from transparent, public blockchains), composability and interoperability – all of which should unlock new app utility and enhance the potential of the crypto economy.

Certain use cases with obvious beneficial value propositions have not been included in this presentation due to limited adoption or effectiveness so far. These include applications in governance, supply chain management, healthcare, and ticketing/events, which must address regulatory clarity or social coordination challenges to become effective crypto use cases. However, many of these headwinds to adoption are expected to ease with greater buy-in of crypto technology by individuals and businesses for other stated use cases. In addition, the value of decentralization should become clearer as centralized service providers inevitably face disruptions over time.

As the world undergoes a digital revolution, there is growing societal emphasis on empowering the individual, particularly among younger generations feeling disenfranchised by the old world. Positioned at the intersection of technology and culture, crypto is well-equipped to meet their needs by offering a more fair, free, and efficient system to build upon.

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