For most people, cryptocurrencies are risky and sometimes even thought of as a scam. But what people don’t realize is that cryptocurrencies are made for specific purposes. Most of these relate to financial services.
The uses for cryptocurrencies range from giving an alternative payment option to newer crypto-native functions. As we progress, innovative ways to use cryptocurrencies are also increasing. With that in mind, we have listed some prominent uses of cryptocurrencies in today’s financial scene.
Low-cost money transfer
Probably one of the most-used functions of cryptocurrencies is transferring money locally and abroad. People can now remit money easily to their loved ones overseas. Also, transactions amounting to millions of dollars can now be processed in as quick as two to three minutes. Add to that, senders will only be paying less than a dollar as transaction fees.
Imagine if such transactions goes through traditional finance institutions like banks. Most likely, it will take several days to a week for the transfer to push through. You may expect higher fees that go with each transaction as well.
Yield farming
Earning crypto through trading requires time, skills, and experience. Thus, many crypto holders are holding on to their coins hoping that they will increasing in value.
However, some investors partake in crypto staking and DeFi lending which is another way to earn. Holders can lend their coins to reputable platforms. Some even yield up to 12% per annum on highly liquid cryptocurrencies.
As promising as it sounds, it also comes with risks. Some major crypto lending platforms have hit the dust last year, taking their investor’s funds with them. Also, financial institutions do not insure crypto lending. Meaning, you can’t run after anybody in case things go south.
Another way to store money
Frozen bank accounts and assets happen more often than you think. It’s as easy as accusing one of a financial misconduct or going against the wrong people.
Situations such as this makes people lose access to their own personal accounts. One way of solving this is offering the use of cryptocurrency wallets. The access to this wallet is yours and yours alone. Financial institutions and even government bodies do not have access to it. therefore, there is no chance for your account to be frozen or seized by authorities.
Alternative payment method
These days, more stores and merchants are opening up to the use of cryptocurrencies as a payment alternative. This allows vendors to offer their products and services on a global scale with lower transaction costs. Merchants and companies also use cryptocurrency as rewards payment.
Other fields such as travel, leisure, and gambling have also adopted this new form of payment method. Prominent travel agencies such as Destinia and CheapAir now accept Bitcoin as a payment method.
Meanwhile, casinos are also attracting new and younger players who opt for cryptocurrency payments. Players can enjoy crash gambling sites and don’t need to worry about tedious deposit and withdrawal methods.
More to come
These are just some mainstream uses of cryptocurrency. Some see cryptos as investment, while others treat them as an alternative money asset. As long as there is a need for it, new cryptocurrencies will be developed. Somehow, it is up to you to exercise caution before investing or dealing with cryptocurrencies.
