Aug 9, 2023
| Updated Aug 9, 2023
|— Digital assets, such as coins and tokens, are primarily know for their use as an exchanges of value, but, in fact, their use-cases go far beyond that.
— The core features of blockchain, transparency, provenance, security and decentralization, have important implications for lots of different industries.
— While many use-cases for digital assets are financial or security-orientated, they have also spurred innovation in the creative sectors too.
— The Web3 ecosystem is rapidly expanding, with new platforms and new types of assets for use-cases far beyond mere transfer of currency.
When you think of cryptocurrency, your mind probably runs straight to native coins of blockchain networks, like BTC for the Bitcoin network.
Of course, this was the initial value proposition a blockchain offered. Put simply, Satoshi Nakamoto, the founder of Bitcoin, created the network to facilitate peer-to-peer transfer of monetary value in a truly decentralized manner. As it is still the most successful and most popular cryptocurrency today, much of the crypto sphere is still inspired by the Bitcoin network. And as such, many networks and projects on those networks are primarily concerned with the transfer of financial assets— it’s no secret that blockchain networks are rather good at that.
In fact, most of the crypto market today is built with this use-case in mind. With the rise of DeFi, it’s not just coins on the market now, but tokenized assets and even financial instruments such as derivatives.
Be that as it may, you may think of crypto purely as currency or an exchange of monetary value. But the truth is, there are all sorts of crypto assets that don’t fit neatly into that box. Digital assets have multiple use cases beyond finance. Some assets even open up the door to new innovations, forging new pathways for creators.
As Web3 continues to grow and thrive, so do digital assets. So what else can digital assets offer and how will we use them in the future?
In this article, Ledger Academy will take you through all of the use-cases of digital assets— beyond currency that is.
Let’s get started.
Web3 Has a Thriving Ecosystem Beyond Finance
So, before we dive into the digital asset specifics, how did we get here in the first place? Well, at the core, blockchain tech offers a few key benefits; namely, provenance, transparency, immutability and ownership. While digital assets were originally created to facilitate this peer-to-peer transfer, these core tenets don’t just apply to currency. As such, developers started to find other uses for the technology.
While Bitcoin was dubbed “digital gold” for its undeniable use as a store of value, other networks arrived to build on top of this solid base to create something a little different. For example, the Ethereum network, at its inception, offered the same kind of store of value as Bitcoin but with another interesting benefit: Exchange of value including conditions.
Put simply, the Ethereum network was the first to support smart contracts, a sort of computer program with self-executable code. This opened the door to multiple different asset classes and blockchain use-cases that go much further than just exchange of monetary value.
Smart contracts offered new digital identity solutions, decentralized governance mechanisms and even fueled a creator economy, allowing creators to take ownership of their own marketing, distribution and more. To explain, NFTs, DAOs and even blockchain games are all thanks to this core piece of technology.
But these important assets are just the beginning. As blockchain technology advances, the potential use cases continue to expand. Web3 is continuously evolving and adapting, and so are blockchain use cases.
So why and how is blockchain facilitating this movement?
Digital Assets On The Blockchain Offer Ownership
To explain, blockchain networks allow for ownership in a way that was not previously possible with web2, otherwise known as the internet. Using a non-custodial wallet means you own the private key associated with that account. In short, only you can manage the digital assets stored at that address. That may not sound like a big deal, but it has important implications for countless digital industries.
For example, you may be familiar with online games such as League of Legends. In these types of games, the in-game items (such as skins) cost real money. However, in League of Legends, you don’t actually own that skin you bought. That’s because the item is only available within that game, and you can’t transfer it or sell it unless you sell your whole account.
This is where blockchain networks come in. Since the network is decentralized and the tokens upon it are interoperable, it means projects can release in-game items that can be sold and transferred on any platform on that network. In short, it allows you to truly own and manage those assets. If you decide not to play that specific game, you can sell the assets for real usable currencies. Put simply, decentralization and true ownership favors the user over the platform that issues the assets.
But, in fact, this use-case goes far beyond in-game items and skins. This ownership model provides a much more appealing use-case for the end user for many other industries too. Let’s see how that works.
Crypto Is Revolutionizing The Art Scene
Of course, you can’t talk about creative digital assets without mentioning NFTs. The NFT movement traces back almost a decade when Kevin McCoy minted ‘Quantum’ in 2014. But it wasn’t until March 11, 2021, when Beeple’s “Everydays: The First 5000 Days” fetched a staggering $69.3 million, sparking the NFT art bull run. Iconic sales followed suit, like Edward Snowden’s “Stay Free” for $5 million and CryptoPunk #7523 for $11 million. Generative art simultaneously emerged as a dominant force, creating unique and unpredictable art through code, algorithms, and randomness. Art Blocks and fxhash led the way as popular platforms for generative art NFTs.
