Cryptocurrency: How Is It Being Used Today?
Last updated on November 23rd, 2022 at 11:52 pm
Cryptocurrency is a broad term used to describe all of the digital assets created since the inception of Bitcoin in January of 2009. Cryptocurrency is broken up into three basic categories, coins, tokens and stablecoins, which, in and of themselves, have a specific function. However, many of these cryptocurrencies are being used by you and I differently than their original intent.
Most people use Bitcoin and other cryptocurrencies as a form of investment and a vehicle to protect and grow their capital. Cryptocurrency is also used to pay for goods and services, trade and give people who are unbanked or underbanked a way to transact business.
One thing is for certain, cryptocurrency has come a long way since the Bitcoin whitepaper in 2008. Read on as we layout what these various cryptocurrencies are, how they are being used today and how they are likely to be used in the future.
What Are People Using Crypto For Today?
Have you ever heard the phrase, given the chance, people will often surprise you?
Well, whether you have or haven’t, this phrase is definitely true when it comes to cryptocurrency.
These surprises not only come from the development of technological innovations created via blockchain technology, or the capacity for finding ways to create systems designed to help people and maintain their individual autonomy, but, how we as individuals find new and innovative ways to utilize all of this technology for our benefit.
These days, the average person like you and me, utilize cryptocurrency to increase our wealth, secure our family’s financial future and maintain our personal freedoms.
When you read that you’re probably thinking, sounds like a bit of a soapbox... and frankly, you’re not wrong.
I am passionate about how cryptocurrency can help to do all of those things and more.
If you want to learn about blockchain and cryptocurrency, and how they can be used to increase your wealth and protect your future and your autonomy, then get my ebook, Cryptocurrency 101: Cryptocurrency & Blockchain Basics For Your Freedom here.
However, I don’t want to get too far off topic. If you’re interested in understanding why I think and feel this way, you can check out my video that I’ve placed here.
Cryptocurrency In Use
Cryptocurrency is becoming more and more mainstream. As such, the actual use of cryptocurrency, and Bitcoin in particular, has reached various facets of the world economy.
Let’s take a look at some of this in action today.
Major companies have invested in cryptocurrency and carry them as assets on their balance sheets. Some of the most notable companies include Tesla, MicroStrategy and Square.
Bitcoin and cryptocurrency can now be added into your individual IRA accounts, and the list can go on and on.
While all of that is definitely a move in the right direction when it comes to the mass adoption of cryptocurrency, there is a large scale use of crypto happening every single day.
Having an entire country use cryptocurrency is a very big deal. That is an everyday occurrence in the country of El Salvador.
While some may argue that El Salvador is a small country, no one can argue that this entire country using Bitcoin for everyday transactions is not a monumental achievement.
To accomplish this, there was scaling of the ecosystems surrounding the Bitcoin blockchain to make this a reality. Some of these things included using the Bitcoin Lightning Network for transactions, the development of the Chivo wallet for residents of the country and the integration of Strike as the processor.
After all this discussion about cryptocurrency being used in the world today, you may be wondering is crypto is considered money. Check out our discussion about that here.
While all of these efforts continue to show the viability of cryptocurrency, we should take a high level view of what cryptocurrency is designed to be.
Different Types of Crypto
Cryptocurrency is broken into three basic groups, coins, tokens and stable coins.
Generally speaking, coins are designed to be money, tokens are designed to be used for some type of utility and stablecoins are designed to peg to a fiat asset. However, like most things in life, there are some exceptions to this rule, one of which we will highlight below.
Let’s take a quick look at a couple of the top ranked cryptos by marketcap.
Coins in the cryptocurrency ecosystem are generally meant to be a form of money.
Currently the top crypto is Bitcoin (BTC). It was the first one created.
Bitcoin was designed to be a peer-to-peer money.
So, you would act as your own bank and send money to whom ever you wanted or needed to, without the need of a bank.
For more information about exactly what cryptocurrency coins are and how they work, check out my article dedicated to that.
In the cryptocurrency space this is often referred to as be your own bank or unbanking yourself.
Then there is Ethereum (ETH).
ETH is one of those exceptions to the coin/token rule mentioned earlier.
Ethereum is a coin and is currently the second largest cryptocurrency by marketcap.
It is a blockchain that allows developers to create something called smart contracts on it.
These smart contracts are then used by the developers to create other tokens or protocols that have varying uses.
A cryptocurrency token generally has a specific purpose designed into it. They are designed to transact various actions on a specific blockchain.
As an example of this we will highlight the FTX token (FTT).
This token is the native token for the FTX Exchange. It is the medium used to pay fees and allow the execution of transactions on that exchange.
But as you can imagine there is plenty to learn about cryptocurrency tokens. That is why I’ve dedicated an entire article to what cryptocurrency tokens are, how they’re created and where they can exsist.
A stablecoin has a very specific function in the cryptocurrency ecosystem. A stablecoin is meant to be exactly that, stable. This is necessary for the purposes of trading between crypto assets as well as fiat currency.
To accomplish this, a stablecoin is pegged to a specific fiat currency, such as the U.S. dollar (USD).
The oldest and currently most utilized stablecoin is Tether (USDT). It is backed by holdings of USD.
There are stablecoins in the cryptocurrency ecosystem for all of the major fiat currencies.
Stablecoins vary in the way their are pegged to a fiat asset. Some are backed by actual fiat money held on balance sheets, some are backed by fiat money and sound money assets like gold and others hold their peg via algorithmic means.
In 2021, the U.S. Comptroller of Currency allowed banks in the U.S. to verify stablecoin networks and use them as forms of payment.
There is more to stablecoins than meets the eye, that’s why I’ve dedicated an entire article to what they are and how they work.
How Will Cryptocurrency Be Used In The Future?
For those of us who are proponents of cryptocurrency, the future is bright.
We see all of the advantages that cryptos can give to the average person like you and me.
We understand that this technology can provide us amazing levels of financial independence as well as securing the privacy and freedoms which are slowly being stripped away.
However, this future is not going to be without challenge.
Governments realize the threat that cryptocurrency poses to their control. This is something that world leaders have been thinking about for a very long time.
In 1974, former U.S. Secretary of State Henry Kissinger said
It wasn’t until now, that the possibility of loosing that control has become so real.
So we will inevitably see more attempts at regulating crypto, or at least attempts to regulate our ability to transact with it inside of their economies.
Questions Related To The Uses of Cryptocurrency
We realized, like most topics in the cryptocurrency space, that this topic has multiple facets that can honestly be enormous. So, here are a few related topics to further the discussion.
Will cryptocurrency replace money?
Given the quickly increasing uses and adoption of cryptocurrency, this question definitely has merit. Read About The Potential For Cryptocurrency To Replace Paper Money Here.
What is the best option to replace the dollar?
The discussion about replacing the dollar are raging in many different circles. Check Out Our Discussion About The Dollar Replacement Options Here.
Is cryptocurrency better than banks?
Earlier we mentioned how cryptocurrency was meant for you to unbank yourself. Come Find Out If Cryptocurrency Is Really Better Than Using a Bank Here.
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