List of use cases

Reflect on the following list of 16 use cases and select one that you will analyse in Questions
1 and 2.

1. Store of value – Digitising gold: Digitising traditional commodities and physical

assets has become a new area of interest for blockchain technology. Turning
physical assets into tradable digital assets creates more liquidity and lowers barriers
to entry for private investors in asset classes that are traditionally dominated by
institutional investors and high net worth individuals. Several companies are
working on tracking and tracing physical gold using blockchain technology, to make
it a digital, easily tradeable asset. This both enables investors to have security and
transparency in the chain of custody of the physical gold underlying the digital
asset, and provides the accessibility and liquidity that trading a tokenised, digital
asset on the blockchain provides. With the speed and transparency of a digital asset
trading platform, investors will have access to an exciting, innovative, and secure
way to buy, sell, and hold gold globally.

2. Store of value – Tokenising carbon credits: Carbon credits suffer from a lack of
transparency, and numerous global markets for carbon and greenhouse gas offsets
are not integrated, leading to leakage in tracking and accounting for carbon. Using
blockchain technology to tokenise carbon credits and other environmental incentive
schemes enables for greater end-to-end visibility and tracking, as well as increased
coordination and trading across jurisdictions to reduce the displacement of
emissions from one jurisdiction to another by simply relocating where emissions
take place. Tokenisation of carbon credits also enables environmental incentives to
become tradeable financial assets, and allows people anywhere in the world to earn
tradeable assets in exchange for participation in the reduction of greenhouse gas
and carbon emissions.

3. Store of value – Tokenising equity: Equity ownership is being tokenised, especially

in start-ups and private companies, which is a type of equity that has traditionally
been inaccessible to retail investors. Even traditional companies, which have
typically accessed capital through public markets, are exploring using blockchain-
based tokens to raise capital in exchange for equity. One of the key benefits of
tokenisation of equity ownership is liquidity, especially for venture investments and
private equity investments that have historically been illiquid and associated with
long lock-ups of 5 to 10 years. This has limited the investment in these types of
 equity to investors who are able to leave capital in these investments for a long
time. Tokenised equity enables investors to trade positions in real time as the risk
profile of a company changes. In addition, it provides increased transparency, so
that investors can actually confirm how many shares have been issued, as well as
validate the ownership of those shares.

4. Store of value – Tokenising art ownership: Ownership of art, especially fine art, is
being tokenised. Art represents an asset class that has long been inaccessible to
most investors outside of the wealthy. By tokenising a piece of art, such as a
Picasso, more investors can participate in the value appreciation of that art or
perhaps even collectively pool their resources to purchase a piece for their local
museum through a token sale, even though none of them possess the resources to
acquire the painting individually. The difference between this and current
crowdfunding models is that the token holders can retain fractional ownership.
Charitable donations of art can therefore evolve towards charitable investments,
and token governance mechanisms can evolve to enable granting usage rights
rather than cash flows from the artwork.

5. Payment rail – Micropayments for online content: Micropayments have the

potential to support high-quality content without locking users into a single, long-
term subscription. The concept behind micropayments is that you spend a small
amount each time you view content. So instead of paying for a monthly subscription
or viewing ads, you pay per article. This incentivises publishers to produce high-
quality content that satisfies the audience – if the audience constantly feels ripped
off by a content source, they will stop making purchases. Because you do not pay
for ad-supported content, you have no recourse if you feel like clickbait has wasted
your time. Micropayments could also help support models where content creators
can engage directly with their audience instead of relying on centralised distribution
platforms like YouTube or Medium, which take a cut of ad revenue. Because
blockchain technology and cryptocurrencies allow for very low-value payments at
little to no cost, new monetisation models that incentivise content creators may
finally be economically and technically feasible.

6. Payment rail – Cross-border payments for small- to medium-sized

enterprises: Sending payments across national borders is challenging for many
small- to medium-sized enterprises, as fees are often expensive, and transfers can
be time-consuming due to the many banks and intermediaries involved in the
process. Using cryptocurrencies as a payment rail for these cross-border payments
 can enable small enterprises that may not be a part of the SWIFT network or other
payment gateways – which charge prohibitively expensive fees – to move money
around the world quickly, cheaply, and efficiently, and with transparency as to
where funds are at any point in the transaction. Furthermore, cryptocurrencies can
provide digital payment functionality to markets that may have traditionally been
cash on delivery, or relied on physical movements of cash, which can be highly
insecure.

