How to Actually Use Cryptocurrencies - A Beginner’s Guideguides
In the 20th century, when you thought of money you mostly thought in terms of coins, bills, and credit cards. In the 21st century, it's more of the same, but with an interesting caveat; coins no longer just mean physical money. There are things called cryptocurrencies now — usually referred to as digital coins — and they are taking the financial world by storm.
But how usable are these coins? We know that paper bills and credit cards have real and practical uses. We know that they are legal tender, and they are indispensable in real life. What about cryptocurrencies? We know that they are truly international and aren't controlled by any state. We know that they are regulated by the people and not a central bank. But can they be used in the same way that credit cards, bills, and regular physical coins are used? And if not, what use, exactly, are they?
The answer to this question is yes. Cryptocurrencies aren't just a neat computer trick (like some financial analysts called them when the white paper for the first Cryptocurrency was released). They have real-world uses. However, these uses are cryptocurrency-specific. Some cryptocurrencies were created to solve a particular problem, while others, like Bitcoin, were not necessarily created for everyday use, but were made to store value. Either way, many big companies are beginning to accept cryptocurrencies of all styles to capitalize on the new wave of financial technology.
Here are some of the coins with more practical day-to-day uses.
Ripple (XRP) for Fast Cash-Like Transfers
Most cryptocurrencies avoid banks like the plague, but not Ripple. It could be said that the currency was made for banks. If banks were to embrace ripple, it would allow them to move huge amounts of money around the world in a split second. While traditional banking options require banks to go through several intermediaries when sending money, Ripple’s allows them to do it directly and faster.
So if a customer in London, for example, wanted to pay someone in Sydney some money, the Ripple network would inquire about the transaction fees of both banks and then make the transaction within minutes— that's faster than anything any bank can do right now.
Dash (DASH) for Shopping & Everyday Transactions
Dash was created as a replacement for PayPal, as it was created for people to shop with cryptocurrencies easier. It's also a lot faster than bitcoin, which means that you don't have to wait for hours before the transaction is approved. Dash can be bought with fiat currency like all other cryptocurrencies and can be kept in a wallet until you want to use it.
Monero (XMR) for When Privacy Matters
When people talk about bitcoin being safe and secure, they never talk about the elephant in the room; Bitcoin is not anonymous. Everything about Bitcoin— every transaction, and every single coin, is available for everyone to browse through on the blockchain. This makes the coin non-fungible.
This is exactly what Monero was created to solve in 2014. The coin is practically untraceable. While the technology isn't perfect yet, Monero has implemented several stealth features on its network that makes it near impossible to track. Of course, many think that coins like Monero are only for criminals, but the coin can also be useful to regular people who want to keep their finances a secret.
Bitcoin (BTC) for a Gold-Like Investment
Bitcoin is the biggest cryptocurrency by market cap and was created to solve the problem of inflation. The main purpose of Bitcoin is to create a currency that could be a hedge against inflation, and could still avoid the issues of centralized banking by being decentralized. And over the last few years, Bitcoin has proven that it can be a great store of value, as the network has gained the confidence of more investors. Despite not having an everyday transaction use because of its very high transaction fees and slow transaction speed, Bitcoin is paving the way for almost every other cryptocurrency as a proof of concept that cryptocurrencies can be a viable transfer vehicle for peer-to-peer transactions as well as a valuable investment asset.
Ethereum (ETH) for Applications & Contracts
Ethereum is the second biggest cryptocurrency after Bitcoin and is the leader of the altcoin world (this is the name given to a range of cryptocurrencies that aren't bitcoin - “alternate coins”). Unlike other cryptocurrencies that try to compete with Bitcoin, Ethereum complements it.
Ethereum is an open-source platform that uses blockchain technology just like Bitcoin, however, the purpose is more towards creating and running decentralized digital applications, or "dapps". Its function is to allow two parties to make agreements and transactions without using a middle-man or escrow service.
How to Obtain Altcoins
If you’re already well-versed with how to buy Bitcoin, you might still be wondering how to obtain some of these alternative cryptocurrencies that have practical use-cases. There are many coins that can be purchased directly with fiat currency from cryptocurrency kiosks, while others may require you to exchange them with another cryptocurrency.
If you’re brand new to cryptocurrencies, the easiest route is usually to start with Bitcoin and Ethereum, as almost every other cryptocurrency can be purchased or exchanged with these two cryptocurrencies. From there, the world is your oyster as there are over 4,000 cryptocurrencies as of 2021, each with different use-cases and market appeals.
May 12, 2021