Top 12 Applications of Cryptocurrencies
The beauty of cryptocurrencies lies in the multitude of diverse purposes of money compared to regular currency. We have compiled an overview of what sets cryptocurrencies apart from regular money.
1. Tokenization of physical assets
Imagine a apartment building with 100 units in which you can invest. Now, you could say that each apartment could equal 1 token, but what if you also want to give smaller investors access to the real estate market and let them benefit from rental income? You can split 1 apartment into 10 or 100 tokens over which rental income can be distributed.
2. DApps
DApps, or decentralized applications, are applications built on blockchain technology and distributed across a decentralized network of computers.
Unlike traditional applications hosted on a central server, DApps run on a distributed network of computers, usually on a blockchain.
You can use dapps by paying in the network token used (for example, Ethereum). The more a dapp or dapp network is used, the greater the token's value appreciation.
3. Data storage
Today, more and more data is stored on cloud services from Microsoft, Amazon, or other large companies.
But what if you could earn money by investing in centralized data storage services and at the same time store and access data in different locations around the world? Decentralized data storage services like Filecoin are suitable for this.
4. Big data
Big data tokens in crypto usually refer to tokens used within blockchain networks to access or pay for big data services. These tokens are intended to enable the sharing, processing, and analysis of large amounts of data in a decentralized manner. Thanks to this solution, you can earn by providing computing power.
5. Microtransactions
Microtransactions enable new business models and revenue generation, especially in sectors where users pay small amounts for specific services. Think of pay-per-view streaming, in-game purchases, or supporting content creators on platforms like Patreon.
6. Fundraising
Fundraising via launchpads in crypto is a process where new projects issue and sell tokens to investors through a platform known as a "launchpad." These platforms act as intermediaries between project teams and potential investors, offering a standardized way to launch and sell tokens.
7. Marketing purposes
There are several ways crypto projects can generate revenue while benefiting their community. Since cryptocurrencies are often linked to dapps, users can be rewarded by following certain steps in a dapp, known as airdrops.
Additionally, users can also earn money by purchasing NFT s from a crypto project. NFTs are often used by users on social media platforms as a profile picture or avatar to show support for a crypto project. The NFT can be scarce, making it more profitable when sold.
8. Mining pools
We have already explained the concept of crypto mining in previous blogs. Managing a mining rig, the hardware needed to mine, costs a lot of money. Because this is not feasible for many people to afford, mining pools exist. Mining pools are groups of people who pool money to mine and are rewarded for doing so.
9. Staking pools
We have also explained the concept of staking in previous blogs.
Many crypto projects require large amounts of a cryptocurrency to stake. Similar to mining pools, many individuals together ensure that they own a certain amount of tokens so that they can stake. They are rewarded for this.
10. Digital ownership
Digital ownership in crypto refers to the concept that individuals or entities can have ownership over digital assets, such as cryptocurrencies, tokens, digital art, or other digital possessions, thanks to blockchain technology.
In traditional systems, ownership rights often depend on intermediaries such as banks or other centralized authorities. Digital owners can conduct direct and peer-to-peer transactions without the involvement of third parties. This reduces dependence on intermediaries like banks and speeds up the transaction process.
11. Liquidity providers
Liquidity providers in crypto are individuals or entities that provide liquidity to decentralized financial (DeFi) platforms, such as decentralized exchanges (DEX) and liquidity pools.
They play a crucial role in facilitating trading on these platforms by providing digital assets to other users who want to buy or sell. Liquidity providers earn money through interest income and sometimes also by receiving trading fees.
12. Identity and CBDC
Identity tokens in the context of Central Bank Digital Currencies (CBDCs) refer to digital tokens issued on a blockchain or another distributed ledger to verify and manage identity information. These tokens are used to capture, verify, and manage digital identities of individuals in a digital form.
In conclusion, cryptocurrencies redefine the concept of money by offering diverse applications, from tokenizing physical assets to enabling microtransactions and digital ownership. The innovative blockchain technology driving cryptocurrencies promotes decentralization and transparency in financial systems, shaping the future of economies worldwide.
