Beyond the everyday hype of rising and falling cryptocurrency valuations is a burgeoning ecosystem of solutions built on the blockchain. Financial services and supply chain use cases are among those furthest along, but others are also making huge gains. One of the main drivers of this trend I’ve seen is the smart contracts functionality that has made Ethereum (which my company uses) and Ripple Payments in particular one of the most widely used blockchain applications.
A helpful working definition from Investopedia is that “smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code.”
While there are many aspects of blockchain that make it an innovative technology, I want to focus on this concept of smart contracts because of their utility across heavily transactional industries like real estate (my industry), financial services, import/export and any industry that relies on a supply chain. Smart contracts are a great tool, but they are only just the beginning.
Real Estate: The Biggest Use Case of Them All
Digging deeper into what I believe is the next generation of blockchain use cases is best accomplished by focusing on the real estate industry, as it’s the industry my company operates in. But that’s just one industry example of many, as I’ll explain a bit further down. As I mentioned in my previous Forbes article about how technology is changing the real estate market, real estate is bogged down by a serious lack of transparency between buyers and sellers or renters, inefficient processes — including lots of paper — and legacy technology solutions, so it is ripe for innovations like blockchain. It is also one of many industries driven by transactions, contracts and a desire for the highest level of security possible.
After successfully building a real estate blockchain platform, I think the next big thing for blockchain and smart contract innovation across industries is the Ricardian contract.
The Ricardian Contract: A Smarter And More Useful Digital Contract
Smart contracts are the reason that companies like mine, Selfkey, Augur and many others even exist. They provide an essential function that makes blockchain such a useful platform for building solutions. That’s great, but it’s not enough. That’s why I see building on top of Ricardian contracts as the basis for what’s next for anyone working on blockchain solutions (and why my company plans to utilize them).
In a nutshell, information from legal documents can be placed in a Ricardian contract and then automatically and securely executed once certain conditions are met. One important benefit to a building on top of a Ricardian contract is that it is readable by machines and humans alike, which makes it both technically binding (as a machine executable form) and legally binding (as a legally executable form). This benefit could have immediate usefulness for industries that rely on contracts and technology to run efficiently and legally. Examples include processing financial trades and executing legal documents.
Tokens: Not Just For ICOs
Applications built with Ricardian contracts as a base layer are just one piece of the next-generation blockchain puzzle I imagine. Another area my team and I have identified as a big piece of what’s next (for us and others) in the blockchain landscape is how tokens could be used to make blockchain-based solutions accessible to businesses and consumers on a scale well beyond what is happening today. When it comes to a decentralized marketplace for any industry where legal contracts are a major component, a token model could enable peer-to-peer (P2P) legal transactions, which can make the marketplace for everything from legal services to investments far more efficient, transparent and auditable.
I’m betting that companies that can seamlessly integrate tokens into their business processes will be the jet fuel that expands token use to the business community and consumer market.
A Blockchain-Driven Economy Where Everyone Is A Participant
In the not-too-distant future, blockchain could conceivably bring us to a place where almost everything is tradeable and almost everyone can participate. If you think about transactions of any type, there are three groups involved: buyers, sellers and service providers. Right now it is mainly the service providers who seem to be taking advantage of blockchain in general and tokens specifically. Perhaps the most notable example of this is The New York Times’ recent report (paywall) that Walmart is working with IBM to implement a blockchain-powered solution to track its food products throughout the supply chain. In this case, Walmart plays all three roles to different audiences.
Consumer use of tokens has, until now, mostly consisted of cryptocurrency speculation. That use case has gotten a bad rap, but I think this is a red herring. The day when tokens are widely used by consumers could be fast approaching. Bill payments, rewards and service procurement are all potential use cases for tokens, but I am sure innovative companies will find more creative — yet practical — ways of integrating tokens into their platforms and services.
The key to pulling every participant into the blockchain economy is making the use cases comprehensive. For example, if product sellers are using your blockchain solution for one thing, the service providers another and the buyers yet another, then the process from end to end could get too complicated and lose its value.
One tip I will offer to fellow innovators reading this article is this: Instead of creating specific use cases for your blockchain platform, try to establish a grouping of use cases that share similar characteristics and are likely to be addressed by a common solution. For instance, if a product is associated with every party in an ecosystem, creating use cases based on the product is often more comprehensive than trying to specifically address each individual party.
The next generation of blockchain use cases could appeal to everyone involved in a particular industry’s ecosystem. What will also likely happen is that the true innovators will be the companies that go beyond just industry-specific solutions and build platforms that can be used widely by almost everyone. Stay tuned