From: thepipeline_xyz
Blockchain technology offers significant potential for disruption and improvement in areas such as financial systems, identity management, and asset settlement. The core value proposition of blockchain in these areas centers on self-sovereignty, permissionless access, and efficiency [01:24:00].
Self-Sovereignty and Permissionless Access
Early proponents of crypto were drawn to the concept of self-sovereignty, enabling individuals to have full control over their money and interact permissionlessly [00:58:00]. This was seen as a solution to issues with traditional banking systems, which were perceived as irresponsible [00:48:00]. The space aimed to disrupt money and the banking and financial industry [01:38:00], unlocking numerous empowering possibilities [02:06:00].
Disrupting Payments and Finance
A clear application of blockchain is in payments [02:30:00]. In the Western world, credit card companies charge significant fees (e.g., 3%) on every transaction, posing a substantial cost to businesses, especially small and medium-sized ones [02:42:00][03:12:00][06:25:00].
Blockchain can facilitate payments by allowing anyone with a phone to pay for a service and bypass these middlemen [03:43:00]. In parts of the world where credit cards are less common, crypto, particularly Tether, is already widely used for payments [03:56:00].
For blockchain to fully disrupt payments, networks must be able to handle transactions at the same scale as current payment processing systems [04:22:00]. Monad, for instance, is designed to be such a network, capable of 10,000 transactions per second [04:37:00].
Personal Finance and Decentralized Finance (DeFi)
Personal finance is another area where crypto can provide significant value [04:43:00]. The goal is to make DeFi the standard for banking, trading, borrowing, and lending [04:51:00].
To achieve this, blockchain systems need to offer an experience equal to or better than centralized personal finance tools [05:05:00]. This involves:
- Reducing slippage [05:16:00].
- Improving the cost of execution [05:16:00].
- Making the cost of on-chain trading comparable or superior to centralized environments [05:19:00].
Achieving single-digit basis points for slippage, compared to the frequent 1-5% seen in DeFi, requires a highly performant environment to allow market makers to quote tightly and compete down the spread [05:33:00].
Settlement Beyond Finance
Beyond payments and personal finance, blockchain has potential in more general settlement applications [05:57:00]. This includes:
- Settlement for stock trading [06:01:00].
- Settlement for the transfer of physical assets, such as buying and selling a house or car [06:03:00].
These areas, along with identity and community, represent significant future potential for blockchain technology [05:55:00][06:11:00].