Cryptocurrency or digital currency is a revolutionary fact that has mesmerized people with its success over the last decade. You may use cryptocurrencies for numerous purposes. Besides transferring money, you can use your digital currency to make purchases. Many merchants take advantage of offering a range of payment options for their customers.
Consequently, it has increased the list of products that you can purchase with cryptocurrencies. For example, you can enjoy your pizza from Pizza Hut, Papa John’s, and Domino. People have also purchased air tickets and high-end real estate services via cryptocurrency payments.
Why Do Cryptocurrencies Have Value?
Many people question how digital coins have value, which can also fluctuate like traditional money. Understanding the numerous types of cryptocurrencies available on the market can be a great idea to get the answer. Even though cryptocurrencies are not tangible or have any centralization, they hold value for reasons.
Fiat currency does not have any inherent value in itself. It refers to a means of anything that two parties agree to exchange. Primarily, cryptocurrencies came into existence for storing value and as a means of exchange. Fiat cryptocurrencies do not aim to attempt anything more than creating a better and cheaper form of currency. They are more decentralized and offer easier usage than fiat currencies. Some fiat cryptocurrencies include bitcoin, Litecoin, Bitcoin Cash, Bitcoin Cash, and Monero.
Stablecoins tie to the value of another asset or a group of assets to minimize volatility and maintain the benefits of a digital currency. While fiat cryptocurrencies may have better security, anonymity, and portability than fiat currencies, they tend to be out of use because of extreme fluctuations in their value. Tether is the most notable stablecoin with a tied price to the US dollar. You can use Tether to hold or transact your asset in a digital currency, having its value tied to a stable asset like the American dollar.
A bitcoin network uses some cryptocurrencies known as utility tokens to power its business and other functions. Although utility tokens do not necessarily work as currencies in themselves, they are imperative for preset uses. The predetermined utilization of utility tokens is not only in demand but also holds financial value. Ether is one of the well-known utility tokens, which tends to pay for computational power on the Ethereum blockchain. Others utility tokens include EOS and XRP. EOS helps execute functions on a decentralized network, while XRP is handy for transferring any digital asset on the Ripple blockchain.
What is the Future of Cryptocurrency?
Nobody can really know the answer to this. However, as long as cryptocurrencies continue to improve over fiat currency, you will find them holding a considerable place in the international financial system.
Online payments are already growing globally, leading to the adoption and usage of digital currencies like bitcoin. Cryptocurrencies are likely to flourish with advanced technology and witness their uses increasing gradually. Consequently, it will attract more and more brands to accept cryptocurrency as a form of payment. While utility tokens might go through a battle to convince regulators they are not securities, Stablecoins may prove themselves as cheaper and faster cryptocurrencies transactions than fiat ones.
Despite the success of cryptocurrencies, they are still facing some issues, including their ease of use. Users still need to have a certain level of technical understanding to use digital currencies to their maximum potential. Developers and new projects can work on cryptocurrencies for a better design and improved user interface, which will result in easy utilization to the average person who has no technical knowledge.