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What are the next killer apps on Blockchain?

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Sometime in 2009, Facebook opened its APIs, which 3rd party developers access to the platform. What followed was a tsunami of apps that changed our lives forever.

Games like Farmville were the poster boys of these apps leveraging the network effect and eventually powered Facebook to become an Internet behemoth. Never to miss a trick, Steve Jobs opened the iPhone app store for developers. What followed was the golden age of the mobile app. During that time, top apps like Whatsapp, Instagram, Uber and Snapchat were built. Today, there is an app for everything. Mobile has since moved up the technology adoption S-curve - which refers to the cumulative rate of adoption, which means that the market is approaching saturation point. Great mobile apps will still be built, but the low-hanging fruit has been picked.

If the mobile revolution handed a computer in the hands of every human, what's next? The next frontier of this decade looks like it is building apps on blockchains. Blockchains are virtual computers that operate on top of networks of physical computers. They have new properties and new capabilities that prior kinds of computers didn’t have. The first blockchain was the Bitcoin Blockchain - a public, peer-to-peer transparent ledger on every computer in that network. This network is secured by miners who solve complex computer problems to forge the next block in the blockchain. For their time and effort in securing the network and validating transactions, they get rewarded with Bitcoin. But there are only so many things that one can do with Bitcoin. To overcome these limitations, a 19-year-old Russian developer Vitalik Butterin, wrote a new language and developed a new programmable blockchain and called it Ethereum. Blockchains are programmable when they have highly expressive, near Turing-complete programming languages. Expressive means that it's easy to write code that's easy to understand, both for the compiler and a human reader. A Turing Complete system means a system in which a program can be written to find an answer. Turing Completeness means that the program can use its codebase to perform virtually any task. So far, the most popular programmable blockchain is Ethereum.

So, just what does Ethereum do? Just as the utility of mobile phones rose exponentially when 3rd party developers started making apps, the same pattern is being repeated in programmable blockchains. Decentralized Finance applications or DeFi is getting a lot of attention. But what is DeFi, and what does it do? DeFi is a system by which software written on blockchains makes it possible for all marketplace participants, sellers and buyers, borrowers and lenders to interact with each other, peer to peer, mainly with a strictly software-based intermediary rather than an entity, facilitating a transaction. Last year during "DeFi summer," the first wave of crypto/blockchain killer apps broke out: Uniswap, Aave, Compound, Maker to name a few. Compared to traditional finance or Centralised Finance (CeFi) is biased, opaque, complex and has substantial overhead costs. DeFi, on the other hand, is transparent, fair inclusive, fair, less complicated (fewer layers and overheads), and far cheaper. Ethereum has processed approximately 1.7x PayPal's payments volume with 0.2% of the headcount in 26% of the time. Uniswap processed 30% of Coinbase's volumes with 27% headcount and 2.6% venture funding. In traditional finance (CeFi), we all know that value flows inward to institutions at the center. In DeFi, value flows outward to people at the fringes.

Let's move onto another killer app - NFTs or Non-fungible tokens. "Non-fungible” more or less means that it’s unique and can’t be replaced with something else. A bitcoin is fungible — you can trade one bitcoin for another, and you’ll have precisely the same thing. Similar to your child's Pokemon cards, each unique card, however, is non-fungible. If you traded it for another Pokemon card, you’d have something completely different. NFTs are powered by Ethereum blockchain as it can store extra information that makes them work. Anything digital can be an NFT - doodles, drawings, music. A lot of the current euphoria is around using the tech to sell digital art. NFTs could seem frivolous to an ordinary person, but they are essential because NFTs offer superior economics to developers and creators compared to existing platforms. So far, 2071 NFTs have been minted on the WazirX NFT platform, out of which 752 NFTs worth 109,512.56 WRX or one crore rupees have been sold. Art depicting an abstract rendition of the fourth avatar of Vishnu by Ishita Banerjee was the highest amount for an NFT on WazirX. The art was sold for 3,112 WRX or ₹2,66,616, as per today’s exchange rate for the rupee. Banerjee is an Indian origin artist based out of Montréal, Canada. Interestingly, the next two highest-paid NFTs — Kali and Phoenix — also were by Banerjee that went for ₹2,49,743.36 and ₹2,42,019.34, respectively.

Another hot trend that has emerged is DAO. A decentralized autonomous organization (DAO) is an entity with no central leadership. In a DAO, decisions flow from the bottom and are community managed and organized. They have rules enforced on a blockchain. DAOs are internet-native, global groups that manage and share resources, build products and services, and work together toward commonly defined goals. The main advantage of DAOs is that they offer a solution to the principal-agent dilemma - a conflict in priorities between a person (the principal) and those acting on their behalf (the agent). An example can be the relationship between stakeholders and a CEO. The agent (the CEO) may operate in a way that is not aligned with the priorities and goals of the principal (the stakeholders) and instead act in their self-interest. Another typical example is a rogue trader (agent) who can use extreme leverage to chase a performance bonus, knowing the bank (principal) will cover any downside.

Social tokens – also known as personal tokens, community coins, and creator coins – are decentralized and secured by blockchain and built on the same model as common cryptocurrencies like Bitcoin or Ether. For a long time, creators – whether it be writers, artists, musicians, or thought-leaders – have been restricted in their ability to monetize their work. Currently, they have to use platforms like YouTube, Spotify, and Substack, which take between 10-20% of their income. Consequently, fans and followers have few opportunities to share in the creators’‌ ‌growth. By owning a symbolic part of the creation, fans can access private content and vote ‌ ‌ to ‌ ‌ influence ‌ ‌ creators' ‌work. Social tokens are new ways for creators to make money online. They empower creators by removing rent-seeking intermediaries and enabling the development of micro-economic fandoms.

Are blockchain-based social networks around the corner? Today's social networks can be compared to Big Brother with them watching every click you make, every video you watch. The sheer power they wield in terms of the ability to cancel people, shape public opinion and spread fake news is unprecedented. Blockchain-based social networks by their very nature, are peer to peer and have a distributed ledger format. This means there is no concentration of data at a single point, and it is distributed across all users. Banning and shadow banning can be a thing of the past and users can share their content freely.

These are early days in the crypto space - we often compare it to the Netscape era when people were just figuring out the internet. Just as the Internet transformed several industries - media, communications, entertainment, finance etc, we believe that this revolution will change lives as we know it. Never before could we send a million dollars to a person across the globe by clicking a button and near instantaneously. Never before could specific finance tasks be done without middlemen. This is a perfect storm of innovation. What a time to be alive!

This article is authored by Rajgopal Menon, VP, Marketing, WazirX

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