So, what drives the popularity of digital collectibles? Well, smart contracts played a vital role in NFTs’ popularity. Smart contracts enable artists to receive royalties and cut out the middleman. With each NFT sale, the attached smart contract automatically calculates and sends the royalty percentage to the artist’s crypto wallet. This revolutionary system empowers artists, allowing them to collect on-chain royalties indefinitely. NFTs have transformed the art world, opening new possibilities for creators and reshaping the art market.
Web3 Allows You To Build A Representative Digital Identity
As the NFT scene grew, so did the popularity of Web3 domain names. Creators, artists, and supporters began to share their lives online, and so developed rich digital identities. Think about it – how many influencers and artists do you know from their PFP alone? Using decentralized systems we can build representative digital identities on-chain. Let’s see how this works
Decentralized Identifiers and Verifiable Credentials
Firstly, your blockchain address acts as a decentralized identifier. In short, a decentralized identifier is a unique digital address that represents your digital identity. In short, it lets you share information without relying on centralized entities. Using this, you can share only the information you need to, without revealing any other sensitive identifiers. A key feature of a decentralized identifier is it must be fully owned by the user. This means that only non-custodial wallets can be used with this purpose in mind. From there, you can use this address to store and manage verifiable credentials.
But what are verifiable credentials exactly? Well, while your degree or professional certifications may be issued on paper for now, the future is a lot more digital. Using blockchain tech and decentralized identifiers, organizations can now issue certifications in blockchain form and these are known as verifiable credentials. Instead of hosting the information in a closed-off network only the issuing board can verify, verifiable credentials are verifiable by everyone! To clarify, since the blockchain is fully transparent, anyone could look up your grade or verify your knowledge on that specific subject. Of course, this is much more decentralized and tamper-proof than using the internet or traditional digital storage systems.
When talking about certifications, it’s impossible not to mention soulbound tokens. Soulbound tokens are a specific type of NFT which are non-transferable. In short, these NFTs will only ever be issued to a single wallet. Since they are linked to specific wallet addresses, they serve as unique identifiers of a crypto user’s digital identity. Their non-transferable properties are a game-changer for certifications, degrees or access passes. For example, you could issue a degree certificate as a soulbound token. Even your passport could one day become a soulbound token. That way, you could never lose it!
Today, one of the best examples of soulbound tokens is ZenAcademy’s student IDs. These student IDs allow the holders access to token-gated content and serve as community identifiers for other users in the ecosystem.
But digital assets relating to identity go much further than just certification. You may have noticed that your blockchain address, or “decentralized identifier” is not exactly understandable at first glance. In an effort to change that, web3 domains came along.
Web3 domains, also known as decentralized domain names, simplify blockchain address identification. To explain – these Web3 domain services take long blockchain addresses, and link them to short, readable names. So, instead of a string of numbers and letters (like 0xCDur4f880Wj098Db08838c7A82dL81n2xD0), you can name your account something short and memorable, like LDGR.eth or LDGR.tez.
As such, these domains form a crucial part of your digital identity. Ethereum Name Service (ENS) and Tezos Domains exemplify these services. ENS, on the Ethereum blockchain, utilizes smart contracts to translate complex identifiers into readable names. Then, Tezos Domains does the same on the Tezos network, turning lengthy addresses into human-readable identifiers.
Crypto Avatars and NFT PFPs
But your digital identity doesn’t stop there. NFT profile pictures also offer web3 enthusiasts a way to differentiate themselves. That’s because many NFT projects offer holders the commercial rights to the NFT’s intellectual property (IP). To explain, NFTs giving out these rights give holders a chance to create a whole brand from that single NFT’s likeness. This first gained prominence with Bored Ape Yacht Club launching the “Made by Apes” platform, offering on-chain licensing to register Ape-centric products and businesses. Then, Deadfellaz also introduced “Streamingfellaz,” empowering their holders” to embody their digital identities through video streaming on popular platforms. These are just two examples of projects using intellectual property rights to offer a way to identify themselves in the digital realm.
Decentralized Digital Gaming Assets Are Much More Interesting
Beyond art and identity, digital assets are also revolutionizing the gaming scene. Today, gaming is a mammoth industry. However, what really drives the industry is in-game sales. It is predicted that in 2025, the market value of in-game purchases will be greater than $74.4 billion US dollars.
With traditional gaming, in-game assets are only usable in the game that they originate from. So, if you buy a skin in Fortnite, you can only use it in Fortnite. If you stop playing the game, then the asset becomes useless. However, blockchain is revolutionizing the gaming industry with NFTs and in-game tokens. With the ability to turn your in-game items into NFTs, you can truly own your inventory. Players can sell, trade, or use their gaming assets. Plus, due to the transparency of the blockchain, buyers can be confident that they are purchasing legitimate items.
