Blockchain Applications and the Rising Digital Asset Class

The digital asset industry is on the cusp of mainstream adoption. After spending most of the first decade on the sidelines, major institutions are now keen to support the growth of this emerging asset class.

Institutions are increasingly investing in blockchain and digital asset applications that satisfy the most comprehensive market fit. This trend has seen the number of institution-related crypto and blockchain patents reach a new all-time high in the past year, and developer activity has increased at the same time.

TaxBit, a company recently named a leading tax and accounting provider for the tokenized economy by CB Insights, believes the industry is entering a new phase of growth. They follow the rapid development of many new use cases for digital assets and advise organizations on transforming ideas into functional systems.

This guide will review the various real-world blockchain applications and compare their institutional support. It reveals that the future is bright for the digital asset class and the industry is on track to reach the milestone of one billion users.

Real-world blockchain applications and institutions drive adoption

The value proposition of digital assets reaches far beyond their speculative value. Separating hype from fact has helped companies identify outstanding blockchain applications that are driving real-world activity. Find out how the world’s largest institutions are positioning themselves for the inevitable use of digital assets.

Crypto in payments and money transfers

Blockchain as a payment rail and cryptocurrencies as tools for money transfer are without a doubt among the best technological innovations. Benefits include near-instant settlement and significantly lower fees than traditional systems, especially for cross-border payments.

Many consumers already recognize the role of digital assets in payments, with an estimated six million US residents using crypto to buy things online in the past year. Meanwhile, the total transaction value of the global digital payments sector currently stands at $8.49 trillion and is expected to double over the next five years.

The unique characteristics of digital assets make them an exciting prospect for the global payments landscape. Traditional payment institutions are already investing heavily in payment-focused blockchain applications, building custom solutions and partnering with crypto-native companies to accelerate consumer adoption.

MasterCard (with 2.5 billion issued cards) and Visa (with 1.8 billion issued cards) has been at the forefront of such adoption initiatives. Both companies already offer a card program that allows cryptocurrency exchanges to offer crypto-backed debit cards. Card users can seamlessly use cryptocurrencies at payment points globally where merchants accept Visa and Mastercard.

Some of the world’s largest platforms for trading digital assets, including Binance, Coinbase, FTX and Crypto.com, using Visa and Mastercard infrastructure to offer crypto-backed cards to a combined user base totaling hundreds of millions of customers. Mastercard is also enabling banks to offer cryptocurrency trading to customers through a recently launched program. This trend is accelerating consumer adoption of digital assets and will bring enormous value to institutions that allocate resources to payment-focused blockchain applications.

Metaverse and NFT experiences

The metaverse – a growing network of interconnected digitally enhanced experiences – has quickly emerged as a demand for blockchain applications. Innovators are using blockchain technology to enable decentralized identities that can be used across different platforms. The same basic technology is used to create non-fungible tokens (NFTs) and cryptocurrencies. These assets enable users and creators to exchange value within a growing digital economy.

The metaverse has been called a $5 trillion opportunity, and many institutions are adapting their investment strategy to capitalize on future growth. Nike, for example, has already launched its Nikeland Metaverse on the popular Roblox platform for fans to enjoy exciting social experiences. Nikeland hosted 7 million users in its first six months, putting to rest any claims that the metaverse is just a fad.

Meanwhile, Nike also spent an estimated $1 billion on acquisitions RTFKT Studios, a startup that creates NFTs for use in the Metaverse. The move bolstered Nike’s Metaverse play and came at a time when Mark Zuckerberg’s Meta is doubling down on a similar initiative. Meta invested $10 billion in 2021 to build its metaverse and continues to channel the company’s primary focus towards dominating the new niche. US-based users can already share NFTs across both Facebook and Instagram, with this functionality expected to roll out to other countries soon.

Another company that has made its mark on the metaverse is the streaming video-on-demand (SVOD) platform Netflix. The platform advertised in the metaverse through NFT drops representing artwork from the popular series “Love, Death and Robots.” Blockchain applications centered around Metaverse and NFTs provide more exciting experiences for users and look set to gain traction in the coming years.

Customer loyalty

The loyalty management industry, valued at $5.5 billion, is another niche that sees blockchain applications in the real world. Blockchain provides a solution for companies to track customer activity in a decentralized manner and reward users based on predefined loyalty goals. Brands can also create NFTs and other digital experiences to drive loyalty in previously impossible ways.

The coffee giant Starbucks is a company that makes use of this use case. Starbucks partnered with Web3 startup Polygon Technology to launch Starbucks Odyssey. The new loyalty program is an improvement on the current Starbucks Rewards loyalty program, where users earn “stars” redeemable gifts such as free drinks. In an enriched digital experience, customers will earn or purchase collectibles issued by Starbucks, while employees can receive collectibles that unlock new perks and coffee rewards.

Blockchain applications solve notable pain points for loyalty programs. For example, the blockchain’s transparency eliminates the chances of users cheating the system through fake transactions or identities. It also makes loyalty programs more valuable and attractive to customers, as anyone can easily exchange rewards for other digital assets.

Accounting and tax solutions

The global accounting industry is currently valued at $133 billion, and the US tax preparation sector is also worth an estimated $12 billion. Another institutional-grade blockchain application brings advanced accounting and tax solutions to the digital asset industry.

Big Four accounting firms (Delloite, Ernst & Young, PwCand KPMG) now has blockchain and crypto-dedicated teams to handle customer demands. On-chain data provides unique and transparent insight into an organization’s financial position and allows auditors to accurately evaluate internal records.

TaxBit is another provider of top-tier tax and accounting solutions serving individuals, institutions and government agencies with exposure to digital assets. Their platform helps clients navigate complex accounting and tax requirements in the industry, and also leverage chain data to optimize business economics.

Blockchain’s unique value offers a bright future for digital assets

The speculative nature of digital assets has helped drive mainstream awareness and industry growth. Still, the underlying blockchain technology has been at the forefront of onboarding mainstream consumers.

Institutions are already recognizing the important role that blockchain applications can play across various sectors and are increasingly adapting their investment strategy to meet market demands. Over time, the digital asset industry will see more growth and reach its full potential to disrupt global finance and greatly benefit early stage investors.

This content is sponsored by TaxBit.

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