Cryptocurrencies and cryptography go hand-in-hand. Cryptography is the science of writing or solving codes, which is what cryptocurrencies are: a virtual currency that uses cryptography to secure transactions and provide anonymity.
The internet has provided us with new ways to communicate and transact, and cryptocurrencies incorporate this technology into their platforms for ease of use. However, unlike traditional fiat currencies such as the dollar or euro, cryptocurrencies aren’t controlled by anyone’s authority. This has led to the creation of an entirely new economy, which has multiple uses of cryptography and cryptocurrencies. In this article, we will explore some of these most common ones.
Online Gambling
Partly due to Bitcoin’s popularity, there is a thriving market for online casinos. Increasingly popular Bitcoin and Litecoin casinos allow users to deposit, play and withdraw Bitcoins or Litecoins with no hassle – rivaling the ease of using fiat currencies like Euros or US dollars. Bitcoin-only casinos offer games that work directly with Bitcoin which means they aren’t bound by any localized laws regarding gambling whereas fiat currency-based games often need to follow more stringent rules imposed by national governments. This also provides an extra sense of security for players who want to avoid scrutiny from their countries’ tax authorities because all transactions are anonymous. With Bitcoin, you don’t even need an email address to sign up and start playing some of your favorite games.
Crowdfunding
Crowdfunding has been used for a long time in the music, film, and art worlds to raise money for projects that would otherwise find difficulty in getting off the ground. Various artists have made popular albums or tours by appealing directly to their fans or audience, who get excited about new works and are willing to pay upfront before the project has even started. Cryptocurrencies allow this model to be adopted on an international scale because once you can send value (in this case, money) anywhere in the world at practically no cost, you don’t need to rely on banks or private companies (where they take a cut of the money). Of course, cryptocurrencies are still in their infancy for this kind of use, but as more companies and artists adopt them it makes sense that they will be used like fiat currencies.
E-commerce
Cryptocurrencies are slowly making their way into traditional e-commerce platforms. They allow users to pay without having to divulge sensitive information about themselves or worry that their credit card details could fall into the wrong hands, like identity theft or fraud,
because cryptocurrencies are decentralized and secure – like most fiat currencies. Cryptocurrency transactions make it easy to complete international transactions, removing geographical barriers between countries with different currencies. For small businesses (specifically online stores), cryptocurrencies enable you to receive payments quickly without any hassles since, in most cases, they are irreversible.
Secure Storage
Many companies and individuals store valuable information online or digitally that requires an additional security measure to ensure it remains safe. This can be valuable data like medical records, legal documents, professional contacts, etc. Cryptocurrency allows for this kind of storage due to its decentralized nature, which keeps the information secure from malicious actors because there is no single point of entry where hackers can gain access to everything without having to work twice as hard for half the reward. It also protects against human error – by storing all valuable information across multiple devices (for example Dropbox), if one device goes down you don’t lose all your important files. This provides a greater sense of security for users who want to protect their information.
Currencies and Arbitration
The bulk of cryptocurrency transactions occur between individuals who want to transfer value from one place to another, but cryptocurrencies offer a lot more potential than just as a store of value or for use as a currency. Cryptocurrencies can be used as actual money – in the form of vouchers, gift cards, tokens in online games, etc. They can also be used to buy goods in stores that accept them. More interestingly, they can also be used in arbitration situations when financial relations break down (for example if someone owes you money). The same principles that power cryptocurrencies are beneficial here because it allows parties to resolve disputes over money without having to go through expensive legal procedures by using algorithms that automatically process cryptocurrency transactions so that either the money goes to one person or the other, with no room for interpretation.
Learning Resources
Since cryptocurrencies are decentralized, public blockchains can be audited by anyone who wants to see how it works and what makes them so secure. For many developers of blockchain technologies (or programmers), this allows them to analyze code written by experts to better understand how it works and learn from their experiences. Since these technologies are open source, people can also contribute their ideas to making improvements or even starting projects that solve everyday problems. And since most blockchains are publicly accessible, you don’t need an expensive college degree to get involved – you just need some time and dedication.
Lending and Borrowing
There are a few bitcoin-based peer-to-peer lending companies that have emerged in the years since Bitcoin’s launch – BitLendingClub, BTCJam, etc. For those who would rather earn interest on their savings than pay it to a bank these services allow users to borrow or lend money at reasonable rates. This is made possible by cryptocurrencies’ guarantee of anonymity (where no one needs to know about your income or social security number) as well as its decentralization (which eliminates banks and other middlemen). These factors make cryptocurrency loans more affordable for borrowers and profitable for lenders, resulting in decreased interest rates and higher availability of credit.
Mining
As discussed in the previous chapter, cryptocurrencies are created by solving complex mathematical equations. When computers solve these equations they are rewarded with newly-minted coins. This is called mining and it’s how new coins are added to the market. Miners can either set up their equipment (called rig) or use cloud services which allow them to mine without investing in costly hardware.
Cryptocurrencies’ independence from central banks makes this an attractive option for people who want to make money with little effort because all you need is some time and a computer. This way, even if your rig fails you won’t lose any money.
However, mining is not ‘get rich quick’ in that it takes time and uses a lot of power, so this would definitely be a long-term strategy.
The uses of cryptocurrencies are limited only by our imagination. As more and more people adopt them, the possibilities grow exponentially because a higher number of users makes a coin more valuable. And as new types of cryptocurrencies appear on the market, their unique properties allow them to be useful in ways that older coins just couldn’t have been used for, which is why it’s so important to keep an eye on the news and not just follow what everyone else is doing.