Russia is in the final phase of testing a central bank digital currency (CBDC), which will be used for both national and international...
The cryptocurrency industry might have seen a recent rise in adoption across different sectors, investors and corporations, but the market still has a reputation of volatility and uncertainty. However, with more investors entering the scene, there has been an enormous uptick in how people are seeing the industry as one that goes beyond financial application – with the technology offering enormous opportunity in the digital space. In this, we’re looking at the key use cases that cryptocurrencies offer and how this might change the way industries run in the future.
What is a cryptocurrency?
Cryptocurrencies, as they stands, are defined as digital assets that store a representation of value, independent from any central bank or entity. A cryptocurrency can be held, transferred, or traded online and some companies and countries accept Bitcoin and other cryptocurrencies as a means of transfer and trade. While they might be used as a way to pay, most countries do not consider cryptocurrencies as legal tender or as currencies in the traditional sense in the financial world.
Banking the unbanked
Offering underbanked individuals a way to store funds online is where Bitcoin shines, and it’s most obvious in countries that have political and financial instability. Typically, underdeveloped economies tend to look at Bitcoin and cryptocurrencies as a way to hold and own their own funds without worrying about how limited banking facilities are. Further, cryptocurrencies offer a hedge against inflation and changing fiat values, as they are typically not associated with the values of national currencies (except for stablecoins).
Digital wallets that store cryptocurrencies offer unbanked users a way for people to gain access to an asset that stores value – outside of the red tape of traditional bank. It means more people have the opportunity to gain access to their OWN money without getting locked out of the financial system.
Diversification of funds
Investors that are looking to buy assets beyond stock, property, gold, or other alternative assets look to the cryptocurrency market as a way to diversify their portfolio. With a massive historic return on investment (ROI), Bitcoin has proven an extremely profitable purchase for early adopters who entered the market and have held on for deal life (HODL) as long-term investors.
With the volatility the market faces, cryptocurrency traders can turn a profit – albeit with associated risk – if they time their trades well.
As a borderless asset class, cryptocurrencies offer people across the world an excellent way to send money to others across countries without worrying about massive bank charges and issues. It makes it easy especially for those who don’t have bank accounts and rely on sending physical cash to family or friends in other countries – commonly seen in underdeveloped economies.
Beyond the financial potential, the cryptocurrency industry is a game-changer as the technology offers a number of industries new ways to operate with contracts and agreements. Through the blockchain technology that cryptocurrencies are based on, smart contracts are self-executing contracts that cannot be modified or changed and offer transparency to all entities involved. This can be a major disruptor in aspects like voting, supply-chain and logistics, and computing applications as it removes all need for expensive legal costs and the reliance on trust.