The following article is an opinion piece by Tyler Adams, CEO and co-founder of COZ.
Over the past two years, crypto developers and venture capital have been hyper-focused on supporting infrastructure projects at the expense of consumer-facing applications. If you look around this industry, you’ll see a plethora of tools that help developers integrate privacy features, decentralize information, and scale platforms, but a lack of applications where these tools can be used. We do not refute the accusations that blockchain is a solution in search of a problem.
It doesn’t have to be this way. Crypto and the underlying blockchain technology have the potential to revolutionize the way we interact online and in the real world. In particular, blockchain as a means of authentication could address a growing crisis in the consumer goods market, providing an immutable source of truth to verify information.
More people in space need this kind of integration with the physical world, what I would call Non-Fungible Items – NFIs.
Cheer up, the crypto winter is over
The collapse of the NFT market and the failure of the metaverse The rise of this technology, combined with the onset of the crypto winter, caused many developers to retreat from consumer-facing applications and instead focus on improving decentralized infrastructure.
Please note that in this same year, media coverage of the FTX bankruptcy has seriously damaged the reputation of the sector. It didn’t feel like a good time to get regular users on board. Instead, developers put their heads down and focused on tackling issues like scalability, user experience, and security.
Now we have seen improvements on all these fronts. Zero Knowledge (ZK) rollups improved the speed and efficiency of Layer 1 protocols, account abstraction enabled a Web2-like user experience, and there was a decrease in the number of hacks from Q1 to Q2 this year.
Not to mention, the Bitcoin price has reached a level highest everboosted this year by the adoption of Bitcoin and Ethereum ETF and mainstream interest in it stable coins and tokenization of assets in the real world. There’s no better time for decentralized application builders to reach web2 users and businesses. We just need to demonstrate that blockchain is more than just a platform for speculative assets.
Counterfeiting crisis
As a transparent and immutable source of truth, blockchain can be used as a tool to authenticate information in the digital and physical world. The second-hand clothing market alone was about worth it $230 million This year the market for second-hand collectibles is being appreciated $134 billion only. You would expect that as the secondhand goods industry grows, from Ebay to Depop, The Real Real and beyond, the opportunities for counterfeiting will increase.
The market for counterfeit goods will almost be worth it $2 trillion by the end of the decade. Imagine if there were an on-chain authentication solution that could verify the origin of goods. This could unlock unprecedented opportunities to integrate blockchain into the fashion and luxury goods market.
In the digital world, the growth of decentralized finance (DeFi) means more people are trading assets without centralized actors. While privacy is a core value of DeFi, there must be a method of identity verification to protect against scams. Again, blockchain authentication tools can be used here.
Blockchain and AI can be integrated to improve authentication methods. Currently authentication is performed by individuals. But AI makes image and pattern recognition and object detection possible on a larger scale. Blockchain can then be used to store information collected by AI tools, creating a secure record.
Enter NFIs
NFIs add practicality to NFT technology. By cryptographically linking a physical asset to a ‘digital twin’ on the blockchain, NFIs can be used as a powerful means of authentication. For example, if you are making a luxury watch, you can embed a personal cryptographic key that can be used to verify the origin of the watch in case it ends up on the second-hand market.
Why should brands invest in this technology? Because it adds greater value to the asset if buyers can guarantee returns on the second-hand market. This isn’t just limited to watches; shoes, jewelry, and collectibles can all be authenticated through the chain.
Keep in mind that fashion and luxury brands haven’t completely given up on NFTs yet. 9dccs NFT-linked fashion collection debuted this year during Paris Fashion Week with designs inspired by digital innovation. Younger generations are also more concerned about the environmental impact of production. It could be beneficial for their marketing if brands embrace the circular economy through blockchain-based authentication.
Blockchain’s killer application
For too long, developers in the crypto industry have looked inward and focused on issues that don’t concern the general population. The industry is maturing and we need to embrace use cases beyond the financial sector.
Authentication is an important area where blockchain can provide a better solution than existing technology. The crypto winter is over, now it’s time to recall the standards.