But it’s not just items, blockchain games also use crypto tokens or coins as their in-game currencies. That means that you can actually swap these currencies for fiat currencies such as dollars or euros—leading to the creation of a new innovative concept: Play to earn. With play-to-earn games, your digital assets, such as in-game currency or items represent real value.
Digital Assets Power Decentralized Governance Methods
So we have discussed art, identity, and gaming, but what else are digital assets for? Well, another popular use case for crypto coins and tokens beyond currency is decentralized governance. For instance, DAOs (Decentralised Autonomous Organizations) are essentially on-chain governance systems. To put it simply, DAOs are like traditional systems, but without one central authority figure in charge. Instead, they are fully decentralized. DAOs use digital assets – like coins or tokens – to create decentralized governance models. Plus, the amount of the DAO native asset that you hold determines how much voting power you have within the DAO. By using these digital assets as votes, DAOs can decide on proposals without the need for a centralized identity. Moreover, the transparency of the system ensures accountability within the organization. Good use cases for these types of organizations include crowdfunding, treasury management, and more.
Nouns DAO is one of the most popular DAOs. It is a community-owned brand, and Nouns (digital assets) govern the DAO. Nouns are NFTs on the Ethereum blockchain, and one noun is auctioned off every 24 hours, forever. Nouns govern Nouns DAO, and holders can vote on proposals, delegate their vote to a third party, and submit their own proposals. The NounsDAO community has funded a range of projects, from a comic books series, to a collaboration with the Australian Open. Now, they have become the first DAO to fund an animated film – “The Rise of Blus: A Nouns Movie”.
Digital Assets For Digital and Physical Experiences
But digital assets are not just for art or decentralized voting either. They can also help build digital communities. These tokens are useful for all sorts of online communities, from art enthusiasts to crypto trading groups, even to celebrity fan clubs.
So how on earth does that work?
Many online communities have token-gated digital groups, like ‘holder-only’ channels in Discord servers. Discord bots verify NFT ownership, granting appropriate access to the community. A good example of this is the Cool Cats’ project, which token-gates certain text channels for text, voice and giveaways.
Another good example of this use-case is ticketmaster. Ticketmaster now allows users to token-gate real-life and online events using NFTs. So, say you wanted to create an event which only holders of a specific NFT could buy tickets to; Ticketmaster now has a tool to make that a reality.
In the same vein, NFTs can now represent tickets themselves. To explain, the ticketing industry has undergone many transformations, from lining up at ticket booths, to online ordering, and now NFT ticketing. So how does it work exactly?
Well, NFTs grant physical access to events by serving as digital event tickets stored on a blockchain. This new type of ticketing is beneficial for both organizers and attendees. Event organizers can track attendance and engage with ticket holders in innovative ways. NFT ticket holders receive an interactive digital asset that not only grants them entry to the event but also access to exclusive experiences and perks. Plus, the NFT ticket is a collectible memory of the event.
Fan clubs date back to the 1930s, and now, fan tokens are revolutionizing the entertainment industry. Digital asset tokens allow public figures to engage with their supporters. With fan tokens, owners can gain access to exclusive content, merchandise, and experiences. Also fan tokens ensure secure and transparent interactions without compromising sensitive information or requiring risky logins. Perhaps the most exciting part of digital fan tokens is the ability to gamify content. Fans can now earn rewards, deepening their connection with their favorite teams or celebrities.
A good example of fan tokens include the Deathbats, Avenged Sevenfold’s NFT fan club tokens. Using NFTs, the band offers exclusive content and events to their most dedicated fans. Another good example is Sorare. Sorare is a fantasy sports platform, where you can buy, sell, play, and trade digital player cards. Years ago we had sports sticker albums, now we have digital trading cards, which you can use to enter in tournaments against other Sorare managers. Plus, you can even earn prizes in free-to-play games!
NFTs as Memories
In addition to ticketing, NFTs can also serve as memories by marking moments in time. For example, POAP offers digital badges that prove event attendance. The event could be anything from an in-person panel, to a community meet-up, or an online quiz.
These NFT memories link people with specific moments in their lives.
Digital Assets Of The Future
So, while digital assets are often associated immediately with finance, it’s clear their use-cases go far beyond that. Digital assets are so much more than finance alone. From art, to digital identity, and even governance, digital assets have a dynamic landscape.
From the revolutionary impact of NFTs on the art scene to building representative digital identities, and from transforming gaming assets to offering decentralized governance solutions, the potential is boundless. Still, we have only scratched the surface. More exciting and novel use cases emerge every day. In fact, a plaintiff has even served a court case via an NFT!
There is so much more to the Web3 ecosystem than just buying, holding, or trading cryptocurrencies. The future is on-chain.