Cryptocurrencies have gone from digital newbies to trillion-dollar technology in just a few years.
It has enough potential to change the traditional financial system radically. While Bitcoin and other currencies serve as digital money, there are many other aspects of cryptocurrencies that make them valuable.
In this article, let’s have a look at the aspects of cryptocurrency as a commodity beyond the label of digital money.
What is cryptocurrency?
Cryptocurrency is a digital currency safely stored on a blockchain, which is a distributed ledger accessible to its network.
All network members can see the blockchain transactions, and the currency is secured cryptographically, thus preventing counterfeiting. What makes them disruptive is that no single authority controls or issues them; instead, it is collectively run by the blockchain and thus decentralized. Click here to know more about “How can Blockchain Prevent Data Hacking“
Cryptocurrency: A promising future of money
The most appealing feature of cryptocurrencies is their decentralized nature. You can transfer cryptocurrency anonymously, across borders, in little time. Also, you don’t have to pay high transaction fees to any third parties or authorities like banks.
Although cryptocurrency prices show wild fluctuations, they serve as a tool for investment. Cryptocurrencies like Bitcoin, which has a fixed supply, act as a safety net against inflation. In contrast, the fiat currency supply is regulated by authorities and can thus control inflation rates.
Cryptocurrencies have become increasingly popular in recent years. The use of cryptocurrencies became so widespread that El Salvador became the first nation to legalize Bitcoin payments in 2021.
Further, stablecoins also make headlines due to their equivalent rate to fiat currency. Fast transactions are possible with stablecoins. Their value is relatively stable, and they allow smartphone access.
DeFi (Decentralized Finance)
One of the most promising byproducts of cryptocurrency is Decentralized Finance, commonly called ‘DeFi’. It includes financial services like lending, trading, and borrowing, without the traditional authorities like banks that charge hefty transaction commissions. In DeFi, smart contracts execute blockchain transactions automatically when they meet all the predetermined conditions. Many DeFi apps are based on the Ethereum blockchain thanks to its ease of use and trackability.
Cryptocurrency beyond Digital Money
We’ve seen what cryptocurrency can do as a digital currency. But is it confined to being just a currency? Well, the truth is, there is much more to it!
Cryptocurrency is not just a highly fluctuating price asset; its use cases extend beyond that, potentially improving our lives in many ways. Let’s check out some of the most practical applications of cryptocurrency as a commodity beyond digital money:
Cryptocurrencies allow you to earn steady interest via DeFi lending and staking of cryptocurrency. Today, multiple platforms allow you to lend your cryptocurrency on interest up to 12% per annum. Although this is a promising way to earn, ensuring if the platform is trustworthy is advisable because it has its own set of risks.
Free your wealth from censorship
Occasions where banks freeze commoners’ assets, are more common than you imagine. This happens if any legal complications are involved with you or your account. You may end up with zero cash to your name if this happens. Here’s where cryptocurrency helps because these are decentralized and, therefore, free from all forms of censorship. You can access your wealth only using your private wallet keys; no authority can freeze, analyze, or control your cryptocurrency assets.
Invest in early-stage startups
Token-based funding is more mainstream nowadays, allowing you to invest in early-stage startups through cryptocurrency investment. Initial Coin offerings (ICOs) are fundraising opportunities to support new and innovative digital tokens in return for major cryptocurrencies like Bitcoin and Ethereum. This opportunity to participate in token-based funding has opened the investment landscape to anyone with a cryptocurrency fund. Ethereum was one of the most successful ICOs, with its initial price of $0.31. The token has a current value of $1083.
Rent your hard drive space to the cloud
You can now earn cryptocurrency by renting your hard drive storage space to those in need. An ideal example is Storj. With multiple machines helping you simultaneously, you can perform actions with greater speed. Besides, your data stays safe as it is encrypted and not in the custody of a separate data center.
Cryptocurrency has the disadvantage of possible liquidity at any given time due to its fluctuating nature. However, asset tokenization is the answer to this. It allows you to tie your tangible real-world assets like real estate to the value of a token. The biggest takeaway is that it enables fractionalization or division of assets into many parts. By doing this, multiple investors can gain ownership over a fraction of the investment.
Travel and Tourism
With the acceptance of cryptocurrency growing daily, it is now possible to travel the world using cryptocurrency to meet your expenses. For instance, travel agents like Destinia and CheapAir accept bitcoin as payment to book your flight, hotel, or car rentals. Besides, the growth of cryptocurrency has opened up new possibilities like Bitcoin ATMs in many countries like the USA, Canada, and Spain. While traveling, you also have the possibility to convert your cryptocurrency into regional currency and pay for your needs.
Cryptocurrency also opens up new landscapes in the gaming sector. Take Coinfantasy, for example. It is a crypto fantasy game in which you can build a lineup of your favorite cryptocurrencies to enter the game. Based on the accuracy of your predictions, you can win exciting rewards by winning contests held daily.
Despite the ongoing bear market, trillions of dollars of funds and pools of talent are flowing into the world of cryptocurrency backed by the blockchain and its subsidiary technologies. With cryptocurrency’s numerous use cases, as we saw above, it is evident that more mainstream adoption is definitely on the horizon.