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Blog 06, Apr

Uses of Cryptocurrency

What are the Use of Cryptocurrency?

It is worth wondering if the popularity that cryptocurrency has garnered over the years is hollow or not. However, even though it is still nowhere near to replacing institutionalized cash, cryptocurrency, especially Bitcoin, has found wide acceptance across the world. 

  • As a mode of payment

Initially, Bitcoin had little value as a mode of payment to merchants. However, with time, several merchants worldwide like restaurants, flights, jewel vendors, and apps have come to accept it as a viable payment medium. 

One of the most notable uses of cryptocurrency as a viable medium of payment is Apple Inc. It allows 10 types of cryptocurrencies for carrying out transactions in the App Store. 

However, India, as an economy is still to explore cryptocurrency as a viable payment mode extensively. Nevertheless, with big companies like Apple and Facebook hoisting its cause, it is expected that cryptocurrency will gain traction in India soon. 

  • Investment

Cryptocurrencies, especially Bitcoin, is one of the most lucrative investment options currently present. Its value appreciation is supremely dynamic and can prove to be an excellent avenue for capital expansion. 

However, individuals must also note the volatility of this investment avenue. Bitcoin, the most popular cryptocurrency with the largest market share, has experienced some of the most erratic price changes as an asset. For instance, in December 2017, Bitcoin’s value plunged from $19000 per BTC to $7000 per BTC. 

Since cryptocurrency is not rooted in any material change but a change in popularity and fad, such price fluctuation is natural.

What are the Different Types of Cryptocurrencies?

When it comes to the variants of cryptocurrencies, most are forks of Bitcoin, while others were built from scratch. However, there are only 3 broad types of cryptocurrencies currently in existence. These are – 

  • Bitcoin

It is the first cryptocurrency that was ever introduced and is considered the Digital Gold. It currently holds a market capitalization of $172.76 billion, the largest of any other variant of cryptocurrency. A unit of Bitcoin can be broken down into Satoshis, which is equivalent to the relationship of rupees and paise. 

Furthermore, the Bitcoin network is so designed that it can only have 21 million units of Bitcoin circulation at any point in time. This limited availability is a primary component that drives its market price. Currently, the market supply of Bitcoin is 18.39 million. 

  • Altcoins

This category primarily involves forks and alternate versions of Bitcoin, thus, the name. However, some Altcoins are exponentially different from Bitcoin and use varying algorithms. For instance, Ethereum, which is an altcoin, is not a currency but a platform where entities can make their apps based on blockchain.

Currently, there are more than a thousand altcoins. Some of the notable altcoins are Ethereum, Factom, Litecoin, NEO, etc. 

  • Tokens

These are products of altcoins like Ethereum and NEO. These cryptocurrencies do not have a separate blockchain but instead run on the decentralized apps created via such altcoins. However, tokens carry supremely low value compared to the other two types mentioned above, because it can only be used to purchase items from such decentralized apps or dApps.