Top 5 Use Cases of Bitcoin and Cryptocurrencies

January 3, 2009 is not an ordinary date, but the beginning of a revolution that changed the course of money as we know it. Satoshi Nakamoto created the Bitcoin network by mining the first block of the chain, called the Genesis block. Bitcoin started its journey as A Peer-to-Peer Electronic Cash System and now has a trillion-dollar market capitalization with thousands of different cryptocurrencies that followed. In fact, in November 2021, the total market capitalization of all cryptocurrencies exceeded $3 trillion.

Adoption of Bitcoin and cryptocurrencies in the global economy

Considered as a rebellion by a few adventurers against the global banking system, cryptocurrencies were not embraced as a legitimate economic assets for a long time. Bitcoin was mostly considered as a fad that could be used for short-term speculative trades or buying illicit goods on dark web marketplaces. Whenever there was a crash in price, critics were quick to announce that this was finally the time when Bitcoin would rightfully go to zero. However, Bitcoin has showed incredible resilience and has gone on to reach new all-time highs even after seeing crashes of 80% or more.

‘’Rapid rise in crypto markets after Fed’s interest rate decision.’’

If you had shown this quote to an economist 10 years ago, they would have just laughed at you. However, cryptocurrencies are now a part of the world’s economic system and crypto markets respond to what’s happening in regards to regulation, equity markets, monetary policy and so forth.

Bitcoin, cryptocurrencies, and blockchain technology are increasingly commonplace in both daily life and the global financial system. This article will discuss the top use cases of Bitcoin and other cryptocurrencies.

1. Trading and investing

Bitcoin is stilly primarily a speculative asset, as it is mostly used for trading and investing purposes. The size of the Bitcoin market is substantial, as the global BTC trading volume regularly exceeds $300 billion per day. While Bitcoin trading was initially dominated by retail traders, professional investors also began entering the market when it was becoming clear that Bitcoin has serious staying power and wasn’t just a fad.

Now, cryptocurrency trading platforms such as Binance and Coinbase provide substantial liquidity, which makes BTC a viable asset even for institutional traders. Bitcoin has even attracted the interest of billionaire investors, including Bill Miller, Stanley Druckenmiller and Paul Tudor Jones.

From 2020 onwards, a number of publicly-traded companies began adding Bitcoin to their balance sheets. The most notable such example is MicroStrategy, which has purchased almost $4 billion worth of Bitcoin. Other companies that have invested large amounts into buying Bitcoin include Tesla, Block (formerly known as Square) and Marathon Digital Holdings.

Some believe that Bitcoin’s fixed supply and predictable issuance policy make it a hedge against the debasement of traditional currencies. However, Bitcoin is much more volatile than traditional stores of value such as gold. From a short-term perspective, Bitcoin doesn’t seem to be too suitable as an inflation hedge, although a case can definitely be made that holding Bitcoin can help preserve one’s wealth over the long term.

2. Buying products and services

Developing technology allows people to shop from the other side of the world with a few keystrokes. Moreover, you can reach your anonymity in these purchases whenever you want. You had to leave your house to buy a CD of a newly released game, but now there is no journey that will spoil your enjoyment of the game. These examples can be multiplied, and we will examine some of them in a little more detail, but it is obvious that one of the most common usages of Bitcoin and other cryptocurrencies is to make purchases of goods and services.

E-commerce and personal expenditures

The spread of e-commerce is one of the biggest contributors to the popularization of cryptocurrencies.

‘’In 2021, retail e-commerce sales amounted to approximately 5.2 trillion U.S. dollars worldwide. This figure is forecast to grow by 56 percent over the next years, reaching about 8.1 trillion dollars by 2026.’’

Retail e-commerce sales worldwide from 2014 to 2026 (estimated). Image source: Statista

E-commerce giant Amazon does not currently accept payments in Bitcoin or other cryptocurrencies. However, you can spend the coupons you bought with Bitcoin on other websites on Amazon.

According to the latest data, more than 15,000 businesses currently accept Bitcoin payments. Among them, there are brands such as technology giant Microsoft, Tesla from the automotive industry and leading brands from the food industry such as McDonald’s, KFC, and Starbucks. Every day, $1 million worth of Bitcoin is spent on products and services by Americans; up to 40% of these clients are first-time buyers who spend twice as much as credit card users.

International Trade (Cross-Border Payments)

Payments are one of the most difficult stages in international trade. Even if the parties have mutual trust, they may have to pay high commissions to the intermediaries. Another disadvantage is that banks hold large amounts of payments. Dozens of payment orders, notifications, commitments, etc., is another stage of the work. However, payments made with Bitcoin or other cryptocurrencies serve their purpose in a very short time with relatively low fees compared to other cross-border payments and remittances services. 

Emmanuelle Ganne, one of the authors of the World Trade Organization (WTO), covers the subject in detail in his book named ”Can Blockchain revolutionize international trade?”

”Trade has always been shaped by technological innovation. In recent times, a new technology – Blockchain – has been greeted by many as the next big game-changer.”

