ADVERTISEMENT

5 Crypto Use Cases To Look Out For

5 Crypto Use Cases To Look Out For – WazirX Cryptocurrency

5 Crypto Use Cases To Look Out For

*This is in partnership with BloombergQuint Brand Studio

The crypto market is witnessing extraordinary levels of growth, while blockchain, Web3 and the metaverse are fast becoming mainstream. While there are over 4,000 different renditions of crypto floating about, a lot of them have found unique use cases and solutions across fintech.

Here are five of the most popular use cases of crypto in play across the world and much of the focus in 2022 will remain on these:

1. Decentralised Digital Currency

Within the buzz around shiny, new technologies paving the way for disruptive applications, the number one use case of crypto is the reason blockchain technology came into existence—independent and decentralised digital currency. From the early days of complex mining to simple transactions on exchanges today, crypto has come a long way in proving its utility.

The decentralised nature of crypto, along with minimal transaction costs, privacy and security has attracted a whole generation of investors, entrepreneurs, and tech-enthusiasts aboard the crypto train. Thousands of crypto exchanges conduct millions of crypto transactions daily, and that trend is only rising with every passing day.

P2P transactions have found a massive home in the one of the largest crypto markets in the world by users: India. While some sources like BrokerChooser research claim India has over 10 crore crypto users, WazirX CEO Nischal Shetty says the actual number is closer to 2 crore users. At the end day, more and more Indians are definitely taking to investing in crypto.

2. Crypto Banking

Despite the fundamental differences between traditional banking and crypto transactions, there is a convergence point where banking services are available for trading crypto and fiat currencies. It's called crypto banking. Its burgeoning popularity is down to the fact that anyone with a smartphone and an Internet connection can trade digital currencies.

Just like traditional financial institutions hold stocks and cash for investors and consumers, crypto banks hold digital assets as well as traditional fiat currency. Banking stalwarts such as Goldman Sachs, JP Morgan, and Barclays, to name a few, are some of the key players who have tailored their services to manage digital currencies, offering services such as crypto interest accounts as well as savings accounts.

While India has some catching up to do in this area because of regulatory clarity that is awaited, there is growing optimism that crypto might soon be regulated, which is what crypto exchanges and the ecosystem in India desire. A good example of this optimism came in December 2021 when Kotak Bank partnered with WazirX to facilitate payments to crypto investors.

3. Asset Tokenization

While digital currencies provide a number of enticing features, there are a few chinks that need ironing out. One of them being inconvenient liquidity at times. Fortunately, with asset tokenization, the answer exists within the blockchain framework itself.

Asset-backed tokens have inherent value directly tied to the underlying physical asset. The tokenization of assets improves the market liquidity of real-world assets such as real estate. The digitisation of assets also opens up markets to investors who previously would not have been able to participate. While traditional financial institutions often prohibit clients with inadequate cash from investing, tokenization of a physical asset allows for a high degree of fractionalisation or the division of an asset into many smaller units.

By dividing ownership of an item into several little fractions, all investors gain in proportion to the value of the asset they possess, and just a minimal amount of money is needed to invest. This promises to be a popular use case in India, especially in Tier-2 and Tier-3 cities.

4. On-Chain Governance

Crypto is also being used to develop a more refined way to govern policies, often at private organisations or clubs.

Entities are often seeking new methods to give their users more power and responsibility. One way to do this is to form a decentralised autonomous organisation, or DAO, and compel members to deposit their own money in return for voting rights, i.e., governance tokens. This method of distributing control among stakeholders is known as ‘on-chain governance.’ The governance tokens' powers may include traditional management positions and the capacity to alter the entity's protocol.

5. Smart Contracts

Smart contracts are a type of paperless digital code that provides a set of guarantees based on specified terms and conditions that are already agreed upon. This basic concept may be used to automate actions or whole networks, such as DAOs that use smart contracts.

The most prominent advantage of smart contracts is the automation it provides. Basically, it means there will be no interruptions, and no third parties will be able to modify the agreement or decision. Security features in smart contracts' also sets them apart. Smart contracts function properly as a result of encryption, and the data generated cannot be updated or altered in any manner since they function on networks with immutable data. This ensures that all data is safe.

It is no surprise that smart contracts are finding a place in a number of fields across the world in healthcare, finance, governance, privacy, and more. In India, while there is still some ambiguity around crypto, smart contracts are slowly but surely finding a way into the commercial sector.