It has been a decade since Bitcoin was announced with the release of its white paper. Since then, cryptocurrency slowly but surely started conquering the world. During those ten years, they were called many names, ranging from “disruptive” and “a gamble” to “groundbreaking new technology”.
Of course, there were even accusations that it is a currency used by criminals.
While there are many different points of view on crypto, the fact is that they are here and that they are growing. A year ago, Bitcoin and other coins grew to entirely new heights. BTC itself managed to reach the value of $20,000 per each individual coin. Since then, the price corrected itself, and 2018 was marked as a year when bears ruled the market.
Even so, BTC is currently quite stable at $6,400, and it often ventures up, at least for a little while. As for other cryptocurrencies, hundreds of them appeared and died, with around 2,000 coins being around today. Bitcoin continues to dominate, with more than half of the total crypto market cap being held by BTC.
Despite this, it has failed to enter the mainstream due to several issues. One of those issues is high volatility, while the other ones include mistrust, the lack of regulations, and alike. While most countries tolerate crypto, and a few even accepted it completely, there are also those that have made it illegal.
In doing so, they damaged it just enough to hold it back and prevent it from being accepted. At the same time, governments that have yet to officially accept it already found a way to collect taxes of it, as well as of other altcoins.
Simply put, cryptocurrencies are fighting a battle for their existence and acceptance. They experienced misuse, crackdowns, market crashes, and price drops. However, they are still around, and while they cannot be used in a lot of ways, there is one way that can prove to be a very significant use case, and that is the investment.
Investing in crypto
Crypto investments are a risky business, which is something that should be noted right away. They are not issued by banks or governments, they are not backed by any type of asset (except stablecoins), and they are highly volatile as a result. Because of that, it is just as easy to lose everything as it is to make a profit.
Because of these risks, a lot of investors decided to turn to derivatives. Crypto-based derivatives are offered, or at least announced, by a lot of big names in the financial business. This move has a potential to open BTC to a lot more investors and future traders, most of which were interested in working with BTC, but hesitant to do so due to issues that the crypto world is facing.
Thanks to this method, however, they can all invest in crypto without having to open wallets, worry about things like blockchain transactions, mining, smart contracts, private keys, fees, and alike. In addition, trading BTC derivatives is legal even in those countries that have outlawed BTC itself.
Thanks to loopholes in laws and regulation, owning the currency itself is the only thing that is prohibited in such countries. Derivatives do not fall under that category, as they are only speculations by investors on the future price of BTC. with not BTC actually being involved.
Using cryptocurrencies in money lending
Another very big use case for cryptocurrencies (prior to their mass adoption) is money lending. Getting loans from the bank can be a difficult and long process, with a large possibility of being rejected. And, while some banks have started opening up to cryptos, they are still a long way away from actually working with them properly.
They still remain suspicious due to early crypto's association with criminal activities and the dark web. While understandable, the situation has changed today, and USD is still used in more illegal activities than Bitcoin ever was. In addition to that, numerous exchanges and other crypto businesses have implemented processes such as AML and KYC that reduce illegal activities significantly. However, such processes are hard and expensive, which is why banks avoid them, and in extent, cryptos.
As a result, they do not accept digital currencies as loan collateral, and crypto holders were forced to sell their currencies for traditional money. However, there are those who do not wish to do so and would rather hold on to their tokens. These people only have one option, and that is to use money lenders that accept crypto as collateral.
Services like these have become very popular recently, as they work quickly, and still leave the possibility of reclaiming the coins for their customers. People borrow money for all kinds of reasons, from buying cars to funding vacations and buying a new home. No matter the reason, there are private firms that are willing to accept coins and provide fiat money, and then return the coins after the loan is paid off.
While this may not be considered a “real” use of crypto, it still provides people with the ability to get money that is accepted by businesses by employing digital currencies. As such, it is considered a real use case, and an important one, at that.