The speed of change and growth in the cryptocurrency industry and the technology supporting it is nothing short of astounding. So much so that said technology has huge impacts on other industries. There are few parallels to compare this leap in technology to other than the internet itself.
With this list, I’m going to put what I think are the Top 5 technological innovations to come out from the cryptocurrency industry.
The security of cryptocurrency is one of the biggest selling points of the asset. No matter what happens your money is secure on the blockchain. Your local bank could be destroyed in a tornado and your cryptocurrency will still be safe. It’s true ownership of your money that institutions don’t give you. Banks are no longer need to hold YOUR money and gone are the fees and surcharges for banking with them.
Tying into security is the concept of decentralized finance. DeFi is democratizing access to loans and can generate passive income from the interest. It adds power into the hands of people instead of banks who often hand out insane APY loans and gives competitive alternatives.
The concept of a “decentralized currency” is like the concept of a “horseless carriage”.
At first, the absence of the past is the novelty. What, it’s not centralized? What, it doesn’t have a horse?
Eventually that’s recognized as the core of the value proposition.
— Balaji Srinivasan (@balajis) August 10, 2021
The potential benefits other industries could gain from DeFi or something similar is still unknown. I predict that decentralized insurance could become a thing in the future and allow people to invest in insurance products. Plus, DeFi may allow people to borrow without providing personal information, credit score, anything personal
We have an article that gives a better explanation of DeFi and how it works.
A smart contract is a program on the blockchain that runs automatically when certain conditions are met. These contracts can automate and decentralize most transactions helping alleviate work on the blockchain and provide greater security and accessibility to all the users. But this technology has amazing applications beyond cryptocurrency.
IBM lists out a variety of smart contract applications like transporting lifesaving medications by increasing transparency in the supply chain. With this increased transparency, trust is built via real-time communication and any sort of dispute between vendors can be quickly solved.
We have an article that goes into further detail about how smart contracts work and one on supply chain implementation.
NFTs have fallen out of favor recently with many outright calling them a scam, but I think that’s for people to say and think. While the art world is a misuse of NFTs in my opinion, the tokens can be really useful in real estate. The typical real estate market is a slow and bureaucratic mess that’s difficult to be a part of. But NFTs in real estate change the game. With an NFT, you could own a portion of a house and sell it for liquidity in a manner of seconds.
Combined with smart contracts, these types of NFTs can ensure everything associated with the property will be transferred with the sale so everyone is on the same page.
Proof of Stake
One of the biggest problems that people have with cryptocurrency is the amount of electricity it takes to mine. Developers have been looking for a way to address this problem, and while there are many solutions, none can top the innovation of Proof of Stake.
Going to sell all my BTC for ETH when I get home. Bitcoin is bad for the environment and with Ethereum moving to proof-of-stake I feel better supporting it.
— Hudson Jameson (@hudsonjameson) August 13, 2021
Proof of Stake is a concept that states a person can mine or validate block transactions in relation to how many coins they hold. So a person with a lot of crypto tokens can mine more than someone who has fewer tokens. The purpose of PoS is to curb the amount of electricity used by all miners and provide better security.
It incentivizes large holders to maintain a secure network while allowing smaller holders a chance to grow.