Stablecoins will become the money used on Ethereum. Various L2 (Layer 2) solutions will make this a possibility as stablecoins will require high TPS (Transactions Per Second). I cannot go into details on which stablecoins will be primarily used, but I can dig into USDC and DAI.
USDC – This is the stablecoin from Coinbase’s Circle. USDC is issued by regulated financial institutions and backed fully by reserved assets. USDC is perfect for the US in that it allows for Coinbase to implement tools that can appease the US government, whether this be controlling who can hold the stablecoin, to keeping track of how it’s users spend the stablecoin. I am sure as time goes on; the US government would like to implement some other tools within the stablecoin that would help them keep track of other things. So now you question, how is this good for crypto, I thought the point of crypto was to fight the fed, fight surveillance, etc. Unfortunately, for us to receive worldwide adoption of certain technologies, governments will need to maintain some level of control over certain assets. This is something that is unavoidable, and still benefits Ethereum as the government indirectly makes use of the platform. Ethereum provides the ability for anyone on this Earth to do whatever it is they please. Adding censorship and surveillance is just one of the possibilities that Ethereum provides, Ethereum does not discriminate. But why use Stablecoins to begin with? Well, we know that ETH the asset on Ethereum is volatile, this is the nature of the asset and with time the volatility will be less than it is now, but people do not want volatility with something they need to purchase goods with, or conduct business. They want an asset that can remain pegged to a value and be unchanged. Therefore, stablecoins are an important invention on Ethereum.
DAI – This is a stablecoin by MakerDAO. It is the first decentralized stablecoin on Ethereum. DAI approaches the peg to $1 differently from USDC in that DAI is not pegged to the USD, instead it is pegged to a basket of assets such as ETH, USDC, USDT, BAT, WBTC and many more. People are attracted to DAI because of its decentralized nature and that it is not controlled by a single entity. DAI has had issues in the past and continue to have issues with keeping its asset pegged to $1, but that has not stopped the community from looking into different solutions to getting the asset pegged back to $1. It is also worth noting that due to its decentralized nature, it suffers from many unknowns, such as how regulators will respond to the asset. Will they allow for it to flourish untouched, or will they crackdown on the asset? For now, it remains to be seen how regulators will treat DAI. I do believe that besides USDC and DAI, other government bodies will come up with their own stablecoins built on Ethereum that can be used within their own countries. So, we may see a EUR stablecoin, a Yen stablecoin, etc. Each with their own unique properties.
You have probably heard by now about DeFi (Decentralized Finance). This has been a work in progress for many years, and it was just this year that the trend for DeFi has caught on with many outside of the Ethereum community. What exactly is DeFi, and why is it an important innovation in this space? DeFi in short is a global, open alternative to every financial service you use today. Whether that be taking out a loan, or building up savings, getting insurance and more much. All of this is possible due to Ethereum’s decentralized nature. So long as you have an internet connection, it will be difficult for someone to prevent you from getting that loan you desperately need, or to build a savings account with an attractive interest rate. In the future, I can see health insurance, car insurance and many other types of insurance also getting built on top of the platform. Ethereum’s smart contract capabilities allows for all of this to be possible and the process is entirely autonomous, which cuts out the middleman. No more discrimination. The great benefit that Ethereum provides for DeFi is that the code written is transparent. Meaning, anyone can audit the contracts. This is fundamentally different from how current operations are handle. Right now, if you wanted to take out a loan, you would need to go through a bank, but each bank has it’s own sets of rules, perhaps you need to meet a certain income, or maintain a credit score for an extended period of time. With DeFi, these rules do not apply. Within the Ethereum community we like to use the term “Money Legos”, and this fits right along with DeFi as well. DeFi applications because of their open nature, can be built by combining other DeFi products. This opens the doors to some amazing combination of products that have yet to be seen. Some examples of products that are already on the market are: Compound, which is a lending platform where you can earn interests or borrow an asset. There are Decentralized Exchanges like Uniswap, which allows the trading of ERC-20 tokens. There are prediction markets such as Augur. Insurance platforms like Nexus Mutual and finally there are synthetic assets from the Synthetix platform. There is a deeper level to DeFi, and I have only scratched the surface of what is to come with the future of DeFi.
