Benefits of Cryptocurrency: Is Crypto the Future of Finance?

In recent years, cryptocurrency has become increasingly popular, attracting attention from investors, tech experts, and enthusiasts. This surge in popularity may be driven by the various benefits of cryptocurrency, from decentralized networks to improved security.

Also, it’s important to note that the benefits are not static; instead, they’re evolving to new features and functionalities, expanding the potential of digital assets and Web3 in general even further.

In this article, we’ll discuss multiple benefits of cryptocurrency, ranging from financial inclusion to technological innovations in different industries. By the end, you can immediately start trading on reliable platforms like Binance and Bybit if you want to reap the benefits.

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Reasons Why Crypto Is Revolutionizing Investments

There are many reasons why the benefits of cryptocurrency have made it an attractive investment opportunity. Let’s explore how it can provide accessibility, diversification benefits, and many more advantages that traditional assets may not offer.

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Decentralization

In traditional financial systems, governments, financial institutions, or regulatory teams handle transactions. They often impose restrictions or censor certain activities. This centralized control can limit individual liberties, including how they use or manage their money.

Well, the benefits of crypto come into play with a decentralized network structure, where many computers (referred to as nodes) work together to check and record transactions. 

This structure is a fundamental aspect of blockchain technology – the underlying technology for many cryptocurrencies.

Decentralization ensures that no single entity has the power to control transactions, making cryptocurrencies immune to censorship. As a result, individuals can engage in transactions freely without fear of interference or suppression from governments and financial institutions.

The protection isn’t limited to just financial transactions. People can also experience the advantages of cryptocurrency beyond monetary transactions because it can safeguard people’s ability to freely express their ideas within the community without fear of censorship or control.

If you look at cryptocurrency history, this democratic value is evident through blockchain forks.

A blockchain fork occurs when a crypto's existing protocol diverges into two separate paths, often reflecting a lack of consensus within the community.

Therefore, during this event, network participants – including miners, developers, users, and node operators – discuss, debate, and vote to express their ideas and preferences for proposed blockchain protocol changes.

A significant blockchain fork in crypto history was the Bitcoin Hard Fork, where the blockchain split into two – Bitcoin became Bitcoin and Bitcoin Cash.

Inflation Protection

Among the pros of cryptocurrency, its potential to safeguard against inflation is maybe the most tempting.

Many argue that cryptocurrencies can serve as a store of value similar to gold, particularly those with established track records like Bitcoin.

With a fixed supply like gold and a decentralized nature, some cryptocurrencies like Bitcoin are durable, divisible, and fungible, potentially making them reliable stores of value. People can also get the added benefit of crypto for being easily transferable over digital networks.

As a result, investors might leverage these advantages of cryptocurrency to protect themselves from losing money when the economy is unstable.

This perception can contribute to Bitcoin’s price increase during economic uncertainty or when inflation expectations rise.

For example, Bitcoin’s value increased during the pandemic. That was when concerns about inflation and currency devaluation began to appear as central banks worldwide implemented expansive monetary policies to mitigate the economic impacts of the crisis.

In response, investors turned to alternative assets like Bitcoin to protect their wealth from inflation.

However, it’s important to note that Bitcoin’s price is very volatile, and its value can fluctuate wildly in short periods. While some investors see this volatility as an opportunity to potentially reap the benefits of crypto, it also introduces risks, including the risk of loss due to price fluctuations.

Investment Opportunities

Cryptocurrencies are known for their high volatility, with values often experiencing rapid and unpredictable fluctuations over short periods.

While this volatility offers opportunities for significant returns, it also boosts the risk of substantial losses. 

In fact, almost 40% of crypto investors lost more money than they made. Once, a person was interviewed and said he lost over $200,000 in Bitcoin. These losses might happen due to several reasons, such as the crypto’s volatility, people’s lack of understanding, and scams or fraud. 

Despite their volatility, cryptocurrencies have shown the potential for remarkable returns over relatively short periods, even far surpassing those of traditional assets like stocks or bonds. This potential for high returns attracts investors to utilize the profitable benefits of cryptocurrency.

One of the success stories comes from Erik Finman, an American boy who grew up in Idaho. In 2011, at 12, Erik received a $1,000 gift from his grandmother and decided to invest in Bitcoin.

