Cryptocurrency Usage in the Economy (Essay Sample)

Cryptocurrency Usage in the Economy
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Cryptocurrency Usage in the Economy
Executive Summary
This report explores the numerous uses of cryptocurrency in the economy. Notably, some of the uses of cryptocurrency discussed in the report include gaming, reducing corruption in charitable organizations, and storage of wealth without any issues of freezing your wallet. Additionally, the report puts forward specific recommendations about cryptocurrency. The first recommendation is that people should use cryptocurrency to make payments because it is fast and secure. Also, people should learn more about cryptocurrency to trade effectively.
Introduction
Cryptocurrency is a type of currency that exists virtually and helps secure transactions through cryptography. It is vital to acknowledge that cryptocurrency uses a decentralized system to record transactions and issue new units to customers. Notably, cryptocurrency employs a peer-to-peer system, which makes it easy to send and receive payments. In the past few years, there has been an increase in cryptocurrency usage globally. Some of the examples of cryptocurrency may include Bitcoin, which is the most widely used, Ethereum, and Ripple, mainly used to track different kinds of transactions. This report aims to discuss the uses of cryptocurrency in the world's economies.
Money transfers
A critical examination of cryptocurrency indicates that it is one of the most commonly used means of transferring and receiving payments from different parts of the world at a low cost. The other reason cryptocurrency is used for sending and receiving payments is its excellent speed (Lielacher, 2021). A typical cryptocurrency transaction only takes a few minutes to process instead of other money transfer channels, which may take days to process. Notably, the cryptocurrency payment system is peer-to-peer, and this means that there is no approval required from an external source, hence its swift nature.
Earning interest in Bitcoin and other cryptocurrencies
Accruing interest in cryptocurrency is often a difficult task that requires much experience, time, and skills. Most investors on cryptocurrency opt to hold their coins for long-term gain, which can guarantee a steady interest after a specified duration. The other way to earn interest in cryptocurrency is through crypto staking, which involves committing crypto assets to support a blockchain and confirm transactions (Lielacher, 2021). It is vital to acknowledge that staking helps investors to generate passive income since some cryptocurrencies offer high-interest rates for staking. Additionally, investors can earn interest on cryptocurrency through lending and borrowing. Cryptocurrency lending entails the participation of lenders and borrowers in agreements to loan other investors with coins. Notably, borrowers agree to pay interest to the lenders and pledge their holdings as collateral through cryptocurrency loans.
Also, investors can earn interest on cryptocurrency through traditional buy and hold. Individuals who want to make money from cryptocurrency can use this method only if they are willing to take risks (Lielacher, 2021). Notably, traditional buy and hold entail obtaining crypto assets of your choice from the crypto exchange and purchasing more when the prices fall. Once the prices increase, the investor can sell the crypto assets at a higher price, making a profit.
Figure 1: Image showing crypto staking (Lielacher, 2021)
Alternative store of wealth
Cryptocurrency has helped many individuals to store their wealth without fear of their assets being frozen. Unlike banks that can freeze your assets, cryptocurrency provides only the investor with the keys to access the wallet. Notably, cryptocurrency enables individuals to avoid problems with banks, which are governed by specific laws that have to apply when financial misconduct occurs (Blockchain Council, 2022). The regulations in banks can affect individuals who are not involved in any financial misconduct, thus making it difficult for them to access their finances. With cryptocurrency, there is no single point when one's bitcoin wallet is frozen, and authorities have no jurisdiction over their wealth.
Gaming
There are numerous ways for monetization in online gaming, which may be in the form of in-app purchases and affiliate marketing. It is vital to acknowledge that in-app purchases enable players to make direct purchases in the games. Notably, the players can purchase extra lives and coins and use cryptocurrency for such purchases (Blockchain Council, 2022). Also, cryptocurrency can be used to pay them through in-app advertising in online games, which presents players with an opportunity to accomplish specific tasks. Some of the reasons why the cryptocurrency is used in gaming may include instant transactions as there is no bureaucracy and intermediaries involved, which may slow down the process. Additionally, the use of cryptocurrency enables gamers to play internationally with no exchange rate problems as no identity confirmation is involved (Financial Express, 2021). Remarkably, cryptocurrency is safe and secure, making it suitable for use in gaming. With its secure nature, cryptocurrency prevents hacking and stealing of keys in online games.
Figure 2: Image showing blockchain and cryptocurrency games (Financial Express, 2021)
De-corrupting charities
An examination of cryptocurrency indicates that it helps reduce corruption in charitable organizations. There are numerous ways through which cryptocurrency achieves its purpose of reducing corruption in charitable organizations.