For this one, I will be delving a bit deeper into what I see as a place that has major potential from utilizing Ethereum. Virtual reality is something that has been taking off at a steady pace. From Steam’s HTC Vive, to Playstation’s virtual reality headset. Gamers have shown an interest in VR and this interest is only expected to grow as time goes on. So, what does VR have to do with Ethereum? Platforms built on Ethereum mean that you as owner of assets built on the platform, own those assets for life. Games like Second Life allow a user to maintain exactly as the name entails it, a second life. Problem is, the assets purchased within this game are tied to the game itself and once the game loses steam, or is gone completely, so do your assets. Building on top of Ethereum ensures that everything you have purchased, remains yours even if the game were to fail or disappear. This means the community could build a new game and make use of those very assets again. But all in all, these assets have value and if the community comes to that consensus, you could build out an entirely new world within VR.
For this one, I will focus mainly on how the US elections are conducted. Currently, as a US citizen you have 2 options on how to vote. You can do so in person, and suffer waiting hours in line, or you can do so at home through mail-in. Both methods have their flaws. The main one being fraud, rigging. With mail-in, you are relying on someone to ensure your vote makes it to its destination and is accounted for. And with the in-person option, you are relying on the machines to count your votes without any tampering. We can do better. Imagine sitting at home, pulling up your phone and voting through the official voting application built by the US government. On top of that, imagine being able to do this from anywhere around the globe. How could we achieve this? Biometrics is one option available. I am not sure of the approach the government would go about this, but they could gather information on you to prove your citizenship of the country. Your biometrics are then uploaded and secured on the Ethereum blockchain. This information can only be accessible by you, and the US government can prove it is you through privacy solutions like ZK proofs (Zero Knowlesge Proof). Now that your biometrics are securely stored on the Ethereum blockchain, you can vote through the application. You will give the application permission to access your biometrics information, and then you can vote for your candidates. The results are then stored either through a dedicated L2 solution, or on-chain and is public and results accessible in real time. Storing the information on the blockchain ensures that none of the information can be tampered with, and also verifies that those who are legible to vote, have voted and is confirmed to be the person you claim you are. This allows the citizen to not be tied to any specific location to vote for their favorite candidate.
Healthcare takes a similar approach as the election subject in that your information is stored on chain and is private and accessible by only the person the data belongs to. You can give specific access to certain health information to your doctors through privacy solutions that only you and your doctors have access to, and is only stored on chain, and not on any centralized servers that have the potential to be exposed for hacks. As technology continues to develop, perhaps an AI can analyze your data and provide to you in real time, solutions to problems you may have with your diet, and many other health related things. All while protecting your privacy.
This is a sector that many in the industry have started to take seriously. A prime example is EY, one of the Big 4 firms that are utilizing Ethereum to build supply chain solutions for businesses. One of the issues businesses have with adopting blockchain technology is how open it is. EY has developed Nightfall, a privacy solution that makes use of public Ethereum in a private way. This way businesses can conduct their regular business without leaking any information to their competitors. Using Ethereum allows for companies to maintain full traceability and transaction history to auditors and regulators without revealing transaction content more widely. They also plan to use Ethereum to keep track of orders in real time. An example being pharmaceutical products. They can track the logistical journey while not revealing details about the products themselves, such as drug type, destination or quantity on Ethereum. The biggest advantage of this is that companies can make use of Ethereum’s censorship resistance, verifiability, and infrastructure. One major company that is currently conducting its supply chain project on Ethereum is Coca Cola. You can find more information in regards to that here: North America Coca Cola Bottling Supply Chain
It is obvious that I have not covered everything related to the potential of Ethereum in this article. The purpose was to show you examples of existing products and what is possible utilizing Ethereum. I see a future where Ethereum replaces many of the tools we currently use today, building a better, more open internet. I did not focus on Ether the asset, as I will leave the economic impacts to the experts. I wanted to focus on using Ethereum as a platform. As mentioned before, it’s really hard to tell where the future of Ethereum is headed in the next 10-20 years, but I can be certain that there are things we have no fathomed yet, and are only possible due to Ethereum.