As Bitcoin’s value surged over the following years, Erik’s initial investment grew exponentially. By the time he turned 18, the value of his Bitcoin holdings had increased, making him the youngest Bitcoin millionaire.

Other people who found the potential and maximized the advantages of cryptocurrency is the Winklevoss twins, Tyler and Cameron. They invested part of their settlement from a legal dispute with Facebook into Bitcoin in 2012. In 2013, the brothers announced they had around $11 million in Bitcoin through Winklevoss Capital.

Accessibility

Traditional financial systems often have barriers based on nationality or credit history, making it difficult for some individuals to access banking services or make international transactions.

Thankfully, one of the advantages of cryptocurrency is its inclusive nature – it’s designed to be accessible to anyone with an internet connection, regardless of nationality, income level, or credit history.

Cryptocurrency reduces barriers to entry for individuals with limited financial resources. Many crypto wallet applications are available for free or at minimal cost. Although most exchanges may have a minimum trade amount – meaning you have to make certain deposits before trading –, the range is usually only $1 to $10.

There’s also no minimum age to use cryptocurrency, although many regulated crypto exchanges require users who register to be at least 18 years old. 

Also, one of the pros of cryptocurrency is its lack of dependency on traditional physical infrastructure like bank branches. You can make peer-to-peer transactions directly between users on a decentralized network. Such transactions are typically processed quickly and efficiently, often within minutes, regardless of geographic location.

As cryptocurrencies rely on digital platforms, they’re mostly accessible via many devices, whether using a high-end laptop or a budget smartphone.

Still related to accessibility, one of the benefits of crypto is its continuous operation. The markets are active 24/7, unlike traditional banking systems that are generally restricted to specific business hours and may have limitations on weekends and holidays.

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Cost-Effective Transactions

You probably wonder, “What are some benefits of using cryptocurrency as a method of payment?”. One answer is that it often incurs lower fees than traditional banking systems.

Here’s why crypto manages to provide lower fees:

• Reduced intermediary costs. Cryptocurrency transactions operate on decentralized networks, so you’re less likely to face multiple intermediaries you often find on traditional banking systems, such as bank fees, payment processors, and clearinghouses, whether for local or international transactions.
• There are no unexpected wallet fees. Generally, users have direct control over their digital assets on crypto wallets without worrying about unexpected charges or penalties, such as overdrafts and account maintenance fees.
• Transparent exchange fee structure. Crypto exchange fees are typically determined by network congestion and transaction size. This transparency allows users to make informed transaction decisions and minimize costs accordingly.

Cryptocurrencies also allow users to transfer funds globally with minimal transaction fees, unlike traditional financial systems, which may charge significant fees for international money transfers.

In some cases, transactions can be conducted with zero fees, particularly during periods of low network congestion.

These efficient fund transfers make cryptocurrencies attractive for individuals and businesses looking for low-cost cross-border transactions. 

Security and Transparency

Security and transparency can be why crypto attracts many people’s attention.

The foundation of most cryptocurrencies is blockchain technology, which maintains a public ledger of all transactions. While this ledger is accessible to anyone, it typically doesn’t reveal the parties’ identities to protect their privacy.

Instead, transactions are pseudonymous, identified by unique alphanumeric addresses. Yes, transactions recorded on the blockchain can be traced back to specific addresses, but users’ identities behind these addresses are not inherently linked to their transactions.

Some cryptocurrencies, known as privacy coins, are even specifically designed to enhance anonymity. These coins use advanced cryptographic techniques, such as zero-knowledge proofs, ring signatures, and stealth addresses, to protect transactional information and user privacy.

Examples of privacy coins include:

• Monero (XMR)
• Zcash (ZEC)
• Dash (DASH)

These privacy coins are the most popular options known for their strong privacy features. They mostly use advanced cryptographic techniques, such as ring signatures and zero-knowledge proofs. 

Benefits of Cryptocurrency for Different Industries

The benefits of cryptocurrency extend beyond individual investors. From supply chain management to healthcare, these digital assets and their underlying technologies have introduced innovative solutions that enhance efficiency, transparency, and security across diverse sectors.

Finance and Banking

Finance and banking institutions leverage the benefits of cryptocurrency and its underlying technologies in various ways to improve their services and enhance efficiency^[1]

An example comes from Fidelity Investments, one of the largest asset management firms worldwide. The company has been actively involved in cryptocurrency through its subsidiary, Fidelity Digital Assets. It offers custody and trading services for institutional investors interested in Bitcoin and other cryptocurrencies.