Buying goods and services restricted by the government

Whether we like it or not, one of the first real-world uses for Bitcoin was buying illicit goods such as drugs on dark web markets. The reason why this is possible is that Bitcoin is a decentralized and censorship-resistant payments method. No authority can stop transactions from occurring on the Bitcoin network, since it is maintained by thousands upon thousands of miners and node operators across the globe. 

While the use of Bitcoin for buying drugs certainly makes for attractive headlines, Bitcoin’s censorship-resistance also enables more noble use cases. For example, someone living in an authoritarian regime could use cryptocurrency to pay for web hosting services and publish content that the government wants to restrict.

Due to the traceability of the Bitcoin blockchain, privacy coins such as Monero have grown in popularity for making purchases of goods and services that are restricted by governments.

3. Gaming industry

Years ago, you had to leave your house and go to the CD store to play a newly released game. But right now, you can buy it from one of the online gaming platforms with Bitcoin or online payment and download it to your game console or to a cloud disk.

1.1 million people around the world play online games and the size of this industry is expected to reach 304.7 trillion dollars in 2027. The use of blockchain technology is becoming widespread, and this development is also reflected in the market volume of the gaming industry. Institutional investors place exceptionally large bets in the Play2Earn and Metaverse categories.

The usage of NFTs in characters and other game assets is growing in popularity in role-playing games. On the other hand, some mobile games accept the use of cryptocurrencies as in-game assets or tokens.

‘’In 2022, global mobile gaming revenues were estimated at 164.1 billion U.S. dollars, making it the biggest segment of the digital gaming market. Online games were ranked second with approximately 23.7 billion U.S. dollars in revenues. The total digital gaming market is projected to reach 304.7 billion U.S. dollars in 2027.’’

Digital video game revenue worldwide from 2017 to 2027 (estimated), by segment. Image source: Statista

4. Gambling 

Advances in technology have also led to the proliferation of online casinos. Factors such as user-friendly interfaces, alternative deposit options, and easy access have increased the interest in online casinos.

“The size of the global online gambling and betting industry amounted to 61.5 billion U.S. dollars in 2021. This has been forecast to rise to 114.4 billion U.S. dollars by 2028, representing an increase of just over 86 percent.”

One of the biggest reasons why the online gambling industry is growing so fast is Bitcoin. Bitcoin and cryptocurrencies allow users to make deposit without exposing their personal information, and this privacy increases people’s use of Bitcoin for online gambling. Instant deposits and withdrawals, security, the ability to play games without leaving their comfort zone are other factors that enable the integration of Bitcoin and cryptocurrencies with the online gambling industry.

According to a survey conducted by Chainalysis, there are approximately 70+ crypto-friendly casinos currently in operation, with an estimated $2.8 billion in revenue so far this year and the industry earned $10 billion last year, a 64 percent increase from 2020.

5. Other uses 

Beyond the use cases we’ve already outlined, Bitcoin and other cryptocurrencies are also commonly used in the following scenarios.

Donations

Another popular use for Bitcoin and cryptocurrencies is donations. Especially after 2020, Covid-19, environmental and natural disasters have been a major factor in this increase, of course, we can associate this with the widespread use of cryptocurrencies. While the cryptocurrency donation volume was $4.2 million in 2020, this amount reached approximately $70 million in 2021.

Another factor in donations is to reduce the tax burden. Especially institutional Bitcoin and cryptocurrency investors can deduct these donations from taxes. Proper use of these strategies can move the donations title to higher ranks on the list in the coming years.

Real estate

Blockchain technology is being used in almost every industry. It is used in a variety of applications, including collecting, processing, and modeling land or real estate information in a database. Bitcoin and other cryptocurrencies are used to pay for these services. There are currently websites all over the world where you can buy real estate using Bitcoin and cryptocurrency. 

Trading collectibles and art

The rapid growth of NFT marketplaces and the increase in the frequency of use of cryptocurrencies enabled collectors to concentrate on this area. Famous artworks, music productions, photographs and many more are meeting with buyers on NFT marketplaces such as Opensea and Rarible. In 2021, the trading volume of non-fungible tokens (NFTs) exceeded almost $20 billion. Online art auctions, which are already attended by famous collectors, are becoming more and more common. Bitcoin and cryptocurrencies are very likely to peak in this different area of use.

Conclusion

People have used various methods since ancient times to obtain goods or services that they required but could not produce. The barter method, which was used in the early days based on the overlap of needs, gradually gave way to other payment methods as time passed. Following the barter method, payments were made in precious metals such as gold, silver, and copper.

Paper money eventually took the place of these precious metals in terms of convenience. It is now easier to make payments with paper money and to meet people’s needs more quickly. In the twenty-first century, cryptocurrencies that reveal significant changes in the structure of money have emerged.

These days when paper money is replaced by digital payment systems and cryptocurrency, people meet another new cryptocurrency every day. The ecosystem and blockchain technology have become so enormous; they meet almost every need of mankind.

In our article above, we examined the top use cases of Bitcoin and cryptocurrencies. Apart from these, Bitcoin and cryptocurrencies are used in dozens of different areas and these usage areas are seeing more adoption day by day.