This article aims to provide insight into the uses of cryptocurrency. It references passive income, NFTs, inflation, and GameFi. If you are unfamiliar with crypto, read our articles on blockchain, crypto, and DeFi before reading this article.
Crypto has been the talk of the town for some time now, with many predicting it will disrupt several industries. However, many discredit its actual validity as a currency due to its volatility, lack of backing, and lack of real-world use cases. While we cannot speak to other aspects of crypto, here are seven ways you can use crypto in the real world today.
Traditionally, you would put your money in a bank, the bank gets to use the money to make more money through investing or lending, and you get a small cut of the interest earned. Crypto allows you to do this by yourself without the banks, and instead of a small cut, you get all of it, and sometimes, extra rewards for using a specific platform. For example, you could put your money in a stablecoin, such as DAI, and lend it through a protocol such as Compound or AAVE. This could earn you anywhere from 5-10% interest a year, which beats bank interest rates by miles and can help your money keep up with inflation.
2. Earning Passive Income
Aside from lending and borrowing, there are many ways you can put your crypto to work to generate passive income for you. You could provide liquidity to pool and earn interest on transactions or farm rewards by locking your tokens in a smart contract. Interest rates could reach over 1000% a year, but the saying “high risk, high reward” holds true here.
While these can generate very high returns, it pays to be extra cautious and do thorough research before investing.
3. Supporting Artists
The rise of NFTs over the past few years has realized several ways in which artists can use blockchain technology to make money. NFTs allow buyers to easily verify the authenticity of the art they are purchasing and allow artists to set royalties to earn a small percentage of every sale of their work. While the most popular NFTs today consist mainly of 2D digital art, they could expand into music, 3D, and other forms of art.
4. Hedging Against Inflation
If you’re fortunate enough to live in a country where hyperinflation isn’t a severe issue, you would still have heard of inflation. Putting money in assets has long been a method people use to hedge against inflation. For instance, buying precious metals such as gold or silver. Today, however, people can put their money in digital assets, which are much more accessible. This could be Bitcoin, Ether, or even their choice of NFTs. People who live in areas affected by hyperinflation might also prefer to convert their currency to a stablecoin, which is pegged to the USD and helps protect the value of their money.
5. Earning Money Through Gaming
Play-to-earn (P2E) games are made possible by blockchain technology, and they are exactly what they sound like. Games such as Axie Infinity enable people to live off playing the game full-time, since in-game items are digital tokens with real-world value attached to them. The P2E gaming space is very young and in its infancy, and there is a lot of buzz and speculation around how the space can grow and disrupt the gaming industry in the years to come.
6. Paying for Goods and Services
A coffee shop in Bangkok called Sarnies made headlines in 2021 for accepting various forms of crypto as payment, such as Bitcoin, Ether, Doge, and of course, stablecoins. This isn’t the only store in the world that accepts cryptocurrency as payment. Companies such as Microsoft and Paypal accept crypto as payment, and El Salvador became the first country to recognize Bitcoin as legal tender in 2021.
7. Decentralized Autonomous Organizations (DAOs)
More of a byproduct of the communities built surrounding crypto, DAOs are an interesting way through which groups of people with similar goals can come together to build something in a decentralized manner. Some DAOs may offer monetary rewards in the form of their native token, similar to being salaried by a company, only regulated by smart contracts instead. This disallows discrimination since the rules of the DAO are written into the code and cannot be changed. As long as the work is done, individuals will be paid the decided amount, regardless of gender, race, or other external factors. This is an ideal scenario, however, and DAOs have a long way to go before reaching their full potential.
Is Crypto Really Currency?
Crypto have only been around for just over a decade, and their relatively widespread adoption only happened within the last 5 years. The very concept of currency took thousands of years to develop and become what it is today. While it is hard to be sure that cryptocurrency is the next step in the evolution of money, it seeks to solve some issues brought about by today’s economy. By making financial services decentralized and accessible to all with an internet connection, crypto has the potential to finally make finance inclusive.
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