7. Payment rail – Remittances: Sending small amounts of money across borders to

friends and loved ones has historically been a very high-cost activity. For example,
someone in the US might take cash, visit a remittance agent, pay fees of up to 10%,
and then wait five to seven days to send that money to a loved one in another
country. One of the great opportunities of digital currencies is the digitisation of
cash, which creates new avenues that enable global remittance to become easier,
faster, and cheaper. Some companies allow users to visit a convenience store,
convert cash into digital cash backed by cryptocurrency, and then transfer it to any
other user’s wallet. The types of services that digitise cash in parts of the world
lacking financial infrastructure are building avenues to make the digital currency
ecosystem more accessible.

8. Payment rail – Real-time payments: The cost of holding working capital can be
very expensive. Imagine you are a supplier who makes parts for a widget factory.
You have to buy raw materials, pay for labour, and then wait 30 to 60 days after
shipping the parts to your buyer to be paid for them. The opportunity cost of this
capital can present a real constraint to growing businesses. Because
cryptocurrencies can be transferred in real time, and can serve as a global unit of
payment in the place of costly and fluctuating currency exchange and transfers,
they present the possibility for a variety of use cases that previously required large
amounts of working capital or float.

9. Distributed ledger – Global registry for academic degrees and

certifications: Using a blockchain registry to digitise, store, and manage academic
degrees and certifications makes them cryptographically signed, immutable, and
shareable. Instead of relying on the word of an individual or a centralised authority
to verify authenticity – which can be slow, complicated, and impermanent – a
blockchain solution replaces institutions with a permanent and tamper-proof
infrastructure record. The blockchain acts as a notary that can attest to the
authenticity of academic records, and makes it easy, transparent, and cheap to
 manage and verify them.

10. Distributed ledger – Land titles on the blockchain: One of the challenges of land
ownership in many parts of the world is the challenge of proving the ownership of
title. When a purchaser seeks to buy property today, they must find and secure the
title and have the lawful owner sign it over. This seems simple on the surface, but in
many developing countries, owners may have incomplete or no paperwork, forged
signatures, or other challenges that prevent them from selling land or using land
ownership as collateral to back a loan or other type of transaction. Using a
blockchain registry to store land title records can provide increased transparency
and reduce the risk of corruption, enable easier tracking and tracing of ownership,
and allow land owners to leverage their land as an asset.

11. Distributed ledger – Blockchain-based voting: In the current political climate,

there are many institutions and individuals questioning the integrity of election
processes. The potential of blockchain technology to radically change traditional
voting systems is enormous. A blockchain-based voting platform allows observers
to ensure those who are voting are who they say they are and are legally allowed to
vote, and provides transparency to count votes in real time and ensure there is no
fraud. Blockchain technology also has the potential to digitise voting. The biggest
problem with online voting is its security. Votes can be tampered with or hackers
can find out who you voted for. Blockchain can make votes anonymous and provide
better security. Voter turnout is low in many countries, but the easier processes of
digital voting can bring in more participants, which enables election processes that
are more democratic.

12. Distributed ledger – Blockchain network for data storage: Centralised services
like Amazon Web Services (AWS), Google Drive, and Dropbox are used by many
people and companies around the world to store files and manage data. The
problem is that users have to trust that these companies will not have any service
outages or major breaches of security. These companies are also vulnerable to
attack due to their centralised nature, and governments can force them to disclose
data. New services leverage distributed blockchain networks to encrypt and
distribute data across a network of thousands or millions of computers and devices.
This makes data more secure – there is no centralised repository to attack – and can
reduce costs. Furthermore, there is a lot of spare data storage capacity around the
world. If users have excess storage capacity on their devices, they can rent it out.
13. Distributed ledger – Blockchain-based identity: Personal identity data is highly
vulnerable in the kinds of centralised, online databases that exist today. Creating an
identity on a blockchain can give individuals greater control over who has their
personal information and how they access it. Users can have one blockchain identity
or many, and can register them just like one would register domain names or
accounts on Facebook or Twitter. The main difference between blockchain
identities and accounts on any other service is that blockchain-based systems have
strong ownership. Blockchain identities cannot be confiscated by any service,
because the system defines ownership according to ownership of public-private key
pairs, just like ownership of coins on the bitcoin blockchain. This is in direct contrast
to Twitter or Facebook usernames, which could be confiscated or censored at any
time by the respective companies they belong to.

