Applications of cryptocurrency

 

Cryptocurrency like any other media of currencies can be used for various purposes. One of them can be considered as payment medium. It can be for minting rewards, purchasing things, wallets, illegal transactions like ransom and money laundering. These usages are explained as –

1] Purchasing articles/things

               Initial and foremost documented official purchase with Bitcoin can be traced back to Laszlo Hanyecz in 2010 when he bought two pizzas for 10,000 BTC or bitcoins (Just convert it into today’s rates; you would be mindblown). Currently, various users use cryptocurrencies like bitcoin to make various purchases in online shopping portals or offline stores like multimedia stations, electronics and garments. One more purchase takes place with the help of such currencies which offer a great deal of anonymity to its user – buying drugs. On darkweb, various sites are reported to be involved with such notorious transactions.

2] Rewards

               Minting or mining can be defined as the process of coin generation which involves proof-of-work (POW) system using blockchains. Generally, these systems require solving or interacting with computationally heavy set of problems which takes large amount of physical and virtual memory resources. It works like the person/ party/ group of coders who successfully solves the problem in less time gets a certain prefixed amount of cryptocoins as a payment as they have exhausted their valuable resources for solving it. Such processes take place by an individual or a group of enthusiasts who knows enough coding to solve problems of great complexities. One can also win coins by providing their computational resources to another coder participating in solving the problem and sharing the coins afterwards.

3] E-wallet/ purse

               Online wallets or purse can be considered similar to banks which provide various services to their subscribers or users. Its working includes by depositing client’s monetary funds in form of cryptocurrencies to the wallet services’ unique and distinct blockchain address. One can make payments by using their e-wallets directly without contacting a whole structure like banks. Subscribers have to use their unique pair of username and password to use their e-wallets without the issue of handling any physical key pairs.

4] Token

               Cryptocurrencies can be used as tokens replacing physical chips in casinos and game arcades in entertainment games like dice and roulettes which are loved and played by millions of players daily in the world. Such currencies have one feature called smart contract which enables improved flexibility to the design of a game. Various games like Cryptokittens allow its subscribers to use chips with random properties, categorizes them for sale, and buy or rent such chips from other subscribers. Often such gambling games hold the major share of blockchain application.

5] Market

               Various industries can generate their individual cryptocurrencies which are used to represent the equities of their products. These companies would sell their own cryptocurrencies in exchange of fiat money or other value-bearing products via crowdfunding activities. Investors buying their cryptocurrencies, showing their interest in them would sell it in exchanges for a better profit. Startup owners can take help of a practice called airdropping using cryptocurrencies which is to send tokens to known investors to market their products and to gain its awareness in general consensus. Bitcoin has entered the world of public trading exchanges in 2010 and became famous since then. Now, its popularity has reached to highest in recent years. People can use such cryptocurrencies either with the help of fiat money or for fiat money on such platforms. Exchanges can make users’ orders by allowing them to list their orders on platforms like mobile applications.

6] Notorious methods

               Cryptocurrencies can also be used in Ponzi schemes and pyramid selling schemes. A Ponzi scheme uses the greed of investors to award early investors an unreasonably high profit. And it provides such yields initially but when it gains enough investments, the organizers stop it and remove all investments and hide them resulting in most profitable frauds. Such schemes also use the method of pyramid selling which can be explained as asking investors to sell their cryptocurrencies to their friends, families or known investors for profit or monetary gains. Untracked channel of cryptocurrencies provides an ideal medium to criminals for whitewashing their black money. They can hide the origin of their funds by investing them in the form of cryptocurrencies and later selling them to complete the process of whitewashing. But this method may have some shortcomings as internet pathways can be traced to expose their illegal transaction.

Although cryptocurrencies are in their budding stage and many consider them as a bubble which is going to burst in upcoming years, we can hope for better security and good future for cryptocurrencies.