New Onramps Creating New Markets
Beyond Currency: The Next Wave of Blockchain Onramps for Business Applications
Historically, the most prevalent onramps to the blockchain ecosystem have been financial in nature. Exchanges and stablecoin bridges like Circle's USDC have predominantly facilitated the conversion of fiat currency to digital assets, allowing people to invest, speculate, or transact in a decentralized manner. This specific onramp has been valuable in bringing capital into the market, and I already see a number of exciting startups using this stablecoin platform to create efficiencies in cross-border exchange, remittances, and access to USD exposure in emerging markets where costs and regulations make it otherwise challenging or prohibitive to access.
However, capital will only remain in the market and have a place to invest if new utility is created in digital assets.
As the blockchain universe expands, there's a burgeoning need for a new set of onramps that transcend currency and unlock a vast array of business applications. In fact, according to a report by McKinsey & Company, blockchain's value-add to business is estimated to exceed $3.1 trillion by 2030**. But what are these new onramps, and how do they serve to enrich the business landscape?
Financial Data Onramps
Firstly, let's consider financial data. Anyone who's ever applied for a mortgage knows the pain of this market, where information needs to be collected and entered from dozens of sources and submitted for review to prove assets, income, etc. and it is still highly imprecise. Existing technologies allow for basic financial data to be imported into blockchain networks, but the next evolution will feature more comprehensive financial histories and account statuses. For any deeply embedded crypto user, one can easily trace their digital financial twin and gain a clear picture of the financial activity, (for example here is Coinbase CEO, Brian Armstrong). Over time let's assume the specifics of their activity become abstracted through Zero Knowledge Proof or other privacy mechanisms that obscure the specific actions, we still will have the ability to gain incredible insight into a user's financial profile in real time. The potential market here is enormous; the global business process outsourcing market for financial services was valued at approximately $30 billion in 2021***. This bridge can allow businesses to execute real-time financial decision-making, such as dynamic pricing based on a client's financial health, significantly cutting down on the cost and time involved in risk assessments.
Professional Data Onramps
Recruitment is another lucrative market that could benefit from blockchain onramps. Companies spend an average of $4,000 to fill an open position****. By pulling verified professional histories and skills from networks like LinkedIn, businesses today can streamline the recruitment process and improve the quality of hires. Now let's imagine instead of relying on personally reported data on LinkedIn, every single professional accomplishment and achievement was verifiably committed to an immutable record (employee of the month, promotions, code commits, product contributions, etc.) where it was able to be made accessible to employers, recruiters, and partners. These onramps pave the way for human capital optimization algorithms that can even predict the future success of candidates based on multiple data touchpoints and a truly complete set of professional acumen versus what we rely on today.
Health Data Onramps
With the global healthcare market size expected to reach $12.1 trillion by 2022****, the significance of health data cannot be understated. Secure bridges that bring verified health records onto the blockchain can revolutionize personalized healthcare. Pharmaceutical companies and insurers can develop more precise health plans, boosting the efficacy of treatments and potentially saving lives. Let's imagine your Apple Watch streaming data not exclusively to your Apple Health record but instead to a privately accessible data repository that you uniquely own and can verify on-chain. Blockchain onramps create a secure way of storing and verifying health records, enabling citizens to take control of their own health data. From here, the potential for artificial intelligence models to analyze vast swaths of data can be tapped into with the assurance that all data is verifiable and immutable and doctors are immediately empowered to make superior health recommendations to their patients based on all of the information that's available, not just what they directly collect.
IoT and Energy Data Onramps
The IoT market is forecasted to reach $1.39 trillion by 2026. IoT data onramps can feed real-time information from smart appliances, vehicles, and homes into blockchain networks. Coupled with transactional data from everyday activities, this opens up avenues for predictive consumer behavior models, fundamentally altering sectors like retail and utilities. One specific application of this is in the renewable energy market where companies like Jasmine are bridging renewable energy certificates on-chain to create more efficient energy markets pulling data directly from utilities and solar panels with companies like React Network plugging into your home energy systems as well.
Legal & Compliance Onramps
Another less-discussed but highly critical onramp is legal and compliance data. The global market for Governance, Risk Management, and Compliance is expected to reach $64.6 billion by 2025*****. Just like the personal finance digital twin discussed above, companies can perform real-time due diligence during acquisitions and partnerships, significantly reducing risk and expediting transactions. We are already seeing green shoots in this area with states like West Virginia recently creating a nationwide digital vehicle title registry. As more of these types of digital assets are created and adopted the design space explodes for new efficiencies to be explored in digitizing marketplaces for assets of all types.
Current Constraints and the Path Forward
The development and widespread adoption of these onramps do face challenges, primarily around data protection and standardization. However, given the potential benefits, businesses and regulatory bodies are incentivized to find common ground and pioneer these bridges. The investment potential in powering the creators of these bridges is really exciting, as well as the opportunities to partner with founders who see unpredictable opportunities to leverage these bridges to construct new businesses that are significantly more efficient than existing markets through the uniqueness of the underlying technology.
While blockchain's beginnings were deeply rooted in the financial domain, its potential stretches far beyond. By creating a network of onramps that feed into a decentralized digital twin, blockchain promises to redefine business in ways we are just starting to comprehend. It's not just about currency anymore; it's about constructing an entire ecosystem that can drive unparalleled business innovation and efficiency.
**: McKinsey & Company, "Blockchain's Occam problem," 2019
**: Statista, "Global outsourcing market size," 2021
***: SHRM, "Average Cost-per-Hire for Companies Is $4,129," 2016
****: Deloitte, "2022 Global Health Care Outlook," 2022