Tokens can be created using several token standards; however, ERC-20 is the most popular token standard. These tokens serve various uses related to the platform for which they are created, such as for Defi services, using platform-specific services, etc.
A stablecoin is a cryptocurrency whose value is tied to less volatile real-world assets like precious metals or fiat currencies. Stablecoins are most commonly pegged to fiat currencies like the US dollar or Euro in a 1:1 ratio. Examples of stablecoins include Tether (USDT), Dai (DAI), USD Coin (USDC), etc. Stablecoins like Pax Gold (PAXG), Tether Gold, etc., are pegged to gold.
Memecoins are cryptocurrencies inspired by internet memes and jokes. Dogecoin (DOGE), the most popular memecoin, was inspired by the Doge meme, which was inspired by a viral Shiba Inu meme. Meme coins operate in the same way as any other cryptocurrency, taking full advantage of blockchain and related technology; however, they aren’t backed by any fundamental use cases.
These joke cryptos are mostly community-driven, and their success rides high on social media marketing and influencer hype. Some other memecoins include Shiba Inu (SHIB), Safemoon (SFM), Baby Doge (BABYDOGE), etc.
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Use Cases of Cryptocurrencies
Online Payment and Digital Transactions
Cryptocurrencies will play an important role in the digital economy in the coming web3 era of the internet. The decentralized nature of crypto, combined with low transaction costs, privacy, and security, has enticed a new generation of investors, entrepreneurs, and tech enthusiasts to join the crypto bandwagon daily.
Payments can be made using cryptocurrencies on any e-commerce site or merchants that accept cryptocurrencies. All you need is a crypto wallet to make such transactions. Over 15,000 merchants around the world accept Bitcoin with Starbucks, Tesla, McDonald’s, Visa, Mastercard, Pepsi, etc., to name a few who allow their customers to use cryptocurrency as a valid payment method.
Crypto Banking
The rapidly expanding crypto finance market is entering into traditional banking functions such as lending, borrowing, and crowdfunding. Crypto banks offer interest-bearing accounts, term deposits, credit cards, collateralized loans backed by crypto asset deposits, and other services similar to traditional banks’ offerings, albeit at much higher interest rates/accounts.
Banking titans such as Goldman Sachs, JP Morgan, and Barclays have already tailored their services to manage digital currencies. They provide services such as crypto interest accounts and savings accounts.
Store of Value
Cryptocurrency is a store of value because it can store and transfer value over time and space. For example, Bitcoin is frequently referred to as ‘digital gold.’ Civilians in Ukraine and Russia have been exchanging domestic currency for Bitcoin and other cryptocurrencies to hedge against the war’s rapid inflation. Bitcoin, given its phenomenal ascent, has the potential to dethrone gold and oil as the preeminent store of value. It is even expected that BTC will take the market share away from gold in the coming years.
Asset Tokenization
Cryptocurrencies have made it possible to tokenize physical assets and link them to digital tokens. Copyrights, real estate, art, stocks, and commodities can all be tokenized and represented as cryptocurrency tokens. Asset-backed tokens have intrinsic value that is directly connected to the underlying physical asset.
Asset tokenization increases the market liquidity of real-world assets like real estate. The digitization of assets also allows previously excluded investors to explore the market. For instance, a Zurich-based crypto bank transformed Picasso’s 1964 masterpiece Fillette au béret into 4,000 tokens to sell to over 50 investors.
Crypto Gaming and Governance
Cryptocurrency and gaming are proving to be a winning combination in the current era of play-to-earn NFT-based games. Cryptocurrencies are being used to refine the way policies are governed in online gaming platforms, private organizations, and clubs.
These platforms use the concept of decentralized autonomous organizations (DAOs) and governance tokens to pioneer the concept of on-chain governance. For instance, MetaBrewSociety allows its NFT holders to partake in the governance of its physical breweries via a DAO.
On-chain governance is a system for managing and implementing cryptocurrency blockchain changes. Popular governance tokens include AXS (Axie Infinity), SAND (Sandbox), and others. As more people play play-to-earn (P2E) games on such platforms, crypto gaming platforms will emerge as potential income sources for many people.
The above list of use cases isn’t exhaustive as cryptocurrency platforms, and their utilities are vast and still expanding at a great pace as cryptocurrencies continue to percolate industries and sectors around the world. Cryptocurrencies aren’t just payment networks or digital money; they are a hybrid innovation that the world needs to embrace to continue on its path toward digitization and development.
Also Read | Behind the crypto hype is an ideology of social change
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