What is crypto good for?
There are two camps when it comes to cryptocurrencies. There are those who believe that crypto is nothing more than a fad that will disappear. On the other hand, there is a higher camp that extols crypto’s benefits and its impact on finance, and they have some credible reasons for doing so.
But is there any truth in their predictions? And how much truth is there? Certainly, it is obvious that there is some strength to the technology and the asset class if a wide variety of audiences enter the market. Some of the biggest brands and companies in the world are also involved in technology and additional applications.
That’s what we’re investigating here: What is crypto really good for?
Important takeaways
- Cryptocurrency has grown from being a technophile’s interest to an asset class with actual utility.
- Finance is the most prominent use case, although real estate, supply chains and many others are also important.
- Crypto-assets will always find more uses, as the technology is refined and governments develop regulations.
Can crypto actually be used for anything?
It is difficult to summarize the extremely diverse development space of the cryptocurrency industry, but here are some examples. With decentralized finance (DeFi) technology, anyone can receive loans with security. Decentralized driving apps compete with Uber’s decentralized power-sharing network. Almost all interactions can be decentralized, and certain industries such as 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. Affordable money transfers
Finance is such a popular program because crypto allows transactions to be done at a very cheap cost – under general circumstances. This is why financial institutions are looking at the technology themselves. SWIFT may not last that long at the rate the crypto industry is going.
Transaction fees were once a problem for Bitcoin, but that has also been mitigated as the average fee hovers around $1 as of September 2022. This is especially useful for international transfers, as international transfer fees traditionally average 2% to 4%.
You can transfer a million dollars to someone halfway around the world in virtually instant time and with minimal costs, like the time when a transaction of $98.3 million in Bitcoin was transferred for just over $3.
2. Make a purchase
That leads to another common use case that hasn’t been as successful as cross-border transfer: daily purchases. Shopping is an application that is becoming increasingly prominent, with some major retailers already accepting crypto.
Microsoft, The Home Depot and Newegg are just some of the companies that have dabbled in 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 trading has some hurdles to overcome, namely the volatility of the asset class, government scrutiny, and the technical capacity to handle such transactions at scale.
In addition, crypto can be used as a resource to store wealth, act as a hedge against inflation and be a means of purchasing real estate. Several companies have launched marketplaces that allow users to buy real estate with crypto. There are no middlemen, which means savings for buyers and sellers. Another useful benefit is fractional ownership, which can lower the entry barrier to property ownership.
3. Accrual of interest
Crypto interest accounts have become a growing trend, allowing users to profit from their otherwise dormant crypto assets. 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 warmed to crypto. It allows users to quickly and easily book hotels and buy travel tickets. One platform that allows this is Travala, and it has 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 for cryptocurrencies, with many platforms designed specifically for this purpose. Some use cryptocurrencies for charity because it offers a lot of privacy – and the payment option is quick and easy.
Ukraine received more than $100 million in cryptocurrency donations, and President Volodymyr Zelensky said it could be a “breakthrough from an economic point of view.” Another example is The Giving Block, a platform with thousands of nonprofits where users can donate crypto.
The bottom line
There is a growing desire to use crypto in everyday transactions, such as for use in grocery stores, but this may be more than a few years away. What is clear is that there are actually efficiencies in using crypto that are not present in other ways. Technology enables anyone and everyone to enter the global market, and this is where all the attention is at the moment.
That said, it may not be long before the smaller use cases become more common. Crypto is becoming more widespread in the wider world, and this will naturally lead to more use cases for the asset class.
