Understanding the uses of cryptocurrency

Although cryptocurrency has been continuously gaining traction over the years, some people are still perplexed about its uses. Because the world of cryptocurrency is highly volatile and decentralized in nature, cryptocurrencies are seen as high-risk investments. 

The topic can be overwhelming for the new investor. However, here at BTC Post, you can understand the basics of cryptocurrency and how owning crypto can be beneficial for you in the long term. Learn more about it below!

Decrypting the basics of crypto

The earliest form of decentralized digital cryptocurrency, Bitcoin, was created in 2008 by an anonymous developer named ‘Satoshi Nakamoto’. 

One of the earliest articles on it, published by Forbes in 2011, pointed out that Bitcoin is not just a new way to digitally spend dollars, pounds and yen. Instead, it is a new type of currency in the form of a digital asset—a set of data that can be traded for goods and services. To ensure security, this digital asset uses cryptography for safer and faster transactions.

To understand cryptocurrency, you’ll have to first understand the concept of a blockchain which serves as its underlying technology. Being digital, cryptocurrency does not exist in physical form but exists only as records on the blockchain. 

The blockchain is a public ledger that is managed by a decentralized network and contains encrypted information recording specific transactions in a ‘block’. Each succeeding block connects to a previous block, creating a chain of blocks (thus, blockchain). 

Each block is part of the public ledger, containing details of the transaction such as the address of the recipient, how much was given, and when the transaction occurred. 

Since it is decentralized, there is no central authority that says what the bitcoin is worth. Through the years, it has acquired value due to its scarcity, divisibility, utility, transportability, durability, and demand. 

Once the concept of Bitcoin and cryptocurrency took hold, other developers created their own to provide better versions of their predecessors, which is called ‘altcoin’ or alternative coin to the famous Bitcoin. Nowadays, there are over 9,000 altcoins in the market, most of which are useful in trading for goods and services in the increasingly digital world of the 21st century.

What cryptocurrency can do

The question is, what can cryptocurrency do for you that fiat cannot? Here’s what you should know:

Confidential transactions

When you opt for the traditional payment method using debit cards, every transaction will be stored and recorded by the bank. For instance, if you frequently have to make huge and multiple transactions in a month, you may have to go through a long bureaucratic process.

However, with cryptocurrency, you can transfer money in big amounts without going through tedious bank verifications. Your transactions and financial history will remain confidential as well because of the cryptography in place to maintain security and anonymity. This protects you from being a victim of identity theft, which can be rampant under traditional payment methods.

Lower transaction fees

For most people, transaction fees charged by the bank cost a significant chunk of their funds. This is especially true when you have to make multiple transactions every month, making it harder for you to maintain your financial assets. 

On the other hand, cryptocurrency offers lower transaction fees since there is no middleman, which means fewer expenses. For instance, a $99,000,000 Litecoin (LTC) transaction will only take almost three minutes to process with a transaction fee of $0.40. 

Alternative storage for assets

Banking institutions have the authority to freeze their client’s bank accounts and financial assets when they see fit or if accused of illegal activities such as money laundering, bad checks and unpaid taxes.

However, one of the most impressive features of cryptocurrency is it can serve as safe, alternative storage for your financial wealth where only you have control over your funds. For example, owning a crypto wallet means only you have rightful access to it. 

When using a crypto wallet, there will be a tight security process before you can transfer. In this way, you are assured that no one can retrieve or access your financial history and other important data.

Buy luxury sports cars

Today, cryptocurrency can be used to buy luxury sports cars. On January 8, 2021, Lamborghini of Newport Beach, California announced Bitcoin as a valid form of payment.  Some people even theorized the dealership will be using a third-party intermediary to convert Bitcoins into U.S. dollars.

Additionally, CEO Elon Musk has also announced to the public on February 8, 2021, that Tesla will be using cryptocurrency as a payment option. However, he stated that Bitcoins will not be converted to fiat currency. 

If you’re looking for luxury goods other than cars, you can also buy high-end art, fine wines and houses if you have enough NFTs (non-fungible tokens) to spend. They are digital assets that can be in the form of music, art or videos which can be bought and sold through cryptocurrency.

Easy mobile payments

With cryptocurrency, mobile payments have become easier and more transparent. Wherever you are in the world, you can purchase products and services without having to fall in line at the bank or visit physical stores. 

You can just simply pay using your preferred cryptocurrency anytime, anywhere. Moreover, you don’t need to give your personal information to complete transactions unlike traditional online payment methods such as PayPal or credit cards. 

Travel around the world

Because of the increasing popularity and steady growth of cryptocurrency in the market, it can now be used to book your flights and travel the world. You can begin planning your next holiday trip and pay for plane tickets using Bitcoin and other cryptocurrencies!

In 2013, CheapAir was one of the first online travel agencies to accept Bitcoin as a payment method for flights, hotels and car rentals, among other things. The company originally used a third-party processor to convert Bitcoins into fiat currency. 

Moreover, travellers can now convert their cryptocurrency into local currency in most major cities around the world, allowing them to pay for travel costs without trouble.

With all these developments, there’s no denying that cryptocurrency has revolutionized the payment system. It has taken huge leaps in terms of financial transactions, security and investments, making it one of the most promising technologies in the world.

Stay updated with cryptocurrency updates and news here at BTC Post!