When we look back at the history of currency, we consider money as a major step in human development. In fact, it is arguable that the invention of money was a fundamental stepping stone in humanity’s journey from primitive societies to modern civilization.
The question many ask today is, “What problem does cryptocurrency solve?” While cryptocurrency may have been introduced as a solution for economic problems, its underlying technology has implications far beyond simply a new form of currency.
Table Of Contents
- Top 20 Problems That Cryptocurrency Solves
- 1. Inflation
- 2. Making Cross-Border Payments Affordable
- 3. Democratizing Access To Economic Opportunities
- 4. Enabling Microtransactions
- 5. Serving The Unbanked
- 6. Preventing Identity Theft
- 7. Reducing Fraud And Chargebacks
- 8. Supply Chain Management
- 9. Charity Donations
- 10. Networking And Sharing Economy
- 11. Government Systems
- 12. Healthcare
- 13. Decentralized Storage
- 14. Real Estate
- 15. Voting
- 16. Education
- 17. Energy Management
- 18. Travel And Transportation
- 19. Healthcare
- 20. Foreign Exchange fees
Top 20 Problems That Cryptocurrency Solves
Cryptocurrency is a solution to the problem of inflation. By giving control of money back to the people, cryptocurrency can change our global economy for the better.
Inflation occurs when there is a significant and sustained discrepancy between supply and demand in a market. One of the most common causes of inflation is when governments print more money, which devalues the currency and decreases individuals’ purchasing power. This is called inflation by fiat , because typically, new money enters the market only due to some artificial effort of a governing entity. Central banks can print more money, or governments can require that employers pay their employees “higher” salaries each year.
2. Making Cross-Border Payments Affordable
Cross-border payments are an expensive undertaking. Sending money to another country can be difficult for both consumers and small businesses, especially if the person or company receiving the funds is in a different economic environment. Current payment systems like Western Union (which has been around since 1851) charge high fees for their services, which would be worth it if they provided quality service, but often do not.
Cryptocurrency is a solution to the problem of expensive cross-border payments. Cryptocurrencies like Ripple provide an alternative means for customers to quickly and cheaply send money across borders—for example, if they were sending funds to family members in another country. Existing payment systems like Western Union are slow and expensive, but cryptocurrency allows consumers to transfer money across borders in minutes at a fraction of the cost.
Cryptocurrencies make it possible for immigrants who work outside their home country to send money back to family members or friends living in their country of origin. It seems like a simple solution, but currently, many immigrants must resort to using expensive money transfer services like Western Union, which charge high fees. In fact, it is estimated that in 2018, $689 billion USD was sent from immigrant workers living abroad to their families back home. Bitcoin has been a particularly effective tool for immigrants because Bitcoin’s transaction costs are much lower than other traditional payment methods.
3. Democratizing Access To Economic Opportunities
Cryptocurrency allows for a great number of economic opportunities to be available on a more equitable playing field , as cryptocurrency can level the playing field by reducing transaction costs and barriers to entry. For example, crowdfunding was made possible by Bitcoin, which allowed anyone to participate regardless of their location.
As Cryptocurrencies becomes mainstream, it is likely that more economic opportunities will become available to people in areas or situations where they otherwise would not have access. For example, crowdfunding campaigns are currently only available to wealthy investors who can afford to buy equity stakes in companies looking for funding. But cryptocurrency could change this. By using cryptocurrency, investors anywhere in the world can participate in crowdfunding campaigns.
This is an area where blockchain technology can really help democratize access to opportunities for people who may not have access to traditional financial services. For example, there are projects like BitPesa that focus on providing blockchain-based financial services in Africa; and there is even a project called Bancor looking to use blockchain technology to help fight poverty in Kenya by providing small-scale entrepreneurs with access to the liquidity they need to grow their businesses.
4. Enabling Microtransactions
Another benefit of cryptocurrency is that transactions fees tend to be extremely low compared with those charged by traditional payment systems, such as PayPal and Stripe. This low cost is a result of the fact that cryptocurrency transactions don’t require a third party to facilitate verification, which allows cryptocurrency users to avoid transaction fees that would otherwise be charged by this third party.
This benefit has been one of the main reasons many people have started using Bitcoin for microtransactions, such as when they want to tip other internet users for valuable contributions online. In contrast, when a person makes a credit card transaction, the merchant must pay fees that typically cost 2-3% of the total transaction. On top of that, the consumer has to pay a processing fee on their end as well!
In general, cryptocurrencies have great potential in helping businesses develop new and improved business models. For example, there is a project called Streamium that enables people to make money by streaming videos online—essentially allowing anyone to become a broadcaster on the internet with an audience of potentially unlimited size.
5. Serving The Unbanked
Many people around the world live in places where they lack access to banking services or financial infrastructure. These people are referred to as the “unbanked”. According to recent study, in 2016 there were about 2 billion unbanked people in the world.
Cryptocurrencies can offer these people an alternative way of managing their finances, since the blockchain allows them to access banking services without having to go through traditional financial institutions.
6. Preventing Identity Theft
One major benefit that cryptocurrencies offer is increased security and privacy. Since blockchain transactions are decentralized and distributed across thousands of computers, it is virtually impossible for anyone to hack the system and make unauthorized changes to a transaction.
Since cryptocurrency transactions are anonymous, they offer enhanced security because every transaction doesn’t include personal information that could be compromised in a security breach or stolen by hackers.
Furthermore, since all cryptocurrency transactions are saved in a digital ledger and cannot be changed, people who use cryptocurrencies can rest assured that their financial records will not be tampered with.
