Real-world uses of Cryptocurrency
Cryptocurrency could improve the way we transact, transfer value, save, invest, and basically anything that we normally do with our money.
At first glance, cryptocurrency seems like a wild idea. Some may even question the uses of cryptocurrency in the real world. After all, we’re already working hard to earn the regular money that we need to get by.
Why should we even care about some “Internet money” when regular money does the job of bringing food on the table? Well, short answer is that cryptocurrency could improve the way we transact, transfer value, save, invest, and basically anything that we normally do with our money.
Cryptocurrency use cases that solve unseen problems
To appreciate the potential for cryptocurrency to improve human lives, we need to look at some of the problems presented by the traditional financial world as we know it — lack of transparency, beaurocracy, and human authority.
Most cryptocurrency operates on a transparent public ledger
Let’s say you want to withdraw your cash out of an ATM. The ATM looks at your account balance and subtract an equal value of cash that you will withdraw. Of course, that number may not accurately represent your true wealth.
This is because of a system called fractional reserve banking. Your bank will typically hold on to less money than what you have initially stored. The rest of it gets lended out for a small interest at the bank’s benefit. Everywhere in the world, banks do this to stay in business.
However, when too many people start to withdraw too much of their deposits, the bank won’t have enough money in its reserve to pay everyone back. It is as if your account balance isn’t a direct reflection of the bank’s own ledger.
On Bitcoin’s public ledger, everyone can audit and verify each account’s true balance of the cryptocurrency that they own. While account names (addresses) remain anonymous, every transaction can be sourced and tracked given how transparent the whole system is.
Cryptocurrency makes frictionless peer-to-peer global transfers
When you want to transfer money abroad, depending on where that money ends up, your initial $100 transfer can potentially end up becoming worth $80 upon arrival.
This is because of the many layers of middleman and beaurocracy that the money has to go through. Your bank must talk to an international bank, and they must talk to another international bank if the country is not within their range of service. In this system, for each exchange, there is a broker wanting a small cut of your initial $100.
Cryptocurrency networks like Solana (SOL) are not owned singly by a bank or government. Instead, private individuals with a computer owns a copy of the public ledger. If you make a crypto transaction to someone else, a simple transaction request gets broadcasted around the world, and afterwards this public ledger gets updated to include your transaction at very little to no cost.
There is no need for a few giant institutions to validate the transaction, when hundreds or thousands of small network participants can do the same job efficiently. Some cryptocurrency networks even allow you to make transfers for free.
Cryptocurrency gives power back to individuals
Lastly, cryptocurrency gives power back to individuals by being autonomous and decentralised. What this means is that no single or group of individuals have all the power the influence the supply of the currency, unlike central banks around the world.
Bitcoin (BTC), for example, is programmatically limited in supply — 21 million whole Bitcoins is the absolute maximum amount that will ever be in circulation. Not even the contributing developers of Bitcoin have any influence in this innate characteristic.
Most lending platforms on Ethereum (ETH) use what’s called smart contracts in place of a legal guarantee on any assets borrowed. On these platforms, there is no lawyer that intermediates the agreement between strangers online. Instead, a strict programme dictates that should the borrower fails to return their debt, the lender gets to own the collateral.
This straightforward, purely logical agreement does not involve the law whatsoever, cutting the administrative costs and eliminates any possibility of fraud and/or corruption within the legal system.
More examples of real-world uses of cryptocurrency
Still not convinced? Here is a curated list of cryptocurrency uses in the real world.
AgriDigital — supply chain management systems for agriculture
There is no doubt that agriculture is crucial to keep the world from going. But the industry is also rife with lack of transparency. For example, customers with certain diet restrictions are still finding it difficult to have access to food of a certain type and source.
Australian agricultural start-up AgriDigital offers a way for customers to be assured about product sourcing. Customers can mean end-consumers or manufacturers. For the farmers themselves, they can track where each batch of their produce is sent by the distributors.
As of 2022, over 10400 people are active users of the platform, with more than 58 million tonnes of grain transacted, which equates to 9 billion AUD transacted.
AgriDigital utilises the Ethereum network.
Power Transition — a decentralised microgrid energy market
To reduce the risk of power dependency on one group of energy providers, Power Transition uses cryptocurrency to incentivise communities to produce electricity on a microgrid scale, and to sell excess energy locally.
Power Transition makes a billion microtransactions a day as energy supply and demand shift dynamically from one property to another. If regular money is used to make all the transfers to pay for units of energy, the bank transfer fees will quickly make this system very costly.
As such, it relies on a crypto called HBAR to make frictionless microtransactions possible.
Learn more about it: What is Hedera Hashgraph (HBAR)?
Golem Network — decentralised computing power
Machine limitations are typically one of the creative constraints experienced by any programmer.
The Golem Network is an open access “computing power marketplace” where programmers can share their unused computing resources. On the Golem Network, data can move freely across the world without fear of censorship, such as Internet access throttling.
One use case of the Golem Network is to allow graphic animators to rent and delegate the network’s spare computing power to cheaply render their animation projects.
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Disclaimer: Information is current as at the date of publication. This is general information only and is not intended to be advice. Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.
Last updated August 29, 2022