Crypto has earned a reputation as a lucrative investment vehicle over the years. Despite being incredibly volatile and unpredictable, people from all across the world invest in Bitcoin and the other digital currencies it inspired, collectively known as altcoins, because of their appreciation potential, which can lead to high returns. According to recent data, Bitcoin, which is not only the originator of the crypto industry but also the most prominent digital currency in existence, has surged by more than 140% over the past year, proving it’s capable of outstanding growth. Therefore, crypto’s inherent volatility, although dangerous, is seen as a boon by risk-seeking investors as it can boost the Bitcoin price and create opportunities for quick and substantial profits.
There are other factors that make crypto an appealing investment venue, such as decentralization, enhanced security, high liquidity, ease of access, privacy, the innovative blockchain technology they’re founded on, and even the widespread fear of missing out or FOMO fueled by the intense media coverage. Furthermore, the numerous stories about ordinary people achieving millionaire or even billionaire status after investing in crypto also reinforce the belief that crypto is indeed an unmissable investment opportunity.
However, with all this talk about digital assets being increasingly included in investment portfolios to achieve diversification and increase profitability, a lot of people have become completely oblivious to the fact that Bitcoin and the crypto squad can serve other purposes as well. So, if you’re curious about what other uses crypto might have, this article will provide a detailed breakdown for you.
Payments
Ironically enough, what we’ve now come to consider an alternative use case for crypto was, in fact, its original purpose. If we go back to crypto’s modest beginnings, when Bitcoin was created, we can see from the project’s whitepaper that Satoshi Nakamoto’s intention was to devise a viable alternative to fiat money so that users would be able to avoid all the issues related to the traditional banking system such as central controls, high fees, wealth inequality, inflation, limited access to financial services, and so on. So, crypto was actually designed to be used just as regular money and facilitate everyday transactions.
Little did Satoshi know that things would take a completely different turn for Bitcoin in terms of utility and that crypto would rise to prominence as an investment mechanism and not a payment method. Although crypto can technically be used to pay for goods and services, no one really does their grocery shopping using crypto, but a lot of people purchase digital assets – mostly Bitcoin – and use them as a store of value instead. That’s because price volatility, the lack of an adequate infrastructure that could accommodate crypto payments and a hectic regulatory landscape that creates confusion among users get in the way of crypto’s adoption as a unit of exchange.
Nevertheless, recent years have brought significant progress in this respect, with an increasing number of businesses in different industries and sectors welcoming crypto among their payment options. Microsoft, AT&T, PayPal, Starbucks, Shopify, and Burger King are just some of the big names that have made crypto a permanent feature in their payment structure, and many other companies and organizations will probably join their ranks in the future.
Charity
Philanthropy is another area where crypto has found a practical use. That’s quite an unexpected development for an asset class that was initially linked to illicit activities. Statistics show that a considerable number of charitable organizations nowadays accept crypto donations, and there are more than a few benefactors out there who are more than happy to use their crypto holdings to support different causes. It’s estimated that around $2 billion in Bitcoin ended up in the pockets of different nonprofits over the past five years, and the contributions keep flowing in.
Obviously, investors and stakeholders with large crypto holdings are usually the most generous. For example, Vitalik Buterin, the mastermind behind Ethereum, has reportedly donated $1 billion worth of crypto to the India Covid Relief fund and another $5 million worth of ETH to support Ukraine’s humanitarian aid.
There are several advantages to using crypto for charity that have led to this trend, as follows:
- Income diversity – through crypto donations, charities can diversify their revenue sources and, therefore, boost their fundraising efforts
- Accessibility – for certain donors, crypto represents the only viable channel to give to charity, so by accepting donations in digital assets, organizations have the possibility to reach a broader range of contributors
- Tax benefits – crypto donations may be exempt from taxes in certain countries, which makes these types of aids more cost-effective for donors and allows more funds to reach charities
Remittances
Digital currencies are frequently used by people to send money internationally to an individual recipient – a type of cross-border transaction that is referred to as a remittance transfer. These transactions usually take place between people who live and work in a foreign country and then send a part of the money they earn back home to their families.
The reason so many resort to crypto to facilitate remittances is their decentralization which allows for faster transactions times and lower fees. Therefore, transferring crypto instead of fiat is generally quicker and more cost-effective.
Crypto remittances are particularly common among residents of developing countries who are unbanked or underbanked and therefore don’t have access to basic financial services. For them, digital currencies represent the only option they have if they want to transfer money across the borders to their home country.
Other notable use cases for Bitcoin and Co. include business funding and decentralized finance, or DeFi for short. DeFi represents a new way of conducting financial transactions that employs blockchain technology and crypto assets to minimize reliance on intermediaries and central entities. Businesses can leverage DeFi solutions and capabilities to put their operations into motion without having to depend on traditional channels or the local economies in the countries where they’re based.
To conclude, there’s a lot more to crypto than meets the eye, and as the technology progresses, we might see new use cases emerging that could expand the possibilities for this innovative asset class.
image credit: Looking Stock photos by Vecteezy
