What are the Best Use-Cases of Blockchain and Cryptocurrencies in 2021?

Decoding the best possible use-cases and advantages of cryptocurrencies in 2021 that are likely to dominate the industry.

Although digital currencies have existed since the 1980s, Bitcoin became the first cryptocurrency with massive adoption. Today, the cryptocurrency industry encompasses more than 8000 digital currencies. Moreover, use-cases of cryptocurrencies have moved well beyond speculations on prices in 2021. In this article, we explore the best applications of cryptocurrencies in 2021.


Best Use-Cases of Blockchain and Cryptocurrencies in 2021

Blockchain technology, the foundation of cryptocurrencies, is currently explored for several industries, including healthcare, finance, banking, real estate, supply chain, and more. Digital tokens play an integral part in the operation of decentralized applications built on blockchain.


Let's understand the advantages of cryptocurrencies and the best use-cases of cryptocurrencies that are in development in 2021.


Peer-to-Peer Transactions

The original and most popular application of cryptocurrencies is an open-source network that enables peer-to-peer transactions. Cryptocurrency networks like that of Bitcoin enable near-instant transactions in any corner of the globe with almost negligible transaction fees. Moreover, this has prompted several leading organizations to incorporate Bitcoin as a payment method in their infrastructure.


Moreover, apart from Bitcoin, many cryptocurrencies are now serving as an infrastructure for transactions. Cryptocurrency networks like Litecoin (LTC) and Bitcoin Cash (BCH) are also used to transfer tokens from one person to another without intermediary organizations such as banks.


Traditional remittance systems charge a significant amount as transfer fees and take a longer time to process payment than cryptocurrencies. These advantages of low-cost and near-instant transactions are one of the best use-cases of digital currencies in 2021.


Merchants have started noticing the advantages of crypto as a payment method. Cryptocurrency business solutions like exchanges and wallets can integrate XanPool's software within their existing infrastructure to incorporate and offer an experience of cryptocurrencies to their customers. Refer to this blog post, to understand about XanPool's different features and how to integrate it within your existing infrastructure.


Decentralized Finance - DeFi

Decentralized Finance or DeFi is growing as one of the most popular applications of crypto and blockchain. 97% of all the Ethereum blockchain activity during the last quarter of 2020 was contributed by DeFi protocols. To date, the total value of assets held in DeFi protocols stands at $41.47 billion.


One of the most successful applications of cryptocurrencies in DeFi is pegging crypto assets to fiat to create a stablecoin. Stablecoins refer to stable cryptocurrencies and do not experience rapid price fluctuations like Bitcoin. The value of these crypto-assets is pegged upon fiat currencies such as USD or assets like gold. A stablecoin is very useful, especially in the settlement of payments, cross-border remittance, and value storage. With stablecoins, you can leverage the advantages of cryptocurrencies without the sudden volatility in crypto prices. The best-known stablecoins pegged to the dollar is Tether (USDT).


Lending and borrowing is another growing application of DeFi. Three of the best 5 DeFi protocols are associated with lending and borrowing. These platforms work similarly to the traditional financial system, but the difference is that users remain in control of their funds and withdraw at any time. Borrowers can access loans from liquidity pools by locking their assets. The protocols are decentralized, borderless, and permissionless.


Asset-Backed Tokens and NFT's

In comparison with utility tokens, asset-backed tokens possess intrinsic value, directly associated with the physical asset being tokenized. The tokenization of physical assets intensifies the liquidity of physical assets in international markets. In this context, the term liquidity suggests how fast an item can be purchased or sold in the market.


Tokenizing assets avail physical assets to those investors that have been unable to participate until now. Our traditional financial system does not enable part investment in different assets like a real estate property or an art piece. However, digitization of assets allows a great deal of fractionalization, and the asset can be sold in portions. All the stakeholders of an asset benefit according to the proportion of the percentage of an asset they own.


Governance

Governance doesn't sound like the most attractive application of cryptocurrencies. However, on-chain voting is the most helpful method of guaranteeing verifiable voter turnout. For a long time, the Bitcoin mining community has been carrying out governance by backing protocol adjustments through signing blocks. For example, back in 2017, 80 percent of the Bitcoin hash rate was amplified by signing the letters' NYA' to Bitcoin blocks to signal support for the New York Agreement.


Blockchain governance has grown even more complex, with Dash launching a successful budget voting network that many projects have embraced. Many cryptocurrency projects grant the token holders a right to vote on significant decisions through a decentralized application.


IOTA

Linking blockchain to IoT devices improves IoT security systems and openness. Blockchain technology enhances data security, data validity, and data anonymization. Tangle, an open-source distributed ledger project based on IOTA, aims to create an environment in which machines trade services and resources with each other. One real-life use case of IOTA is its collaboration with a major car manufacturer to investigate the use of "smart wallet" technology in the linked car services range.


Car owners can earn tokens that they can utilize to digitally settle road tolls, parking fees, or smart charging using their smartphones. These tokens are made by allowing their cars to convey road conditions to concerned parties such as highway and traffic departments, road maintenance authorities, and other concerned parties.


Bottom Line

The power behind the blockchain sector is the democratization of technologies and investments. With time, the successful applications of crypto assets will massively hinge upon global regulators and experts in the industry teaming up to advocate for the widespread adoption of cryptocurrencies in day-to-day living.