When many people think of cryptocurrency, they think of a high-risk investment vehicle that enjoys popularity among millennials. But with all the hype surrounding cryptocurrencies, most people forget the creation of digital currencies happened with particular uses in mind. Individuals who have questioned the usefulness of cryptocurrency may be surprised at what they can do with digital coins.

What is Crypto

Crypto tokens are digital currencies that allow consumers to exchange money online for various goods and services. Cryptocurrencies function through the use of blockchain technology. The blockchain is a database used to manage and record transactions.

Cryptocurrency app by Agung Wahyu Saputra

The data recorded on the blockchain spreads across the computers of many users. This action allows crypto transactions to become easily tracked and verified by multiple people.

Cryptocurrency Uses

Digital currencies have existed for a little more than a decade. These currencies intend to provide users with more control of their money and less dependence on centralized financial institutions. People asking the question, “what is cryptocurrency used for” may be surprised by some of the answers.

Convenient Money Transfer

Cryptocurrencies allow money transfers to take place nearly instantly at little cost to users. Examples exist of multimillion cryptocurrency transactions happening in a matter of minutes. In some cases, these transactions cost users less than a dollar to complete.

Trading for Profit

Investors interested in cryptocurrencies for the money they can earn enjoy several ways to obtain profits. But time, experience, and skill are necessary to take full advantage of these methods.

Some crypto investors are in it for the long term and hold onto coins in hopes of a dramatic value increase. The experts at SoFi explain many people holding onto crypto were able to cash out in October 2020 when Bitcoin reached its highest value in three years. Others earn steady money through activities like crypto staking and Defi lending.

Safe Money Storage

Many people do not understand the potential risks posed to the money they keep in a bank account until something happens. Several things can happen to cause the money in a bank account to become inaccessible to the rightful owner. Bank accounts are also a common target for cyber thieves.

illustration by Hurca!

Cryptocurrency is a secure way to store wealth since no one other than an individual with the "key" to a digital wallet can ever access a digital currency.

Start Up Investment

Many new tech companies accept cryptocurrency to fund their startup efforts. This situation allows any crypto user with internet access to purchase a stake in new startup ventures from the ground floor. Many of these opportunities would only have been available to experienced venture capitalists before the advent of cryptocurrency.

Private Transactions

Some cryptocurrencies allow users to execute transactions with complete anonymity. This benefit of cryptocurrency will allow users to purchase products online or pay for services without the hassle of explaining to a bank why they are transferring money, where the money comes from, or the identity of the person receiving the money.

Individuals who only think of cryptocurrency only as a novelty investment vehicle may be missing the point of digital coins. Digital currencies are safe, versatile, and allow users to complete many financial transactions in ways not possible just a few years ago.