The new decade is just one month in and many anticipate increased acceptance of digital currencies. According to various research and market predictions, a few crypto use cases will help grow the cryptocurrency industry. These include:
- Store of value
When cryptocurrencies were first introduced, many used them as a store of value with a hope that one day their tokens would be worth much more. In 2017, many got the opportunity to reap from using Crypto as a store of value. Despite falling from their glory days, people have not given up on cryptocurrencies.
According to reports, in the 2019 store of value remained the most desirable use case across the globe. During this period, the cryptocurrency community saw the rise of alternative stores of value (SoVs) and Collateral-backed crypto assets. The market also experienced what many called the decentralized finance (DeFi) revolution. The revolution allowed many crypto users to save and stake their tokens.
Notably, the Bitcoin community has, by far, led in using their token as a store of value. This has caused other crypto community like the Ethereum community to focus their energy on “programmable money” with “ETH is money” dominating the discourse.
In 2020, experts predict, store of value will continue to grow as the primary use case for cryptocurrencies. However, a few issues need to be handled for a store of value to dominate the cryptocurrency markets fully. Firstly, there is a need to create more capital, efficient DeFi mechanisms. One option is to introduce a non-transferrable reputation as part of a user’s collateral options.
We also need to “spread the word” to markets that show high potential for crypto growth. Lastly, for maximum use of a store of value, there is a need to create a system that helps us accurately represent off-chain assets on-chain. As it is, we are confined by guidelines within security token exchanges and excessive use of centralized proxies.
2. Crypto as a Payment device
International e-commerce has massively grown over the years. In 2018, global commerce raised $2.92 trillion, which rose to $3.53% trillion in 2019. Predictors show that by 2020 these numbers will increase to $5.60 trillion. With cryptocurrencies, gaining momentum in e-commerce, it will be no surprise to see adoption in the next 11 months.
Both consumers and merchants are taking up Crypto as a payment mechanism for the numerous benefits they offer. To sum it up, cryptocurrencies enable faster transactions, saves money, secure, and it is much more efficient for international trades. Pairing it with a crypto debit card gives it much needed real-world utility for those merchants that don’t take cryptocurrency directly.
For people working abroad, sending money to their families can be quite a hustle, primarily due to the high charges. Due to these charges, many are opting to use cryptocurrencies to help their loved ones. According to recent reports by the World Bank, the global remittances market reached USD 689 billion in 2018 and will grow beyond USD 700 billion by the end of 2019. Using cryptocurrencies for remittance is much cheaper. For instance, sending $200 of remittance form the United States to Ukraine will cost about $9.90. This is quite high compared to the 0.5% 0r 1% charged by cryptocurrency exchanges. By the end of 2019, India led in remittance transactions, which amounted to slightly above the $80 billion.
With more people moving to other countries for better opportunities, the remittance will help grow the cryptocurrency community.
There is more to cryptocurrencies than trade. In the cryptocurrency community, people decide on matters through a system called on-chain voting. It is a very effective process that ensures provable voter turnout. Through this system, different cryptocurrencies have sought support for protocol changes by signing new blocks. Over the blockchain, governance has become sophisticated. There are many benefits of on-chain governance in addition to decentralized decision-making. On-chain governance can also help in binding code changes, reduce malicious hard forks, and transparency.
Presently, there are a few cryptocurrencies whose primary function is governance. These include maker, Ox, dfinity, and decred. Other governance projects include Aragon incorporated governance. It is essential to mention that, to date, there has been minimal use of on-chain governance. However, there is still hope to increase this in the next few years.
5. Lending industry
In decentralized finance (DeFi), lending is one of the most used applications. Decentralized lending was created to help individuals get funding without having to pay substantial interest rates. Many like LendingClub and Robinhood have tried to push financial firms to reduce their fees. However, this did not bear fruit.
Decentralized finance is based mainly on the Ethereum network. Some of the lending solutions include Dhama, Dydx, Maker, Instadapp, and Compound. Despite being a relatively new concept, there are millions of dollars worth of assets locked up in lending protocols. Experts predict more people will join the DeFi, more to use the lending applications, and drive cryptocurrency growth even higher.
6. Data storage
Unlike your traditional data storage, decentralized data storage devices are much more secure. Companies and individuals are now paying data storage companies to have their data stored on the blockchain. Notably, these payments are usually made through cryptocurrencies.
Decentralized storage works by making use of multiple machines that are connected to record transactions on-chain. These data are both encrypted and shredded, making it more secure than centralized servers do where there is a single point of failure.
Another significant difference between the two systems is that decentralized storages cost less compared to popular centralized data cloud storage providers. Demand for storage keeps rise by the day with both new and old organizations seeking to keep their data secure through blockchain. 2020 will see more use of these storage systems while increasing Crypto use in different circles.
Although this might be the least use case to promote the use of cryptocurrencies, it will no doubt influence their growth. Confidentiality is critical in today’s society. From having numerous passwords on our devices to installing home security features, people are in constant such ways to keep their fairs secret. In the cooperate world, companies are fighting to keep their operations private, avoiding data thread and the likes.
Initially, these entities sought the help of banks and other financial institutions; however, after the 2008 financial crisis, people are now more distrustful of banks. They would instead use private cryptocurrencies like Monero, Zcach, Veil, PIVX, and Horizen.