Vitalik Buterin, photo by John Phillips

Erik Weijers, 6 months ago

What crypto use cases will survive - Vitalik's take

After the frenzy of the bull market and current depression of the bear market, it's nice to go back to the drawing board and wonder: what are the use cases of crypto that will survive? This is precisely the question co-founder of Ethereum Vitalik Buterin asked himself. What is he most enthusiastic about? 

Known for sporting rainbow unicorn t-shirts, the applications Vitalik focuses on are remarkably down-to-earth: his top 3 consists of Money, basic DeFi and Identity. According to Vitalik, these are proving themselves already, and 'are only getting stronger'. 

1. Money: still the most important crypto use case

Vitalik reminds us of the fact that in most countries which are not part of the Western world, access to traditional banking is limited. Also, in many of these countries, inflation is a much bigger problem than the 8% we consider catastrophic. Dollar stablecoins come in very handy in those places. They give people access to the dollar without having to go to the black market and/or having to stash the paper dollars under their mattress. 

The stablecoin market is still in development. There are trade-offs between the ease of use and straightforwardness of a centralized stablecoin like USDC and a more experimental, decentralized protocol like RAI. The success of the first depends on the success of the company behind it and the willingness of the Unites States government to allow it. The second is harder to attack as it is not related to the real-world financial system. But it presently it has a negative interest rate, so it's not entirely stable against the dollar. At least there is a wide array of options! 

2. Defi: keep it simple

According to Vitalik, Decentralized Finance (DeFi) has grown into a monster of excessive and unsustainable yield farming. It should now direct its focus to the core use cases. In Vitalik's view these are: decentralized stablecoins and other synthetic assets. Synthetic assets means that a token is tied to an asset outside crypto in the same way a stablecoin does, for example a stock index or real estate index. Another DeFi use cases that is a personal favorite of the legendary founder of Ethereum is the prediction market. 

3. Identity: one that can't be taken away

Let's face it: authentication in the current state of the internet is a mess. Stolen password databases, lost passwords, hacked identities...  That can be done better. The Sign In With Ethereum (SIWE) standard is a protocol that is already used in mail and chat services and a social network. It allows us to interact with a site without giving a party like Google access to private information or the ability to lock us out of our account.  

Vitalik: "Blockchains are valuable for identity applications because of their institution-independent nature and the interoperability benefits that they provide." To avoid a centralized point of failure, Vitalik envisions an approach where many specific identity-related applications are solved by separate projects, only then adding interoperability over time. 


These are just the top 3 of use cases Vitalik is enthusiastic about. He also talks about DAO's and hybrid applications that are not entirely on-chain, but that also use off-chain systems to improve their trust models. Voting is an example. To read further, check out his accessible blog post.

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