The following article is an editorial by Tyler Adams,
Over the past two years, cryptocurrency developers and venture capitalists have focused on supporting infrastructure projects at the expense of consumer-facing applications. If you look at this industry, you’ll see a plethora of tools for developers to integrate privacy features, decentralize information, and scale platforms, but a lack of applications where these tools can be used. We do not dispute claims that blockchain is a solution in search of a problem.
It doesn’t have to be this way. Crypto and the underlying blockchain technology have the potential to revolutionize the way we interact online and in the real world. In particular, blockchain as an authentication tool could address a growing crisis in the consumer goods market, by providing an immutable source of truth for verifying information.
More and more people in space simply need this type of integration with the physical world, what I would call non-fungible elements – NFI.
Rest assured, crypto winter is over
THE collapse of the NFT market and the metaverse failure The takeoff, combined with the onset of crypto winter, has caused many developers to pull back from consumer-facing applications and instead focus on improving decentralized infrastructure.
Keep in mind that that same year, media coverage of FTX Bankruptcy has seriously damaged the reputation of the industry. It didn’t seem like the right time to onboard mainstream users. Instead, developers put their heads down and focused on solving problems like scalability, user experience, and security.
We are now seeing improvements on all these fronts. Zero Knowledge (ZK) rollups improved speed and efficiency on Layer 1 protocols, account abstraction enabled a Web2-like user experience, and there was a drop in hacks from the first to the second quarter of this year.
Not to mention that the price of Bitcoin has reached a record levelreinforced this year by the approval of Bitcoin and Ethereum ETFs and general interest in stable coins and tokenization of real-world assets. There is no better time for decentralized application creators to reach Web2 users and businesses. We just need to demonstrate that blockchain is more than just a speculative asset platform.
Counterfeiting crisis
As a transparent and immutable source of truth, blockchain can be used as a tool to authenticate information in the digital and physical world. The second-hand clothing market alone was worth approximately $230 million this year, with the market for second-hand collectibles estimated at $134 billion alone. One might expect that as the second-hand goods industry grows, from Ebay to Depop, The Real Real and beyond, opportunities for counterfeiting will increase.
In fact, the market for counterfeit products should be worth nearly 2 trillion dollars by the end of the decade. Imagine if there was an on-chain authentication solution that could verify the origin of goods. This could open up unprecedented opportunities to integrate blockchain into the fashion and luxury goods market.
In the digital realm, the growth of decentralized finance (DeFi) means more people are trading assets without centralized players. Although privacy is a core value of DeFi, there must be a method of identity verification to protect against scams. Again, blockchain authentication tools can be used here.
Blockchain and AI can be integrated to improve verification methods. Currently, authentication is done by individuals. But AI enables image and shape recognition, as well as object detection on a larger scale. The blockchain can then be used to store the information collected by AI tools to provide a secure record.
Enter non-food items
NFIs bring real utility to NFT technology. By cryptographically linking a physical asset to a “digital twin” on the blockchain, NFIs can be used as a powerful authentication tool. For example, if you are creating a luxury watch, you could embed a private cryptographic key that could be used to verify the origin of the watch in case it hits the second-hand market.
Why would brands invest in this technology? Because it brings greater value to the property if buyers can guarantee returns on the second-hand market. This isn’t limited to watches: shoes, jewelry, and collectibles can all be verified on-chain.
Keep in mind that fashion and luxury brands haven’t completely abandoned NFTs. 9dcc Fashion collection linked to NFT debuted at Paris Fashion Week this year with designs inspired by digital innovation. Younger generations are also more concerned about the environmental impact of manufacturing. Seeing brands embrace the circular economy through blockchain-based authentication could be beneficial for their marketing.
The flagship blockchain application
For too long, developers in the crypto industry have turned inward, focusing on issues that don’t concern the general population. The industry is maturing and we need to embrace use cases beyond finance.
Authentication is a prime area where blockchain can provide a better solution than existing technology. The crypto winter is over, now is the time to remember the standards.
