What problems blockchain will solve. And what potential does the technology have?

Processes that are most effective using distributed registry technology and barriers to its implementation

What problems blockchain will solve. And what potential does the technology have?

Blockchain projects can demonstrate a successful case for using this technology, and communities outside blockchain seeking a horizontal type of self-organization can take advantage of new solutions. The specifics of the potential development of such processes will be discussed in this article.

Blockchain – a technology for building a new type of community

Most critics of the crypto space constantly note the fact that blockchain technology is used only for highly specialized cases, mostly related to finance in one way or another. However, with all the statements about the paradigm shift, the benefits of decentralization and the openness of technology to all, cryptocurrencies are mainly used only in cases where the tasks set cannot be solved by conventional banking services due to their inaccessibility or sanctions.

Nevertheless, there is a distinct category of communities, far from the financial world, that could potentially benefit from blockchain technology. These are any organizations that strive for transparent and decentralized governance models at any stage of their operations.

Crypto-technology can significantly improve many of the processes communities need. First and foremost, voting processes, the use of shared funds within a fund or collective piggy bank, and the organization of raffles or prizes can be made more efficient, transparent, and reliable.

The last point is worth more details: we are not talking about mass lotteries, where many users seek to win a large sum, risking a smaller amount, although this too is more convenient and efficient to be implemented on blockchain. In community management, transparent randomization algorithms based on smart contracts will be extremely useful in processes where it is necessary to sеlect one participant from many equal participants.

Let’s imagine a real-world situation: members of a certain artists’ uniоn submit their work to a competition. All participants are valuable professionals to the community and the work of each carries its own unique style. Unlike sporting disciplines, where an athlete’s victory is objective because of the use of a clear and easily measurable criterion, a competition of artists of equal professionalism is virtually impossible to objectively evaluate. And with a centralized approach, this will inevitably lead to the subjectivization of judging and decisions in favor of their friends or acquaintances.

Random generation of a winner, transparency of the process and instant dispatch of the prize money using smart contracts can make the realization of such contests more democratic. Such a system will show participants that the community values everyone’s creative contributions equally, avoids nepotism, and is willing to reinforce such beliefs at the level of technical organization of its events.

Blockchain ecosystems for local businesses and activists

Tokenization and other blockchain solutions can benefit relatively decentralized ecosystems of mutual support for local business and activism that are just beginning to take shape.

To take an example: an ice cream store chain wants to give discounts to everyone who participates in beach plastic cleanup events organized by a local environmental organization. In this case it is necessary to have a reliable record of participants who are entitled to discounts. The relatively small size of such an ecosystem may imply solutions to the problem of accounting for the availability of the discount even by using paper coupons, but as the ecosystem grows, such a method will immediately cease to be effective.

What advantages would tokens have over paper coupons? The main advantage of using tokens is the transparency and accessibility of the entire accounting system for any participants in the system, which in turn will provide new opportunities for planning, analysis and systematization of such discount campaigns.

Even using the standard blockchain browser, a store owner can estimate how many participants have discount rights, how many of them have already spent their points in other stores, and which stores have more effectively notified their customers about the possibility of using “points”.

If tokens are used, it will also be extremely convenient to connect new participants to the existing ecosystem. Participation will not cause problems even if the stores in the ecosystem represent different businesses. Managers of different companies will not have to interact with each other or exchange data on the progress of actions – all information is automatically recorded in the blockchain and is available for everyone to analyze independently.

Lastly, there are two fundamental and well-known advantages to using tokens for such tasks. First, the system guarantees almost 100% protection against counterfeiting compared to paper coupons. And second, it’s cheaper than developing a Web2 counterpart from scratch, followed by the implementation of plastic cards and applications.

Why Communities and Ecosystems Still Don’t Use Blockchain

Despite the obvious benefits and readiness of the technology, blockchain solutions are still rarely used in local communities and ecosystems. The answer to this “why” question is extremely simple. The main barrier to the use of crypto technology is the difficulty in working with software that new users face.

Installing the necessary software and creating a blockchain account takes time, the “waste” of which outside the environment of ideological enthusiasts, without having a direct benefit is questionable. The above difficulties are easier to overcome by large corporations that can afford to allocate substantial funds for the implementation and advertising of new applications. Or state organizations, which, in addition to large budgets and information potential, also have a reputational advantage – an app recommended for downloading by the local administration will raise fewer questions from the public and spread faster.

Therefore, blockchain projects conveniently integrated into already familiar software can be the most capable of breakthrough innovations in local communities and ecosystems without additional help or resources. We are talking about Telegram and Discord, which are used by ecosystems and communities to organize their activities.

Most likely, we will be able to talk about the proximity of mass spread of crypto technologies only when a token sending will not differ from a picture sending in the already familiar messenger.

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