What Are Cryptocurrency’s Benefits?

The cryptocurrency revolution is introducing a new generation to trading and piquing the interest of seasoned investors. As the crypto industry continues to grow, we cover five potential benefits that cryptocurrencies may provide consumers, traders, and investors.

1. Easier International Trade

Though largely unrecognized as legal tender on national levels at present, cryptocurrencies, by their very nature, are usually not subject to a specific central bank’s control over exchange rates, interest rates, transaction charges, or other levies imposed by different countries. Many cryptocurrencies leverage the peer-to-peer mechanism enabled by blockchain technology, allowing parties to conduct global trade outside of the current framework of international intermediaries. One of the aims is to create a near borderless and near-instantaneous means of exchange that can reduce costs as well as waiting periods. If successful, cryptocurrencies could be used for an international coffee company like Starbucks to pay for coffee beans directly to the farmer anywhere in the world. This example would result in the farmer getting paid faster while allowing Starbucks to pay less in transfer fees and exchange rates.

2. Earned Interest

Crypto brokerages and exchanges may offer customers the opportunity to earn interest through a variety of decentralized finance (DeFi) services like lending/borrowing, staking, mining, yield farming, and liquidity mining. While services vary across the industry, some exchanges require customers to lock up funds, transfer to third-party platforms, or perform complex DeFi activities to earn interest, whereas other exchanges make it simple and provide a hands-free service for the customer to earn interest by simply holding a crypto balance. In both examples, customers typically accrue interest daily, and some services even allow the interest to compound over time.

3. Mobility

With the rise of smartphones and online payment platforms like Apple Pay and PayPal, sending and receiving funds has never been easier. Unfortunately, many of the same costly fee structures and privacy issues inherent to physical and in-person currency transactions now exist online. Cryptocurrencies aim to solve some of these challenges, as they act as a medium of exchange and aspire to become a form of money. Unlike an Apple Pay or a PayPal, which requires you to have a bank account or credit card, several cryptocurrencies let you make payments online without a banking or creditor relationship.

4. Privacy

One of the big draws of cryptocurrency is privacy. Crypto can potentially provide you with more privacy than traditional country-issued currency, as it operates without any intermediaries. On most blockchains, crypto wallets are numbered like a Swiss bank account. You can enjoy anonymity until you interact with a service provider that needs to know who you are. Many cryptocurrency payments are facilitated over large and disparate peer-to-peer computer networks. Through these networks, you can send and receive payments to or from anyone without a financial institution in the middle.

5. Remittance

Global remittance is a multi-billion-dollar market long dominated by industry giants like Moneygram and Western Union. Also known as international money transfer, remittance regularly serves migrant workers who send money to loved ones living far away. The traditional remittance model involves multiple intermediaries and transactions, along with different currencies and exchange rates. It can be an expensive, multi-day process that ends with a recipient receiving far less money than what was originally transferred. By using cryptocurrency, a sender – with just a smartphone and a mobile app – can transfer funds directly to a recipient in just minutes for little cost. By removing intermediaries like money transfer services and banks, the recipient can potentially receive more money, much faster.

Three Takeaways

Although the cryptocurrency industry is relatively young, as compared to traditional or fiat currency, crypto coins can offer a variety of benefits.
Crypto may provide consumers, traders, and investors with privacy, the ability to earn interest, and an efficient vehicle for global remittance and foreign exchange.
Some cryptocurrencies also offer the infrastructure for mobility and utility that is not dependent on a customer having a pre-existing bank or credit card account.

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