Taking a Legitimate Look at the Top Cryptocurrency Applications and Use Cases
Having started humbly and silently in 2009 when the rest of the world was still reeling on the economic crisis, the crypto industry has well and truly come a long way. Bitcoin, the de facto face of this burgeoning industry, was the first decentralized crypto-asset, then rolled out by a Satoshi Nakamoto, pseudonymous developer.
But for an industry whose growth was pegged on the convenience of Peer-to-Peer payments, its current uses seemingly extend beyond the coin’s original uses. Today, Bitcoin, Ethereum and all the other digital currencies are no longer used to pay for goods and services alone.
From the obvious to the bizarre, cryptocurrencies now have a plethora of uses and somehow have the potential to shape the future of the ongoing fintech revolution. Here are just a couple of the use cases for crypto assets.
1. It is a Digital Cash
Bitcoin and the whole cryptocurrency industry started as an alternative P2P electronic payments conduit. Satoshi’s whitepaper explicitly explained this and even Bitcoin, in its early years, was majorly for paying goods and services online.
Being a form of digital cash, Bitcoin fueled a nascent digital economy that mostly happened in the shady underworld. It was a preferred choice of payment amongst participants in the black market (Silk Road) and gamblers.
It is only recently that its mainstream uses, especially among tech-savvy merchants, finally accepted payments made in crypto. Today, it is normal to pump into a brick and mortar store that accepts Bitcoin payments.
But even with this mainstream use, Bitcoin is no longer the most preferred choice of accepting cryptocurrency payments. Long transaction completion times, as well as issues around scalability and comparatively high transaction costs, have forced many to ditch BTC.
Bitcoin is no longer suitable for low-cost payments, something which effectively makes it unsuitable for ordinary merchants. This has forced the vast legion of Bitcoin Core loyalists to instead promote the “digital gold” narrative. Bitcoin Cash, meanwhile, is the go-to choice for digital cash purposes, even though it sprung to life as a fork of Bitcoin in mid-2017.
Crypto as modes of settling payments online is now growing even as a selected few coins and tokens serve this purpose. The 2017 ICO boom died because, even though the tokens served as a promise that the project would be a success, most of the native ERC20 payment tokens proved unviable soon after. The only crypto assets that still keep the ‘digital cash’ idea alive are largely the pre-2015 coins, including Litecoin and Dash.
2. It Is A Programmable Money
Though cryptocurrencies shot to popularity and were embraced by many, Smart Contracts actually came earlier. Nick Szabo, a legendary cryptographer and a person who many believe to be Satoshi Nakamoto, first created smart contracts.
Smart contracts today have much important use in the world and have been taunted to finally help transform different industries. They are a set of unique, Blockchain-based code that’s executable upon meeting particular conditions. These smart contracts, however, aren’t exclusive to Ethereum alone, even though they are synonymous with it.
Several Blockchain platforms, especially Ethereum, Tron and EOS, have been gaining lots of traction in the development industry lately. However, RSK has been working on a smart contracting platform that would leverage the security of BTC and its network.
The move is aimed at taking advantage of the fame that Bitcoin has over its decentralized alternative Blockchain platforms. This, according to RSK, is meant to lure back developers from the “second-gen” Blockchains to Blockchain. This is happening at a time when the BCH network’s Simple Ledger Protocol is easing how one can issue sub-tokens, with everything essentially based on Satoshi’s original opcodes.
3. Crypto-Backed Lending
Of all the various applications of crypto assets, lending is arguably the most important one. It not only allows cryptocurrency hodlers to acquire funding against their assets, but also creates some form of liquidity in this burgeoning finance industry.
A person, looking to get funded in fiat, deposits a particular amount of digital currencies with reputable crypto lenders and is lent a given amount almost instantly. These lenders also perform custodial services, accepting cryptocurrency deposits with a promise of later paying the amount back with interest.
Interestingly, this industry is now worth hundreds of millions of dollars’ in assets, despite being relatively young. One of the most flourishing entities in this business includes Maker, Compound, and Instadapp, who all operate on the Ethereum network. Others on this defi lending platform are Dharma and Dydx with Salt, Youhodler, and Nexo operating theirs on a centralized space.
Blockchain, or more closely, crypto and governance might not be the kind of words you would expect in a single sentence. But as far as its applications go, Blockchain has been tipped to ensure total efficiency in ensuring free, fair and transparent voting happens.
Bitcoin miners have in the past engaged in stupid governance practices. They would signal sign new blocks that effectively support protocol changes. This happened on June 2017, a move that almost created a disaster. It was adding letters “NYA” to all blocks and this affected 80% of the entire Bitcoin network’s hashrate, even though the so-called New York Agreement later failed.
The good thing though is that governance in Blockchain has greatly improved ever since. Dash even has a budget voting mechanism that operates quite effectively and has even inspired lots of projects.
Better still, it is because of this that we have several crypto assets designed specifically for governance, led by 0x, maker, decred and dfinity. Furthermore, Aragon is a project that integrates governance in ordinary voting practices, allowing token holders to give their decisions in the making of vital decisions.
Collectibles represent a rather new subsector in the crypto-sphere and are mostly associated with esports and virtual reality. But unlike ordinary crypto coins, non-fungible ERC-721 tokens (NFTs) represent something unique and thus aren’t interchangeable.
They could be in-game collectibles of special characters or pretty much anything valuable in virtual reality games. But they aren’t 100% decentralized like ordinary cryptocurrencies, even though these collectibles have been tipped to revolutionize their respective industries in the future.
The fact that these ERC-721 tokens cannot be divided and are only bought or sold as a whole means they can be traded by those within the same ecosystem. Their value often depends upon a clear central authority like Cheeze Wizards and Cryptokitties.
The Crypto Industry is Growing
You might have not known some of the aforementioned applications of cryptocurrencies yet. The industry is still in its infancy and that’s why some of the use cases highlighted herein appear new to you.
Other uses, especially those touching on security tokens, hybrid tokens, stable coins, privacy coins, discount tokens and crypto derivatives, are yet to gain mainstream attention. But with time, they will all experienced increased adoption.
For now, though, there’s no doubt Bitcoin and the entire list of altcoins is a force to reckon with and the authorities will have to accept the wave of disruption they are creating. They are versatile, borderless and decentralized and have a myriad of applications.
Permissionless networks, on the other hand, can be used by anyone, whether via the base layer or through the secondary and tertiary layers. In all these, it is crystal clear the crypto-sphere has greatly evolved, despite the industry being a decade old. It only remains whether the next decade will see crypto assets finally replace fiat.