To most people, cryptocurrencies are typically thought of as high-risk investments for millennials and Silicon Valley insiders. However, what is getting 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?’:
Money Transfers At Low Cost
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 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.
Earn Interest Through 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 12% per annum being offered on some 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.
Invest in innovative early-stage startups
The emergence of digital token-based fundraising has allowed anyone with an Internet connection to become an investor in innovative early-stage tech startups, while at the same time providing new startup ventures with much-needed seed capital.
Although a rarer event these days, Initial coin offerings (ICOs) and IPOs are a form of fundraising that provides startups with the opportunity to raise capital by selling a newly-created digital token to early backers of the project in exchange for established cryptocurrencies such as Bitcoin (BTC) or Ether (ETH). The price of the newly-issued token then acts as a proxy linked to the success or failure of said startup once it starts to trade in the secondary market.
In the past, access to these deals would have only been available to experienced venture capitalists, but the advent of cryptocurrency has opened these opportunities up to a much broader spectrum of investors.
In some cases the digital tokens of the most successful ICOs have increased in value by several thousand percent and cryptocurrency-based fundraising has helped startups to raise over $12 billion in the past two years.