Some also create their digital currency, such as JP Morgan Chase. While initially skeptical, this company has finally embraced the pros of cryptocurrency and blockchain technology by launching its token, called JPM Coin, designed to facilitate instantaneous payments between institutional clients.

Another financial institution that makes use of the benefits of cryptocurrency is Ripple. Founded in 2012, this technology company aims to transform how international payments are made using blockchain and crypto solutions.

At the core of Ripple’s offerings is RippleNet, a decentralized network of banks, payment providers, and financial institutions that facilitate cross-border payments and provide participants with access to various payment solutions, including:

• xCurrent. It’s Ripple’s enterprise software solution that enables banks to settle cross-border payments in real-time with end-to-end tracking.
• XRP. It’s Ripple’s native digital asset, which serves as a bridge currency in Ripple’s payment solutions.
• On-Demand Liquidity (previously known as xRapid). This is Ripple’s liquidity solution that uses XRP. It enables payment providers to source liquidity on-demand, reducing the need for pre-funded nostro accounts and lowering liquidity costs associated with international payments.

Ripple emphasizes the advantages of crypto: currency exchanges in its payment solutions have become more streamlined, and international payments are more cost-effective.

eCommerce

Crypto is used within eCommerce in many ways, especially as a payment method. With this in mind, you may wonder, “What are some benefits of using cryptocurrency as a method of payment?”. In short, it enhances both the customer experience and the efficiency of online transactions.

One of the most apparent benefits of cryptocurrency as a payment method is global reach. Crypto enables eCommerce businesses to reach customers worldwide without being limited by conventional banking systems or currency exchange barriers. 

With cryptocurrencies, businesses can accept payments from global customers, facilitating cross-border transactions without costly currency conversions or international transaction fees.

This global reach will help expand market opportunities and open new revenue streams for eCommerce merchants.

To further understand the benefits of cryptocurrency for eCommerce, it’s important to note that cryptocurrency transactions also provide enhanced privacy compared to traditional payment methods such as credit cards or bank transfers, as the transactions are pseudonymous.

This privacy protection can help mitigate concerns about data breaches, unauthorized access, and identity theft of financial information in eCommerce transactions.

Moreover, with its irreversible characteristic, crypto helps eCommerce merchants mitigate fraud and payment disputes due to chargebacks. These happen when a customer requests a refund from their payment provider, resulting in additional costs and administrative burdens for merchants.

Crypto will help reduce chargebacks, as the buyer can’t reverse or dispute the payment once it’s confirmed on the blockchain.

Lastly, cryptocurrency transactions are also faster than conventional banking systems, which usually take several days to complete. In crypto, thanks to the blockchain network, they often happen within minutes.

This faster settlement speed enables eCommerce merchants to receive payments more quickly. It reduces the time required for order fulfillment and delivery, improving cash flow management and allowing them to reinvest revenues more effectively.

Supply Chain Management

In the previous section, I discussed the question, “What are some advantages of using cryptocurrency for payments?”. Now, let’s discuss its benefits in supply chain (SC) management!

The underlying technologies of digital assets, like blockchain and smart contacts, help track the movement of goods in SC from their origin to the end consumer. Here’s how:

• Permanent record-keeping. With blockchain technology, SC teams can create a tamper-proof record of product movements throughout the supply chain. It means that the record cannot be altered or manipulated, assuring stakeholders about the products’ authenticity, quality, and compliance.
• Enhanced traceability. Blockchain technology allows stakeholders to track the journey of products at every stage of the SC since each transaction is time-stamped and linked to the previous one. This level of traceability helps identify issues, such as product recalls and counterfeit goods.
• Improved compliance and accountability. Cryptocurrency-based SC solutions can use smart contracts, which are self-executing contracts with predefined conditions. Smart contracts can automatically verify the product authenticity, helping reduce administrative overhead.
• Reduction of fraud. The immutability of blockchain technology makes it more challenging to counterfeit products because cryptocurrency helps verify product information, such as origin, ownership, transfer of ownership details, and prevent fraud.

