IPFS, WEB 3 & Decentralization – Part 3

The Blockchain, Smart Contracts & DeFi


In the previous post on Non-Fungible Tokens (NFT’s) I took a skeptical view of their value in the real world. This was based on the observation that the most common use of NFT’s is for digital artwork and other intellectual property, and the fact that people were paying a lot of money for “the pride of ownership.”

However there are other uses for blockchain technology that have real potential value. Decentralized Finance (DeFi) is a primary goal of blockchain technology – the ability to transfer funds and ownership without the participation of banks, credit card companies, or similar institutions. Here are a few.

Real Estate

  • Real Estate contracts have been well developed over the years and require several “process participants” – Sales agent or broker, title company, mortgage lender, inspector, seller and buyer – to close the contract.
  • The elements of a real estate contract can be represented by standardized digital tokens, like the physical property, tax liability, rights and obligations, transaction funds, transaction participants, and as many others as is necessary to fully describe the transaction. Smart contracts can implement each of these tokens, and funds are delivered to the seller immediately by a smart contract.
  • The biggest benefactor to smart real estate contracts could well be the mortgage provider. A digitized history of the property title, purchaser finances and other requirements set by the lender’s smart contract and the sale closed with no human participation.
  • With commercial property, the opportunities for cost savings and increased transaction speed are even greater, particularly in properties with multiple owners. Blockchain smart contracts permit both costs and profits to be distributed easily.
  • Realtors claim that their value-add is pro-active marketing of your property, but with real estate marketing entities like Redfin and Zillow, real estate marketing will inevitably move to the internet.

Provenance

The value of an artwork is largely defined by its provenance – a chain-of-custody document that accompanies every change of ownership and proves the artwork is what it claims to be and the current owner is the true owner. However, paper documents can be forged or modified to enhance the value. Once a true provenance is committed to a blockchain, it cannot be modified. This could be a true use of NFT”s.

Passports & Visas

If you have ever poked around in the dark web you have found there are numerous sites that offer fake passports and visas. In 2018 U.S. Customs and Border Protection uncovered a plot that had allowed 700 individuals to enter the country on false Hungarian passports.
Blockchain technology can offer unalterable identification of the carrier. The blockchain “passport” can be carried in a cell phone or any number of formats and the individual identified by bio-metric means.

Medical Records

People with extensive medical histories, by definition have complex medical records. There has been great effort to convert to electronic health records (EHR) in the past 10 years, partly incentivized by Medicare paying $44,000 per physician if they converted, penalized physicians failing to do so. There are a dozen EHR providers, dominated by Epic and Cerner with a combined 54% market share. 1Cerner was acquired by Oracle in 2021 for $28.3 Billion.

All of these providers are WEB2 client/server applications, and they don’t talk to each other. If your doctor is on Cerner, and you require services from a specialist using EPIC, all your medical data must be populated manually. WEB3 can fix this.

The ability to have all of your medical data secure in a WEB3 blockchain controlled by you would be a huge advance. As an exercise, I have been trying to consolidate all my medical history into digital documents, and it is proving extremely difficult. If blockchain medical history comes to pass, companies like Cerner and EPIC that store and manage applications and databases would see considerable revenue reduction. Forbes has more detail here.

There are a few aggressive WEB3 companies that have blockchain EHR systems that can be found in Estonia, Thailand and a couple other countries. WEB3 EHR will happen in the US when an entrepreneurial company finds a way to monetize it. If implemented, it will put an end to siloed, stagnant data from generations of healthcare inefficiency.

Gaming identities & assets

I don’t play games, but I do know the gaming industry is estimated at $173 billion in 2022, and expected to grow to more than $300 billion in the next 5 years. Where there is that much money floating around, there is huge incentive for fraud and theft. Those who play online games spend a lot of money and effort to build their identities and game objects. When these are represented as NFT’s or blockchain tokens, they cannot be stolen, and can be bought, sold and traded, possibly at a profit.

Travel

I have saved this one until last because it gets a bit more complicated.

Currently Online Travel Agents (OTA’s) book user requests through websites on their dedicated servers. When you book an airline flight you connect directly to the airline. If you book a room with Hilton, you connect to the hotel servers.

However, if you book airlines or hotels with a booking agent like Expedia or Travelocity, they effectively “broker” your request to multiple airlines or hotels in return for a fee from the airline or hotel.

Bookings with Airbnb or VRBO are more like ebay. They provide a platform to match hosts and guests. The transaction takes place between the traveler and host, and the platform facilitates the transaction. For providing this service, the platform takes a fee of 10% to 20%.

By applying Web3 blockchain and the “Interplanetary File System”2More on IPFS, Web3 and Decentralization in a future post. companies like Trips Community intends to eliminate platforms and associated fees. Trips Community founder Luca De Giglio, says this means creating “an Airbnb (the platform), without Airbnb (the company).” In addition to eliminating fees, the property owner is in control of his listings, his bookings and his reviews. His account cannot be lost or suspended by an OTA.

As with real estate, the big problem not yet solved by blockchain is marketing. OTA’s currently handle the marketing and listing for you.

Innovators are currently working on directories for blockchain travel marketing. STAYBIT has implemented a Minimal Viable Product (MVP) 3An MVP is a software system with sufficient function and features to be useful to early adopters but not enough to be marketable. Its value is giving developers early feedback on their designs. to demonstrate blockchain payments. It does not yet have capability of a listing site. It is built with a hybrid of the public Ethereum network and traditional Web2 servers. However, it does automate the trust between hosts and guests at a much lower cost than all existing platforms. It requires a Web3 browser to run.


Notes:

  • 1
    Cerner was acquired by Oracle in 2021 for $28.3 Billion.
  • 2
    More on IPFS, Web3 and Decentralization in a future post.
  • 3
    An MVP is a software system with sufficient function and features to be useful to early adopters but not enough to be marketable. Its value is giving developers early feedback on their designs.

One thought on “IPFS, WEB 3 & Decentralization – Part 3

  1. Pingback: IPFS, WEB 3 & Decentralization – Part 2 | Geek Emeritus

Leave a Reply

Your email address will not be published. Required fields are marked *