14. Smart contract – Supply chain: Blockchain can act as a common ledger for various
parties involved in the supply chain. Using blockchain technology can enable faster
and more accurate tracking of products and transportation details, enable the
ownership of goods in transit to change hands throughout the supply-chain
lifecycle, and facilitate the use of “smart contracts”, which can enable more
automation in the execution of financial transactions that are coupled with the
physical flow of goods. Smart contracts in a supply chain can integrate commercial
transactions and agreements automatically and transparently. It also enables
disintermediation by enforcing the obligations of all parties in a contract without
the added expense of a middleman.

15. Smart contract – Royalty payments: Every time that a piece of content, such as a
song, is used for commercial purposes, the owner of the rights to that song receives
a royalty fee. One of the challenges in managing the multiple parties involved in
creating a song is working out who owns these rights and who is therefore entitled
to payment. Smart contracts can ensure that royalties go to the intended recipients
by recording ownership rights in a blockchain system, and automating payment
each time a song is played. This could theoretically be applied to any piece of
content with a team of contributors.

16. Smart contract – Trade clearing and settlement: Blockchains provide a single
ledger as the source of truth, and smart contracts offer the ability to automate
approval workflows and clearing calculations that are prone to lag and error. This
allows banks to reduce errors, cost, and the time to settlement, especially for
complex trades that have a long post-trade life cycle, such as a monthly coupon
payment that requires ongoing processing. Trade clearing and settlement entails
labour-intensive activities that include various approvals or complex internal and
external reconciliations. The opportunity to streamline clearing and settlement
processes with blockchain and smart contracts is immense.

4. Questions

Question 1

1.1 Which use case are you analysing? Copy the name of the use case as listed in
Section 3.

1.2 Once you’ve selected a use case, do some independent research to expand
your knowledge of what it involves. Once you’ve gained a firm understanding of the
use case, respond to each of the following questions listed under the “Key criteria”
heading in the OBSF. Indicate “yes” or “no”, along with a short reason justifying
your answer (no more than four lines per question).

For the use case you have chosen:

1. Is there a predictable, repeatable process that lends itself well to

automation?

2. Is there an ongoing or long-running transaction or process, rather than a

process that only occurs once?

3. Are there multiple stakeholders in this process or value chain?

4. Is the role of reconciling disparate data usually played by one party or a

limited number of parties?

5. Is there an element of value transfer? Remember, value is not only

monetary.

6. Is there value in an immutable record? Or is an immutable record a

requirement?

Grading criteria: Your responses for Question 1 will be graded according to the
following guidelines:
  Evidence of understanding: Each question is answered with a “yes” or “no”, along
with a short justification for why. The responses reflect a clear understanding and
interpretation of the key criteria questions in the OBSF.

 Relevance to the use case: The responses to justify the reasoning for “yes” or “no”
are insightful and relevant to the particular use case that is being analysed.

Question 2

Having answered the six key criteria questions for your chosen use case, you are now
required to investigate the most important considerations that you need to make when
applying blockchain technology to the particular use case that you are analysing. This can
be achieved by answering the questions linked to the respective layers of the blockchain
development stack. Consider the following questions as they relate to the use case you
have chosen:

Protocol layer

 Is it possible to use public blockchains, or is there a defined need for a private

implementation?

 What are the design expectations regarding speed, programmability, or payment

functionality?

 Do you have developer resources available or is the protocol you’re using supported
by a robust, sustainable open-source developer community with access to
resources?

Network layer

 Who needs to run a node? Who has read access? Who has write access?

 What are the technology integration requirements?

 What are the data storage requirements regarding archiving and regulation?

Application layer
  Who is going to use the application? What are the implications for user experience
and design?

 What is the existing organisational structure and what behavioural patterns do users
have today? How does this product or service fit into their existing workflow?

 Are there any behavioural or organisational changes necessary to implement this

use case?

Work through the set of questions linked to each respective layer and formulate three
responses (one for each layer) outlining the main considerations that you need to make for
each layer or category. Note that you do not need to address every single question that
appears under each layer. Instead, the objective is to investigate the most important
questions per layer while keeping each response around 250 words (i.e. 750 words in
total).

Grading criteria: Your submission for Question 2 will be graded according to the following
guidelines:

 Evidence of understanding: The responses reflect a clear understanding of the

questions associated with the protocol layer, network layer, and application layer.

 Relevance to the use case: The responses are not abstract or expressed in general,
theoretical terms; instead, the ideas are related back to the specific use case at
hand.

 Critical thinking skills: The responses highlight key factors that need to be taken
into consideration when applying blockchain to the chosen use case. In this way, the
responses demonstrate a thorough and incisive approach to thinking about
blockchain and the use case at hand.