What To Do With Crypto After Buying It

 

The first major decentralised cryptocurrency is Bitcoin, first announced in Satoshi Nakamoto’s whitepaper published in October 2008. Among other things, Satoshi’s whitepaper presented Bitcoin as a peer-to-peer electronic cash system that enables users to send and receive money. While Bitcoin still serves this purpose, the asset, and altcoins that came after, are a lot more.

 

Different Ways To Use Crypto

The evolution of cryptocurrency created several unique functions for digital assets in addition to Satoshi’s intended use of Bitcoin. With thousands of digital assets actively trading on hundreds of exchanges, crypto holders have more ways to put their holdings to good use.

 

Medium of Exchange

The most common use of cryptocurrency is its function as a medium of exchange. Today, many merchants now accept crypto payments instead of restricting payment methods to fiat-based options. Many of these merchants use crypto gateway applications to handle the conversion of crypto into fiat. This allows the merchant to immediately receive fiat even if the buyer paid in crypto. Merchants use this method to ensure they do not lose value as crypto prices are volatile. On the other hand, some merchants may also allow users to pay directly with crypto without using a gateway. Either way, merchants supporting cryptocurrency payments open up their businesses to broader audiences.

Several organisations allow users to pay for goods and services using one or more supported digital assets. Some of these companies include Microsoft, Starbucks, AT&T, PayPal, and Tesla. Service providers like online casinos also allow users to deposit crypto into their gambling accounts. These casinos provide players with the ultimate cryptocurrency casino experience as they can process payments faster and cheaper than most other options. Crypto casinos also attract more players from around the globe since blockchain-based payments have no geographical limitations.

 

Investment – Hodling and Staking

Another common use of crypto is investment. Crypto proponents believe that assets like Bitcoin are a great store of value comparable to gold. Generally, cryptocurrencies are infamous for their volatility, as prices can be susceptible to market events. This instability can sometimes trigger a bear market, which could be bad for investors. On the other hand, holders can also enjoy a lot of returns by simply buying and holding crypto.

Crypto investors who prefer to HODL (hold on for dear life) their assets sometimes buy tokens like Bitcoin, which has a history of healthy annual returns. Although the king coin had a poor year in 2022 due to a heavy bear market, holders have enjoyed significant returns on Bitcoin in previous years. For instance, Bitcoin returned 90% in 2021, 95% in 2019, and 301% in 2020. As of October 2023, Bitcoin returns have hit 65% for the year. In 2021, Ethereum holders also received impressive returns, earning 184% of their initial investments.

In addition to hodling, people also invest their crypto via staking. Simply put, crypto staking is locking up a specific amount of crypto assets for a defined period to support a blockchain’s security and operational needs. Users who stake their crypto earn percentage yields as rewards for the fixed deposits. Staking is exclusive to proof-of-stake (PoS) blockchains, such as Cardano and Avalanche.

 

Cross-Border Transactions

Cryptocurrencies are also popularly used for cross-border payments. Most international payment functions are handled by traditional systems that require long processes before settlement. These processes usually involve several middlemen who take percentages of the total fee as commissions for transferring the funds. The amount sent can also sometimes be significantly different from the amount received because of government regulations and tax requirements for cross-border transactions.

Several companies, like Circle and Ripple, have created solutions directly targeted at simplifying the process of sending money across borders. Nonetheless, any two crypto users with functioning wallets can easily exchange assets instantaneously without worrying about regulatory bottlenecks or intermediaries. In addition to the ease of these transactions, cross-border payments are significantly cheaper because the blockchain process eliminates intermediaries.

 

Governance

Crypto and blockchain projects also use digital assets for governance purposes. Projects may create governance tokens that allow holders to participate in decision-making processes. A blockchain project may do this by enforcing a governance structure where holders with larger portfolios are prioritised or allowed multiple votes. This method is standard with decentralised autonomous organisations (DAOs), where no decisions are taken without a transparent voting process. Governance is crucial for decentralised organisations to protect the interests of their investors and prevent reckless managers or executives from misappropriating resources or making rash decisions.

 

Conclusion: The Best Way to use Crypto

Crypto assets serve many different functions and are as important as the intended purpose defined by the holder. While some people only hold crypto for investment reasons, others mainly use digital assets for cost-effective cross-border transactions. As the industry expands and continues to grow, the continuous adoption of digital assets will likely bring about further use cases for cryptocurrencies and digital assets.

 

 

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