Cryptocurrency and blockchain technology have significantly revolutionized the finance sector. Digital currencies have expanded the scope of the digital economy, allowing individuals and organizations to transact with more than traditional currencies.
But cryptocurrencies do more than represent digital value. When combined with other innovations, they can adopt many use cases, which further increases their significance in today’s economy. And the more mainstream and mature they become, the more applications become possible. Here is a look at the most innovative uses of cryptocurrency today.
Smart Contracts
Source: ibm.com
Smart contracts are stored and executed on blockchains. These “if/when…then…” programs are executed when set conditions are met and are used to automate agreements. Because actions cannot be reversed or modified once completed, smart contracts assure all participants that an agreed-upon outcome will be achieved and eliminate time wastage and the need for intermediaries.
Multiple industries have adopted smart contracts to improve efficiency and transparency within their supply chains. But perhaps one of the best applications is how IBM and Sonoco are using the technology to facilitate the transportation of crucial, life-saving pharmaceuticals.
Through blockchain technology powered by IBM, Sonoco launched Pharma Portal. This platform tracks medications across the supply chain, providing accurate and credible information to all involved parties. The result is that end consumers track the journey of a given medicine from its source to its final destination and that data is shared in real-time to avoid delays and confusion.
Online Gambling Transactions
Source: analyticsinsight.net
Cryptocurrencies like Bitcoin and Ethereum offer the anonymity and privacy that was previously lacking from online gambling activities. With digital currencies proving so popular, the online gaming industry has adopted them as an alternative, and sometimes primary, mode of transaction.
Many gamblers have in turn taken to using them to fund their gambling accounts and play poker, blackjack, pokies, and other casino games. But it is not just about anonymity, cryptocurrency transactions involve lower exchange rates, which allows gamers to retain more of their winnings. They are also faster, which allows for uninterrupted gameplay.
Utility Tokens
While Bitcoin was first to the crypto scene, Ethereum was the first to establish a sizable blockchain network. This produced the ERC20 standard and smart tokens, both of which are the foundation for blockchain-backed assets like utility tokens. Utility tokens allow holders to access services offered within the world of cryptocurrency, including crypto-games like CryptoKitties.
Asset-Backed Tokens
Source: vibeblogs.com
Crypto technology powers the tokenization of assets to create asset-backed tokens. Asset-backed tokens are like utility tokens except their intrinsic value is directly linked to a physical asset, such as a car or property, instead of a digital currency. By tokenizing physical assets, crypto technology hastens liquidation processes and makes purchases easier to complete.
It also makes investment more accessible. Traditional financiers often have requirements that restrict low and middle-income clients from investing. The tokenization of physical assets makes it possible to fractionalize an asset into many small parts. By doing this, it splits ownership into fractions so that involved parties can invest with relatively small amounts and profit based on their ownership ratio.
Banking in Developing Countries
Cryptocurrencies in themselves can solve banking crises in jurisdictions facing hyperinflation or political instability. These factors can often limit a population’s ability to access banking services and facilities. Because they are transferred through and stored in digital wallets, cryptocurrencies can provide accessible stores of values that do not rely on traditional banking systems.
This application is already active in many economies within the developing world. It bridges the gap created by a primarily cash-driven society where a significant portion of the population do not own bank accounts. Aided by mobile phone proliferation, crypto technology provides a viable alternative to cash, enabling trade and investment outside traditional banks.
Pegged Stablecoins
Source: tech.hindustantimes.com
Despite their many applications, economists have often had a problem with cryptocurrencies because of their high volatility. The value of a digital currency like Bitcoin can fluctuate widely within a short time span and due to highly unpredictable market movers like social media posts.
Stablecoins were established to address this problem. Unlike cryptocurrencies, they maintain a stable value primarily because they are pegged at the value of a stable asset. Fiat-backed coins are pegged at the value of the Japanese yen on one US dollar while commodity backed coins are pegged at the value of real-world assets. Usually, these assets or fiat currencies are held by regulated financial institutions.
Pegged stablecoins allow holders to trade between cryptocurrencies on crypto exchanges faster and without major losses. Essentially, they allow holders to enjoy the perks of cryptocurrency – anonymity, zero government interference, low exchange rates – without the extreme value volatility.
IOTA
Source: blokt.com
Another innovative use case for cryptocurrency technology is the Tangle. Established through the IOTA project, this open-source distributed ledger allows machines to trade resources and services with each other. The application is powered by the Internet of Things and one of its most notable uses is the smart wallet and connected car services.
By partnering with an automaker, IOTA has made it possible for drivers to earn digital value assets they can use to pay for parking, smart charging, and road tolls through their phones. They earn these assets by allowing their cars to report road conditions to road maintenance authorities, highway departments, and other involved parties.
Wrapping Up: A Promising Crypto Future
At the moment, cryptocurrencies are defined as digital representations of value acceptable and means of payment and not issued by public authorities or central banks. Their evolution into stores and products of value from simply digital currencies has greatly expanded their applications, as you can see. Cryptocurrencies today have uses beyond financial transactions and the possibilities continue to grow.