Thus, the transparency and automation from blockchain deployment in SC will not only increase efficiency and streamline the business operations, but also build trust among all the stakeholders^[2]. These ultimately help consumers get more confidence in the product quality, boosting the brand reputation and customer loyalty.

An example of companies harnessing the pros of cryptocurrency in SC is IBM. Through its blockchain-based platform, Food Trust, IBM enables food suppliers, retailers, and consumers to trace the journey of food products by recording data such as origin, processing, and shipping information on the blockchain.

With blockchain technology, IBM Food Trust improves transparency and traceability, helping stakeholders identify and solve food safety issues more efficiently.

Healthcare

Cryptocurrency and blockchain technology offer several benefits for the health industry, including enhanced data security and streamlined administrative processes. These advancements emphasize the significant benefits of cryptocurrency in improving efficiency and patient care within the healthcare sector.

Here’s how the health industry leverages crypto in detail:

• Secure medical records. Blockchain technology can help create secure and tamper-proof medical records, ensuring the confidentiality of patients’ health information. Medical records on a blockchain will be encrypted and securely accessed by authorized parties only, such as healthcare providers and patients.
• Facilitate seamless data exchange. Cryptocurrency and blockchain technology can offer seamless health data exchange, such as medical records, lab results, and treatment histories, in real-time, regardless of geographical location or healthcare system.
• Track medical supplies. The health industry can use blockchain technology to track the movement of medical supplies and devices. Stakeholders will be able to trace the products from manufacturing facilities to end-users, improving patient safety by ensuring the quality and compliance of medical supplies.

Medibloc is a real-life example of a brand that maximizes the benefits of cryptocurrency.

This blockchain-based platform enables patients to securely store and manage their medical records while retaining full control over their data. Patients can grant access to healthcare providers or insurers to improve care coordination.

Real Estate

Real estate is no exception to the influence of crypto.

This industry reaps the benefits of cryptocurrency by allowing investors from anywhere in the world to participate in real estate markets without the barriers of geographic location, currency exchange, or regulatory restrictions.

Through tokenization, real estate business can represent their assets as digital tokens on a blockchain.

This method allows investors to buy, sell, or trade properties, opening up opportunities for global access to previously inaccessible markets and allowing investors to explore real estate assets around the world.

Cryptocurrencies also take part in the use of blockchain in real estate for fractional ownership, allowing multiple investors to collectively own a portion of a property.

Fractional ownership makes real estate investment more accessible to a broader range of investors, including those with limited capital. They can invest in smaller increments rather than purchasing the entire properties outright, providing flexibility in diversifying their investment portfolios.

For example, RealT offers a trustworthy place for fractional ownership. This blockchain-powered platform lets global investors become the “landlord” of US properties.

The investors purchase digital tokens representing ownership stakes in rental properties located in different cities across the United States. These tokens are backed by real-world assets, providing investors a secure and transparent way to invest in real estate.

Aside from fractional ownership, crypto also helps reduce transaction costs.

Traditional real estate transactions often incur high fees for agent commissions and legal or administrative expenses. Meanwhile, using crypto in real estate will typically involve lower costs, as it reduces the need for intermediaries and paperwork.

Moreover, smart contracts can help automate various areas of real estate transactions, like property transfers, title deeds, and escrow payments, further reducing costs and streamlining the process.

With blockchain technology that provides a verifiable and auditable trail of ownership and transfer of real estate assets, you can also expect a more transparent transaction.

This transparency reduces the risk of fraud, forgery, and disputes, as all stakeholders have access to accurate and up-to-date information about the status and history of properties.

Gaming and Entertainment

Cryptocurrency can potentially revolutionize the gaming and entertainment industry by offering new monetization methods for content creators and developers.

One of the crypto-based items in this industry is digital collectibles, such as non-fungible tokens (NFTs). These unique digital assets represent ownership of a specific item or content, including digital artwork, music, videos, virtual real estate, and in-game items.

Cryptocurrency serves as the medium of exchange for NFT transactions. Users can sell, buy, and trade NFTs using cryptocurrency, with popular choices including Ethereum (the most common blockchain for NFTs) and other blockchain networks like BNB Smart Chain, Flow, and Tezos.

By tokenizing digital collectibles on a blockchain, creators and developers can make a new revenue stream. They can authenticate and sell rare or limited-edition items to collectors, fans, and players.

