Despite the cryptocurrency industry going through a rough patch in recent months, exacerbated by the collapse of once one of the largest crypto exchanges in the world, the blockchain space continues to evolve.
With this in mind, the founder of Ethereum (ETH), Vitalik Buterin, shared five important use cases for the budding technology and cryptocurrencies he’s most excited about in his blog post published on December 5.
1) Alternative to mainstream money
According to Buterin, crypto offers opportunities for people and organizations in countries hit by high inflation:
“In Argentina and many other countries around the world, links to global financial systems are more limited and extreme inflation is a reality every day. Cryptocurrency often steps in as a lifeline.”
However, he also believed that cryptos have significant value in wealthy countries, as well, as they’re “far more convenient than traditional banking. It’s also valuable for industries and activities at risk of being deplatformed by payment processors.”
2) Identity, privacy, and Twitter substitute
Furthermore, Ethereum’s founder emphasized that “blockchains are valuable for identity applications because of their institution-independent nature and the interoperability benefits that they provide” as long as they’re using “an organic approach, with many projects working on specific tasks that are individually valuable and adding more and more interoperability over time.”
This, he stressed, is exactly what happened with the Sign In With Ethereum (SIWE) standard, which “allows users to log into (traditional) websites,” like through Google or Facebook, but without giving these services “access to your private information or the ability to take over or lock you out of your account.”
He also highlighted that “an Ethereum-based Twitter alternative (e.g. Farcaster) could use POAPs [Proof of Attendance Protocols] and other proofs of on-chain activity to create a ‘verification’ feature that does not require conventional KYC, allowing anons to participate.”
3) Improved trust in voting process
Buterin is also a firm believer in “applications that are not entirely on-chain, but that take advantage of both blockchains and other systems to improve their trust models,” with an example of voting.
“High assurances of censorship resistance, auditability and privacy are all required, and systems like MACI effectively combine blockchains, ZK-SNARKs, and a limited centralized layer for scalability and coercion resistance to achieve all of these guarantees.”
By publishing votes on the blockchain, “users have a way independent of the voting system to ensure that their votes get included. But votes are encrypted, preserving privacy, and a ZK-SNARK-based solution is used to ensure that the final result is the correct computation of the votes.”
4) Keeping DeFi simple
Referring to the current state of decentralized finance (DeFi), Buterin described it as being “in the early stages of setting down into a stable medium, improving security and refocusing on a few applications that are particularly valuable.”
As the most important DeFi products, acting as its stable pillars, Buterin singled out decentralized stablecoins and other synthetic assets like major stock indices and real estate, as well as prediction markets like Polymarket, and “glue layers for efficiently trading between other assets.”
5) Decentralized governance
Discussing decentralized autonomous organizations (DAOs), Buterin referred to them as “a smart contract that is meant to represent a structure of ownership or control over some asset or process.”
He further explained the value of decentralized governance, particularly in terms of the different roles of its structure and implementation:
“Decentralized governance structure protects against attackers on the inside, and a decentralized implementation protects against powerful attackers on the outside (‘censorship resistance’).”
At the same time, “decentralized governance structure (…) can incorporate opinions from more diverse voices at different scales, and decentralized implementation (…) can sometimes be more efficient and lower cost than traditional legal-system-based approaches.”
Finally, decentralization makes it “easier and more secure for on-chain things to interact with other on-chain things than with off-chain systems that would inevitably require an (attackable) bridge layer.”
It is also important to note that Buterin is equally the crypto sector’s supporter as he is one of its most vocal critics, recently warning that it still has the potential to attract bad actors while referring to Terra (LUNA) proprietor Do Kwon.
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