If you do a quick Google search "benefit cryptocurrency," you will see how the cryptocurrency phenomenon truly has a lot to offer. In this article, we are not only going through the benefits of cryptocurrency. But we are also going to look at its most popular use cases. Let's delve into it!
What Are the Benefits of Cryptocurrency
Cryptocurrency provides a lot of advantages for its users, thanks to its peer-to-peer and decentralized nature. Now, let's take a look at some of the top benefits of cryptocurrencies below.
1. Simple private transactions
Crypto transactions are known to be simple, low-cost, and considerably more private than other conventional transactions. One only needs to have a smartphone app, exchange wallet, or hardware wallet to start sending or receiving cryptocurrencies. Want to have a more private transaction? You can do crypto mixing services, but it's conducted mainly by advanced users.
Crypto transactions are secured, and this is probably its most certain benefit, thanks to the nature of a decentralized blockchain system. The network will grow increasingly more secure as more computers participate in it. Any malicious event that occurs is usually tied to the platform's poor security. Also, no one can get access to your funds unless you give them your private keys.
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3. Inflation protection
Many believe that cryptocurrencies like Bitcoin provide inflation protection. Bitcoin, for example, has a strict limit on coins that could be minted. So, when the money supply grows faster than that of Bitcoin, the price of the latter ought to rise. Other cryptocurrencies also apply this mechanism as a protection against inflation.
4. Transaction Speed and Cost
The cost of crypto transactions is relatively more affordable than conventional financial services. Some coins like XRP and Litecoin even could cost cents or even less for each transaction. Another advantage of transacting using crypto is that it can be settled in just a matter of minutes.
For investors, the emergence of cryptocurrency can provide variation to their traditional investment portfolios, such as bonds or stocks. Besides, the prices of cryptocurrency have no correlation with the other markets. Therefore, investing in cryptocurrency can be a wise way to diversify a portfolio.
6. Cross-border payments
The good thing about cryptocurrency is that one individual in a particular country can transfer coins to another in a different country without hassle. If it's traditional financial services, doing such a transaction will no doubt take a long time and often come with exorbitant fees.
7. 24/7 markets
Unlike stock markets that only open on business days, crypto markets open for business every day for 24 hours. Some of the things that may prevent a trader from conducting a crypto transaction would be technical stuff like an internet outage, power outage, or crypto platform down.
Use Case of Cryptocurrency
Knowing the benefits cryptocurrency offers that also exceed other assets, it's difficult to argue that using crypto has no value. Now, let's explore cryptocurrency's most popular use cases in the following discussions.
1. Online payments
The growing popularity of cryptocurrency indicates that this phenomenon is an essential part of the global economy's future. Many believe crypto is on the way to becoming the most widely used online payment method. Cryptocurrency is digital money, so it's not impossible if we employed it as the next payment method many would adopt.
What can one purchase with cryptocurrency? Anything you can buy with fiat currencies, like services and goods, be it fungible or non fungible. Some services that require anonymity even depend heavily on cryptocurrency payment methods since they guarantee complete privacy.
2. Store of value
Another use case of crypto is a store of value. What does it mean? Cryptocurrency is an asset that can preserve its own value across time and nation. Unlike transacting with gold, you don't need to use a middle man to conduct crypto transactions. Also, it's more secure than a physical asset like gold.
Cryptocurrency like Bitcoin is even way more divisible in comparison to physical assets. This means you can divide the crypto into a hundred million pieces. This, of course, something is nearly impossible to be done with gold unless it's a gigantic piece. Another reason is that crypto can't be manipulated by any centralized authority; therefore, it's easier to utilize as a store of value.
3. Lending platforms
Since 2020, cryptocurrencies have been widely employed as lending platforms. To put it simply, cryptocurrency is used as a form of a platform where you can borrow or lend money, much like a traditional financial institution. How does it work? The lender will first lend coins to the borrower. In return, they will receive an interest rate previously agreed upon.
The idea behind this crypto lending is that making crypto much more accessible for the borrower would increase the coins' liquidity. This can be beneficial for those who want to start investing in crypto but do not have enough of the required funds. In addition, the interest rates a crypto lender can achieve are substantially higher than that of traditional banks.
4. Blockchain games
With the growing popularity of cryptocurrency, more and more industries of all sectors are jumping into the crypto craze pool. They want to find out how profitable this phenomenon is for their company. Gaming developers are one of those industries. Since 2021, many online gaming companies are adopting cryptocurrency coin as their in-game currency.
In crypto games, players can purchase in-game items using the game's currency. These games mostly employ a play-to-earn model, in which cryptocurrency will be rewarded to players for completing tasks. Duckie Land is one of the closest examples of a blockchain-based metaverse multiplayer online game that employs cryptocurrency for in-game transactions.
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The benefit cryptocurrency has over traditional currency and other types of assets further prove that investing in crypto is worth trying. Of course, cryptocurrency comes with its drawbacks, with volatility being one of the most significant. Therefore, those interested in this crypto finance should do in-depth research first before jumping into the market.