Besides digital collectibles, cryptocurrency can power in-game economies by serving as a digital currency that players can earn, spend, and trade within virtual worlds.

But, what are some benefits of using cryptocurrency as a method of payment in gaming? It enables faster transactions, lower fees, and increased security, enhancing the overall gaming experience.

Moreover, in traditional gaming, game developers often produce and control in-game currencies, limiting players’ ability to freely trade or transfer virtual assets. With crypto, game developers can create decentralized in-game economies where players own and control their digital assets, such as virtual currency, items, and land.

Axie Infinity best represents the benefits of crypto in gaming. This blockchain-based game combines elements of digital pet collecting, battling, and breeding.

Players collect and breed fantasy creatures called Axies, represented as NFTs on the Ethereum blockchain. They can battle their Axies against others to earn in-game rewards and tokens they can trade or sell on decentralized exchanges.

Crypto also offers innovative monetization methods for content creators, such as streamers, artists, musicians, and writers. These creators can monetize their work without relying on traditional intermediaries or advertising revenue. Some strategies include:

• Selling digital artwork as NFTs.
• Offering exclusive access to premium content through subscription models.
• Receiving tips or donations from fans in cryptocurrency.

One Republic is the first major US artist to accept cryptocurrency payment for a live gig. In 2021, the band accepted Bitcoin in full payment for its acoustic performance at a historic theater, and the tickets were sold in minutes, showing that music and technology can go hand in hand smoothly.

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Legal and Intellectual Property

Another sector that leverages the benefits of cryptocurrency is legal and intellectual property (IP), mainly through the implementation of smart contracts.

Many lawyers spend up to 48% of their time on administrative tasks, such as updating client trust ledgers and transferring information between software.

With smart contracts, lawyers can automate contract management, enforcement, and compliance processes, reducing the need for manual paperwork and intermediaries. The technology can also facilitate automatic payments based on predetermined triggers or events, eliminating manual intervention and reducing the risk of errors or delays.

Smart contracts are also helpful in facilitating IP licensing transactions in NFTs.

The journey begins with creating smart contracts that encode the terms and conditions of the IP licensing agreement. These contracts are written in code and deployed on a blockchain platform like Ethereum.

The terms of the licensing agreement, including details such as the scope of use, duration, royalty rates, and payment triggers, are translated into code logic that the smart contract can execute autonomously.

Once the licensing agreement is established, the smart contract enforces the terms and conditions outlined in the agreement. It will automate royalty payments to creators and rights holders based on predefined triggers.

For example, the smart contract may include arrangements for calculating royalties based on usage metrics as the triggers, such as the number of downloads, views, or sales of the licensed IP.

When these predefined triggers occur, the smart contract automatically executes payment transactions, transferring royalties from the licensee to the creators and rights holders in real-time.

The triggers can also include monitoring the licensee’s IP usage, ensuring compliance with usage restrictions and enforcing penalties for violations. 

In this case, the smart contract will automatically detect and enforce any breaches of the terms and conditions, reducing the need for manual intervention and minimizing disputes between parties.

From the cases above, we can conclude that the benefits of cryptocurrency through smart contracts help streamline the licensing process and ensure that creators are fairly compensated for using their intellectual property.

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Conclusions

The benefits of cryptocurrency are numerous and continue to shape the landscape of modern finance. These digital currencies promote inclusion, encourage new ideas and efficiency, and make global trade more accessible and safer.

While challenges such as regulatory uncertainty and market volatility continue to exist, cryptocurrency has the potential to reshape how we use money and do business.

After learning about the various benefits of cryptocurrency, do you want to start investing or trading right away? Ensure you choose a secure wallet like Ledger Nano X or Binance Wallet. A reliable crypto wallet provides a secure place to store digital assets, so you can trade more confidently!

The content published on this website is not aimed to give any kind of financial, investment, trading, or any other form of advice. BitDegree.org does not endorse or suggest you to buy, sell or hold any kind of cryptocurrency. Before making financial investment decisions, do consult your financial advisor.

Scientific References

1. A. Alamsyah, I.F. Muhammad: ‘Unraveling the crypto market: A journey into decentralized finance transaction network’;

2. P. Dutta, T. Choi, S. Surabhi, et al: ‘Blockchain technology in supply chain operations: Applications, challenges and research opportunities’.