There are two camps when it comes to cryptocurrencies. There are those who believe that crypto is nothing more than a fad that will fade away. On the other hand, there’s a louder camp that extols crypto’s benefits and its impact on finance, and they have some credible reasons to do so.
Is there any truth to their predictions, though? And how much truth is there? Certainly, it’s obvious that there’s some strength to the technology and asset class if a wide swath of the public is entering the market. Some of the biggest brands and companies in the world are also dabbling with technology and ancillary applications.
That’s what we examine here: What is crypto actually good for?
Can Crypto Actually Be Used for Something?
It’s difficult to summarize the extremely varied development space in the cryptocurrency industry, but here are some examples. With decentralized finance (DeFi) technology, anyone can receive collateralized loans. Decentralized ride-hailing apps compete with Uber’s decentralized power-sharing networks. Almost all interactions can be decentralized, and certain industries like finance, supply chain, medicine, and real estate can benefit from them more than others. In addition to these benefits, there are a few more.
1. Low-Cost Money Transfers
Finance is such a popular application because crypto allows transactions to be made at a very cheap cost—under general circumstances. This is why financial institutions are looking into the technology themselves. SWIFT may not last very long at the rate that the crypto industry is going.
Transaction fees were once a concern for Bitcoin, but that too has been assuaged as the average fee hovers around $1 as of September 2022. This is especially useful for international transfers, as international transfer fees traditionally average at 2% to 4%.
You could transfer a million dollars to someone halfway around the world in a practically instantaneous time and with the smallest of costs, like the time when a $98.3 million transaction made in Bitcoin was transferred for just over $3.3
2. Making Purchases
That leads to another commonly touted use case that has not been quite as successful as cross-border transfer: day-to-day purchases. Shopping is an application that is growing in prominence, with some major retailers already accepting crypto.
Microsoft, The Home Depot, and Newegg are just some of the companies that have dabbled with crypto purchases. People can use crypto to buy groceries at Whole Foods and for hardware purchases at The Home Depot.
However, the idea of crypto being used daily for grocery shopping has a few hurdles that it needs to overcome, namely the volatility of the asset class, the scrutiny of governments, and the technical capacity to handle such transactions at scale.
In addition, crypto can be used as an asset to store wealth, act as a hedge against inflation, and be a means of buying real estate. Several companies have launched marketplaces that allow users to buy properties with crypto. There are no intermediaries, which results in savings for buyers and sellers. Another useful benefit is fractional ownership, which can lower the barrier to entry for real estate ownership.
3. Earning Interest
Crypto interest accounts have become a growing trend, allowing users to earn from their crypto assets that otherwise would be idle. These accounts simply charge what is usually a fixed rate, which varies depending on the asset, and the rewards are automatically credited to the account.
For example, Binance has a service called Binance Earn, which also offers both flexible and locked staking features. Users can take a token like Cardano (ADA) and accrue interest over time.
4. Online Booking
The hospitality industry has also been warming up to crypto. It allows users to quickly and easily book hotels and purchase travel tickets. One platform that allows this is Travala, and it features more than 3 million travel products worldwide. You can book accommodation, flights, and travel activities using cryptocurrencies, and most major assets are supported.
5. Charity
Charity has become another surprising use case of cryptocurrencies, with many platforms being designed specifically for this purpose. Some people use cryptocurrencies for charity because it offers a lot of privacy—and the payment option is quick and simple.
Ukraine received more than $100 million in cryptocurrency donations, and President Volodymyr Zelensky said it could be a “breakthrough from an economic standpoint.” Another example is The Giving Block, a platform with thousands of nonprofits where users can donate crypto.
What is cryptocurrency?
A cryptocurrency is a digital currency, which is an alternative form of payment created using encryption algorithms.
What are NFTs?
Non-fungible tokens (NFTs) are type of blockchain-held token that represents a physical or digital asset.
What is blockchain?
A blockchain is a digitally distributed, decentralized, public ledger that exists across a network.
The Bottom Line
There is a growing desire to use crypto in everyday transactions, like for use in grocery stores, but this may be more than a few years away. What’s clear is that there is indeed effectiveness in using crypto that is not present via other means. Technology makes it possible for any and all to enter the global market, and this is where all the attention is at the moment.
Having said that, it may not be long before those smaller use cases become more common. Crypto is beginning to become more prevalent in the wider world, and this will naturally lead to more use cases for the asset class.
