Crypto Use Cases

When many people think of cryptocurrency, they think of Bitcoin and its headline-grabbing price swings. They might also think of using crypto to send or receive electronic payments, similar to other services like PayPal.

Introduction

Many people are still unaware of the vigorous pace of innovation in the crypto space. The world of cryptocurrency has moved far beyond digital payment systems or stores of value.

In this article, we’ll explore some of the common use cases for cryptocurrency and where it’s heading in the future.

What can crypto be used for?

The unknown creator of Bitcoin, Satoshi Nakomoto, released a whitepaper in 2008 that outlined a vision for a new financial system – free from centralized governance. It would enable people to conduct direct, peer-to-peer transactions with anyone in the world.

It proved to be a revolutionary idea and spawned a thriving industry dedicated to the advancement of cryptocurrency. Every day, new projects are being developed that demonstrate cryptocurrency's increasing relevance to our lives. Crypto has evolved beyond digital cash to include the use cases listed below

Payments & Transactions

Using crypto to pay for something online is still one of its most common uses. Cryptocurrency’s inherent characteristics make it safe to use and protect the user’s privacy.


For example, when you conduct an online transaction with crypto, your private information isn’t attached to the transaction. As a result, your data can’t be sold to advertisers, banks, or credit agencies. This reduces the risk of identity theft or personal data leaks.


Crypto is especially well suited to sending large amounts of money across borders. Suppose you wanted to send money to a relative in a foreign country using a bank or remittance provider. This process requires extensive verification, potentially large fees, and waiting for up to a week or more for processing. With crypto, your funds can be deposited directly into your relative’s account in minutes and cost minimal fees.


However, there’s still a long way to go before you can use crypto to pay for cereal at the supermarket, and an increasing proportion of cryptocurrency transactions now occur within the crypto world itself. Most native tokens on a blockchain like Ethereum have specific uses within that platform. They’re used to pay transaction fees, distribute rewards, and perform other utilities.

Governance

Since a central authority doesn’t govern public blockchain networks, how do participants agree on upgrades or platform developments? The answer is governance tokens. By holding these tokens, participants can vote on decisions that determine the future of a crypto project.


The idea of community governance is essential to many decentralized finance platforms. When a protocol implements this form of decision-making, it’s referred to as a decentralized autonomous organization (DAO).

Network Fuel

To be self-sufficient, blockchain networks need to incentivize participation and pay for on-chain transactions. That’s where network fuel comes in. Just like an automobile, the network requires a power source. Users pay for the computing resources needed to power the network in the form of transaction fees.

For example, if you want to execute a smart contract on Ethereum, you’ll need to pay the associated gas fee. The fee amount depends on the size of the transaction and is paid in ETH or GWEI, the network’s native tokens.

Store of Value

Gold reserves no longer back fiat currency. This means centralized banks can print as much money as they want which can result in high levels of inflation.


In contrast, cryptocurrency is often seen as a hedge against inflation because many coins have built-in mechanisms restricting inflation and preserving scarcity. Bitcoin, for example, has a supply cap of 21 million BTC. Since it’s such a scarce resource and has significantly increased in value over time, many refer to it as ‘digital gold.’


Stablecoins, such as USDC or USDT, are pegged to the value of the US dollar. As a result, they can be used as a savings mechanism or used for trading across blockchains.


If you’d like to learn more about what makes cryptocurrencies valuable, check out this article.