7. Reducing Fraud And Chargebacks
Another major benefit that cryptocurrencies offer businesses is increased security and privacy since all blockchain transactions are decentralized and distributed across thousands of computers. Since cryptocurrency transactions are anonymous, they offer enhanced security because every transaction doesn’t include personal information that could be compromised in a security breach or stolen by hackers.
Furthermore, since cryptocurrency transactions can’t be changed and all transactions are saved on a digital ledger, businesses and organizations that use cryptocurrencies can rest assured that their financial records will not be tampered with.
For example, every time you make a credit card transaction, you have to provide your billing information such as your name, credit card number, and address. If a bad actor is able to acquire this information they can use it to make fake transactions with your payment card.
In addition to the increased risk of fraud that comes with credit cards, whenever you make a purchase using a credit card there is always a window of time where the transaction can be reversed. For example, when you make an online purchase using your credit card it can take up to two weeks for the transaction to be finalized in some cases.
However, with cryptocurrency transactions there is no need for a third party because cryptocurrencies are purely based on public key cryptography. As a result of this, when someone makes a cryptocurrency payment they can be confident that it won’t be reversed. Using cryptocurrencies instead of credit cards is the fact they eliminate the possibility of identity theft. This is because blockchain transactions do not require any personal information such as your name, billing address, and card number.
8. Supply Chain Management
Blockchain technology can provide supply chain solutions for enterprises by creating an easy way to track goods and transactions throughout the entire supply chain. Every party in the supply chain, from manufacturer to shipper to customs agents, has access to information about their part of the transaction.
9. Charity Donations
Every year in the United States, donors give billions of dollars to charitable causes. However, studies have found that up to one-third of these charitable contributions are either mishandled or not used for their intended purpose. Cryptocurrencies would provide a solution because they enable donors to track exactly how their money is being used.
10. Networking And Sharing Economy
As we move toward a more interconnected global economy, blockchain technology has the potential to provide a decentralized system for verifying identity, reputation, and transactions. For example, Airbnb hosts are always at risk of damage or theft due to short-term tenants who sublet their homes without permission. Blockchain technology could be used to create a verification platform that provides increased trust between hosts and guests by allowing users to cryptographically sign digital contracts.
11. Government Systems
Blockchain technologies could also be used by governments to improve and streamline the process of voting and issuing and tracking identities and personal documents such as licenses, medical records, and birth certificates.
Blockchain technology has the potential to provide increased security for keeping electronic health records in healthcare systems where medical professionals in different locations can quickly access important patient information.
13. Decentralized Storage
The blockchain can be used to decentralize file storage. Although this technology is still in its early stages, it could potentially disrupt the cloud storage industry by eliminating third parties that are currently responsible for storing data on servers.
Currently, storing data in cloud storage is easy and convenient; however this comes at the cost of your privacy once you put that out on the internet for public access. Similar to how blockchain-based cryptocurrencies eliminate the need for a trusted third party, decentralized cloud storage solutions can be created using blockchain technology.
14. Real Estate
Blockchain technology provides safe and efficient solutions for this type of problem because it provides instant verification of possession rights that cannot be tampered with. In the next few years, it is likely that real estate transactions will be conducted using blockchain technology as a result of its ability to securely transfer documentation from one owner to another.
Blockchain technology could allow governments to provide voting systems that are more open, secure, transparent, and verifiable. Instead of manually logging votes using paper ballots or electronic voting machines that are prone to human error, blockchain-powered solutions can be implemented to ensure vote integrity.
Blockchain technology can also have an impact on our education system by creating decentralized repositories for students’ educational records that cannot be hacked or altered. This type of database would store both academic records and school-related information that can be verified by colleges, employers, and other educational institutions.
17. Energy Management
Blockchain technology has the potential to increase energy distribution efficiencies and improve supply chain management in a massive way. Currently, a centralized system manages the energy distribution process; however with blockchain technology this process could be made more transparent and efficient by tracking energy production, monitoring renewable energy credits, and enforcing smart contracts.
18. Travel And Transportation
Blockchain technology can help streamline the travel industry by providing real-time information for travelers about flight times, delays, and cancellations. This saves travelers from being stuck at airports or bus stations because it will not allow them to miss scheduled departures.
Blockchain technology can also provide increased transparency and security for health information through medical records. Instead of having incomplete health records scattered throughout different providers, blockchain solutions allow all parties to securely upload their data into a new system that can be accessed by approved caregivers.
20. Foreign Exchange fees
Blockchain technology can also help companies reduce foreign exchange fees. Instead of paying extensive processing fees to third party money exchanges, blockchain technology lets users convert their fiat currency into a desired cryptocurrency and then freely move that money across the world without having to worry about conversion rates or hidden costs.
Now that you have come across the Top 20 uses of cryptocurrency, I hope this article shed some light on how cryptocurrencies can be used to solve various types of problems. Although it is still early in the life-cycle of blockchain technology, there are already many practical use cases that are being implemented into our day-to-day lives. The future looks bright for cryptocurrencies, and it will be interesting to see how blockchain technology continues to improve our society.
Although there are many different ways that blockchain technology can be used to improve our lives, it is still in its early stages. As more people learn about the potential for this groundbreaking new technology, it will likely gain widespread use and implementation across various industries.
Blockchain technology is disrupting industries across the world by providing innovative solutions to problems that have long existed. This type of innovation could potentially lead to greater efficiency, productivity, and transparency throughout many aspects of our society.
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