Even as Bitcoin pizza event continues to trend, Cryptocurrencies have changed the way people perceive and handle finances all around the world. It has brought decentralisation, cryptography and distributed ledgers to the scene, giving its users various benefits.
Naturally, the crypto sphere has been witnessing massive growth lately. Currently, there are over 20,000 cryptocurrencies, many of which have found unique use cases across the globe in multiple fields.
Let’s learn about some of the most significant use cases of cryptocurrencies.
Top Cryptocurrency Use Cases
Cryptocurrencies have the following use cases:
1. DECENTRALISED DIGITAL CURRENCY
The first and foremost use case of cryptocurrencies is that it has provided the world with a decentralised digital currency. It means that this currency has no government or other third-party interference, and banks or other financial organisations cannot exercise any control over this digital coin.
2. CRYPTO BANKING
Banking barons like Barclays, JP Morgan, Goldman Sachs, and others have tailored their banking services to manage cryptocurrencies. This has led to the emergence of a system called crypto banking. These banks have begun offering crypto interest accounts and savings accounts.
Traditional banks hold cash, stocks and other financial assets for their users. Similarly, crypto banks hold their clients' crypto assets and traditional fiat currencies. Do note that India has to do a lot of catching up in this regard.
3. CRYPTO STAKING
Crypto staking is one of the best ways to earn passive income from crypto assets. Proof-of-Stake (PoS) blockchains allow you to stake your cryptocurrency and participate in its consensus mechanism. In exchange, you can validate a block on that chain and earn rewards.
The cryptocurrencies you can stake are:
Ethereum (ETH)
Solana (SOL)
Cardano (ADA)
Avalanche (AVAX)
Luna (LUNA)
Polkadot (DOT)
Binance coin (BNB)
Bitcoin (BTC), etc.
You can safely rely on PoS blockchains for investing in your crypto. As the network forces its participants to lock away a certain portion of its local tokens, it safeguards against any malicious activity on that blockchain.
4. ASSET TOKENISATION
Cryptocurrencies allow you to tokenise physical assets and link them to digital tokens. Thus, you can tokenise commodities, real estate, art, stocks, copyrights, etc. This process of asset digitisation improves the market liquidity of various real-world assets. Asset tokenisation would allow increased participation of investors who would have otherwise been unable to invest due to inadequate cash.
Furthermore, by dividing the ownership of items into several pieces, investors can gain a proportion of the value of assets they hold. Asset tokenisation would be a popular use case in our country, especially in Tier-2 and Tier-3 cities.
5. ONLINE PAYMENTS
Cryptocurrencies have revolutionised international payments through their high transaction speeds, decentralised nature and low transaction costs. Your crypto payments are anonymous, and no one can track you in real life based on your online activities.
Moreover, you can also use your crypto assets at merchants that accept crypto as a form of payment. Leading enterprises like Mastercard, Pepsi, Starbucks, Tesla, Visa, McDonald's, etc., accept crypto from their customers as a valid payment method.
6. ON-CHAIN GOVERNANCE
Cryptocurrencies offer a more refined way to implement new policies on a network. Blockchains have DAOs (Decentralised Autonomous Organisations), allowing you to stake crypto coins in exchange for voting rights.
Blockchain developers call it Governance Token. On a blockchain, the community can distribute governing power among its stakeholder via these tokens. This is called On-Chain Governance. By owning governance tokens, you get the authority to alter a network’s protocol.
7. CRYPTO GAMING
The crypto gaming industry has seen a boom in recent years. Gamers worldwide are earning in-game items in the form of NFTs and trading and selling them based on their demand.
These P2E games can be an excellent way to utilise your crypto assets and gain endless hours of fun and NFTs in the form of rewards. Furthermore, you can earn crypto as a reward by playing these games.
There are a lot of gamers in the Philippines who earn a daily wage from playing Axie Infinity, a popular NFT game.
8. SMART CONTRACTS
Smart contracts are lines of code that execute a transaction if a given set of terms and conditions are met among the concerned parties. You can automate various actions and functionalities using smart contracts.
The best part about them is that there are no interruptions in the execution of a process when the underlying terms are met. Furthermore, no third parties will have the authority to change or modify the decision or agreement. As smart contracts are blockchain-based, all the data it generates is immutable, and no entity can update or alter it in any way.
Smart contracts have an increasing number of use cases in the fields of Governance, Finance, Health Care, Insurance etc.
9. STORE OF VALUE
You may have heard crypto investors call Bitcoin “digital gold”. This is because cryptocurrencies can store and transfer value over time. They work on a supply mechanism that restricts inflation. As the value of crypto increases with a rise in demand, it can serve as an excellent investment opportunity over time.
Some experts even predict that Bitcoin will take the market share away from gold in the coming time.
10. BORROWING AND LENDING
You can use your crypto coins to lend or borrow funds via Decentralised Finance (DeFi) applications. As crypto has no borders, you can borrow or lend capital from any part of the world using your crypto assets. These DeFi apps also reduce the time and the huge amount of paperwork you need to complete while getting a loan from a traditional bank.
11. NFTs
NFTs, or non-fungible tokens, are one of the best investments you can make with cryptocurrencies. They are unique cryptographic tokens that exist on a blockchain that individuals cannot replicate. These digital tokens can represent a variety of items. They are:
Artwork
Real estate
Digital artwork
Sports cards
Rare items and much more
Famous examples of NFTs include CryptoPunks and Bored Ape Yacht Club, which have been sold for millions at auction houses.
The use case for cryptocurrencies will keep on increasing as time passes. Countries like the Central African Republic and El Salvador have adopted Bitcoin as a legal tender. It is just a matter of time before many more will follow suit. As blockchain technology improves and develops with time and worldwide acceptance of digital currencies grow, crypto coins will see a significant rise in their use globally.
