To most people, cryptocurrencies are typically thought of as high-risk investments for millennials and Silicon Valley insiders. However, what is getting somewhat lost amid the hype and speculation is that most decentralized digital currencies, such as bitcoin, were created to ‘do something’ and so have a wide range of powerful use cases. Here are some answers to the question of ‘what can you do with cryptocurrency?’:
1. Low-cost money transfers
One of the most well-known uses of cryptocurrency is for sending and receiving payments at low cost and high speed. For example, a recent $99 million litecoin (LTC) transaction took only two and a half minutes to process and cost the sender only $0.40 in transaction fees. If this money transfer had gone through a financial intermediary the fees would have been much, much higher and the transfer would have taken several days, or longer if this was a cross-border transaction.
The low fees associated with transactions using digital currencies such as litecoin (LTC), stellar (XLM) or bitcoin cash (BCH) make them excellent payment systems for international money transfers.
2. Earn interest on Bitcoin and other cryptcurrencies with ‘Yield Farming’
Successfully trading crypto for profits requires a lot of time, experience and skill and instead many cryptocurrency owners are holding their coins for long term gain. There are ways to earn steady ‘interest’ on crypto, though. Popular examples include DeFi lending and crypto staking. This article covers the main ways an investor can engage in crypto yield farming, and this survey shows which platforms are offering the highest interest and on what coins. With the interest rates offered by traditional bank accounts at all time lows, lending your crypto to a reputable platform is certainly an option – with 10% per annum being offered for highly liquid cryptocurrencies like Tether. It is important to note, however, that this type of lending is not risk free and is not insured by the FDIC or similar government bodies in other countries. Don’t have any crypto to stake – check this article for how to mine crypto on your home PC.
3. A censorship-resistant alternative store of wealth
While you probably don’t think your bank account and assets could be frozen, the reality is that this occurs more often than people realise — especially in jurisdictions with dubious rule of law. All it can take is for someone to be accused of financial misconduct or making powerful enemies. When that happens, people can find themselves with little to no access to cash, even if they’ve done nothing wrong.
This is where one of the most unique and powerful cryptocurrency uses comes into play. Cryptocurrencies like bitcoin act as a censorship-resistant alternative store of wealth that only the individual with the private keys to the wallet has access to. Hence, no personal bitcoin wallet can ever be frozen by authorities.