Ways of Using Cryptocurrencies: Top 5 Use-Cases

Mar 02, 2021
byNDAX Labs

In 2008, Bitcoin’s release marked the genesis of alternative, decentralized, and peer-to-peer (P2P) currency, namely cryptocurrency. Leveraging the wide implications of blockchain technology, their usability has diversified manifolds over time. In terms of market value, the blockchain and cryptocurrency sector has grown exponentially, with Bitcoin’s market cap surpassing the $1 trillion mark in early 2021.

Such a remarkable boom is primarily attributable to blockchain technology’s disruptive potential, which presently touches almost every business domain. There isn’t a  sector—from finance to education—where blockchain technology hasn’t enabled unprecedented avenues for innovation.

Despite its broad scope, cryptocurrencies are still the most widely-adopted outcome of this blockchain technology. The following article highlights some of the significant use-cases of cryptocurrencies.



Payment & Transactions

As an alternative to traditional currencies, payments and transactions are the most common usage scenarios for cryptocurrencies. Eliminating the need to rely upon centralized authority and intermediaries, cryptocurrencies represent a fast, secure, and cost-minimized method of financial transactions.

Notwithstanding day-to-day payments, crypto is especially well-suited for cases involving cross-border transfers of funds. While traditional methods require 7-14 days to settle international transactions, crypto-based payments are settled within 10-40 minutes or even less. Further, algorithmic automation and the absence of intermediaries enhance efficiency while reducing bottlenecks and fees.

Even in the initial days, tech-savvy merchants accepted crypto-based payments globally. Today, the rapidly-elongating list includes several mainstream retailers and brands, including Burger King and Microsoft. Furthermore, cryptocurrencies represent a viable store of value, usable for bootstrapping investment for startups and transferring funds between individuals.

Bitcoin’s BTC, Ethereum’s ETH, Litecoin’s LTC, XRP Ledger’s XRP, and Stellar’s XLM are some cryptocurrencies that are predominantly used for payments and transactions. However, almost every existing cryptocurrency has this functionality, even if for a secondary purpose.




In the absence of centralized authorities, blockchain-cryptocurrency networks adopt community governance mechanisms for executive decision-making. The majority consensus, achieved through distributed voting by members, secures and stabilizes decentralized networks.

To determine voting rights and to ensure that voters have their skin in the game, several blockchain ecosystems employ their native tokens. Although essentially cryptocurrencies, these are usually referred to as governance tokens. In general, network members acquire voting rights in proportion to governance token ownership. Varying from protocol to protocol, governance tokens can be distinct assets or the network’s native cryptocurrency.

The DOT token—Polkadot’s native crypto—is predominantly a governance token, although it has market tradeability as an additional purpose. Polkadot users need to stake their DOT tokens to participate in the network’s decision-making process for upgrades and bug fixes. On the other hand, several Ethereum-based protocols require users to stake their ETH tokens for governance rights.



Network Fuel

Blockchain ecosystems need to be financially self-sufficient while participants are adequately remunerated for their efforts. In other words, there have to be mechanisms of settling in-platform transactions without involving additional third-parties.

As such, Ethereum was the first platform to adopt and introduce this crypto-economic model. Leveraging the Ethereum Virtual Machine (EVM), it enabled decentralized computing for the development of Smart Contracts and Decentralized Applications (DApps). To execute these contracts and to deploy DApps, developers need to pay for Gas—basically, a form of transaction fees. Commonly, this is referred to as ‘fuel’ for the network and is payable in ETH tokens or its sub-denominations, GWEI.

Over time, other blockchains that facilitate smart contracts and DApps have also adopted this model. Among them, Cardano (ADA) and EOS.IO (EOS) are popular. Similarly, ChainLink—a platform enabling on-chain-off-chain interactions with Oracles—also enables users to pay for in-platform services using the LINK token.



Savings Mechanism

The volatility of prices has been a persistent complaint against cryptocurrencies in general. Despite facilitating high-risk-high-return trading and speculations, such volatility hinders the use of ordinary cryptocurrencies for long-term savings. To meet these demands, among other factors, collateralized stablecoins have steadily emerged on the scene.

Proportionally pegged to fiat, cryptocurrencies, and/or other real-world assets of value, stablecoins ensure non-volatile price. In turn, this makes them viable as a savings mechanism and various cross-chain interactions. Tether (USDT), which is pegged in a 1:1 ratio with USD, is one of the most popular stablecoins. At the time of writing, USDT’s market capitalization is over $34 billion, thereby proving its wide adoption.



Incentivization & Rewards

A crucial aspect of blockchain ecosystems’ self-sustenance is the incentivization of user participation. Consequently, cryptocurrencies are often used to provide incentives or rewards to developers, validators, lenders, and content creators. Several mainstream social media platforms such as Steemit support content creators through cryptocurrencies. Contrary to platforms wherein users’ data is rampantly misused for profit, this represents a user-centric and just model.

Dogecoin (DOGE) is a cryptocurrency whose primary purpose is to incentivize meme-makers and entertainment content creators. DOGE is also used as a tipping currency, circulated on Twitter, Reddit, and Twitch, among others. Furthermore, the DogeCoin community is known for donating large sums of money for philanthropic activities worldwide.




Evolving greatly since their inception, cryptocurrencies are no longer limited to being methods of payment. Although being a store of value is still its most common use-case scenario, cryptocurrencies are now being leveraged to meet diverse needs. So much so that innovators have developed reliable and profitable means of generating passive income from idle cryptocurrencies.

As a whole, Decentralized Finance (DeFi) is increasingly emerging as a holistic and multi-dimensional financial framework. Mitigating the persistent perils of traditional and centralized financial systems, cryptocurrencies are paving the road to finance’s future.

To become a part of this journey, buy, sell, and trade cryptocurrencies on NDAX.