{"id":62241,"date":"2023-06-09T04:07:56","date_gmt":"2023-06-09T04:07:56","guid":{"rendered":"https:\/\/staging.coinclarity.com\/benefits-of-owning-cryptocurrency\/"},"modified":"2023-11-22T18:37:26","modified_gmt":"2023-11-22T18:37:26","slug":"benefits-of-owning-cryptocurrency","status":"publish","type":"post","link":"https:\/\/coinclarity.com\/benefits-of-owning-cryptocurrency\/","title":{"rendered":"The Benefits of Owning Cryptocurrency"},"content":{"rendered":"\n

First, there was the internet. Then home computers arrived —  who remembers Windows 95? Soon, people were building websites and playing their role in the \u2018Dotcom\u2019 boom. Hotmail, AOL, Yahoo, and a few others made email one of the most popular and streamlined forms of communication ever known. Friends and family sent funny cat pictures to one another years before the invention of the meme. <\/p>\n\n\n\n

Fast forward to the present day, and blockchain technology is playing a role similar to that of the internet, except the technology is so much further ahead than we could ever have imagined. The internet changed how we talk, shop, and love. It even changed our language — are you computing this information? It\u2019s a lot to process. Google transformed into a verb. We upload our dinner. You DM (direct message) your friends.<\/p>\n\n\n\n

The blockchain will do so much more for our daily lives than most have realized yet. In this article, we\u2019re going to discuss what\u2019s in it for you, how cryptocurrencies are replacing traditional financial models with innovative tokenomics, and how beginners can profit just as much as the experts.<\/p>\n\n\n\n

What Do You Do With Your Money?<\/h2>\n\n\n\n

Ask 1,000 people what they do with their money, and they\u2019ll likely tell you something similar — they pay their bills, buy clothes, pay their Netflix subscription, try to save a bit, and go out and enjoy themselves. Great — that\u2019s the purpose of money!<\/p>\n\n\n\n

\"Person<\/figure><\/div>\n\n\n\n

When you dig deeper into the question \u2018What do you do with your money?\u2019, you realize the question is more about \u2018how\u2019 than \u2018what.\u2019 How do you use your money?<\/em> <\/p>\n\n\n\n

  1. Saving (banking and earning interest)<\/li>
  2. Investing (pensions, funds, high-interest accounts, fund management)<\/li>
  3. Spending (goods, services, luxuries, gifts)<\/li>
  4. Trading (stocks, shares, foreign currencies, commodities)<\/li>
  5. Sending (paying friends, family, colleagues, or remitting money over borders)<\/li>
  6. Borrowing \/ Lending (credit cards, mortgages, loans, microfinancing)<\/li>
  7. Developing infrastructure (improving your home, business, or community)<\/li><\/ol>\n\n\n\n

    All of these ways of using money were aided by the internet. Online banking, eCommerce, investment platforms, trading websites, PayPal, online lenders, and the general utility of low-cost person-to-person communications. Transferring money to one another was also complicated \u2013 can you imagine no PayPal, Venmo, or Wise? <\/p>\n\n\n\n

    Is Cryptocurrency Money?<\/h2>\n\n\n\n

    What if the blockchain was so good at moving and utilizing data that you could replace cash entirely<\/em>? That might be a bit extreme at this point, but it has at least served to improve data, value, and finance functions. The underlying mission of the blockchain is to incentivize a continual evolution of this. <\/p>\n\n\n\n

    See, as a beginner, you hear Bitcoin and Ethereum, and it\u2019s all jargon. Squawk, squawk, squawk. You are overwhelmed before you even begin, and so you tune out. You\u2019re not techy. You don\u2019t even have a laptop. You don\u2019t care. You\u2019re old school. We\u2019ve heard it all. Then we slow down and say, \u201cHey, do you use online banking?\u201d and you say, \u201cSure! Who doesn\u2019t these days?\u201d. We ask about the rates your bank gives to your savings. \u201c0.1%, not much these days,\u201d you reply. Then we show you Nexo and Celsius, a couple of crypto banks that offer up to 20% APY. Suddenly, you\u2019re interested.<\/p>\n\n\n\n

    Cryptocurrency is not money, as we\u2019ve come to know it. It\u2019s parallel to money. It has value as a currency, but that\u2019s not its core purpose. This is where most people go wrong, lose interest, or get confused. They think only about spending and forget about the other six ways<\/em> to use money. <\/p>\n\n\n\n

    Adjusting Your Relationship With Finance Through Crypto<\/h2>\n\n\n\n

    We\u2019ve used banking as an example. If you could get 20% interest with a crypto bank that\u2019s easy to set up, easy to deposit money into, and all managed from a well-designed app, what\u2019s stopping you? <\/p>\n\n\n\n

    Above is just one example. Here are more tools and projects that can gently redesign your relationship with finance. <\/p>\n\n\n\n

    Saving & Banking with Crypto<\/h3>\n\n\n\n

    The two big crypto banks are Nexo<\/strong> and Celsius<\/strong>. Quite simply, you buy crypto directly (deposit) using your card, and then you stake it (save it) in your account. Alternatively, you can deposit fiat currency such as USD, GBP, or EUR, which will then convert into a digital equivalent to trade for the compatible cryptocurrency of your choice. <\/p>\n\n\n\n

    If you\u2019d like to take out a loan, you can borrow cash by using your crypto as collateral rather than using your house, car, or something else of great value. <\/p>\n\n\n\n

    While crypto banks such as these are popping up, the actual mechanics of crypto banking has become so easy for cryptocurrency exchanges to offer that you\u2019ll now see the best ones offering high-interest savings accounts. Our favorites are easily Binance and Gemini.<\/p>\n\n\n\n

    Binance offers a far more comprehensive range of savings products than any other platform, and while the majority of coins might only gain 1% interest APY, others can return up to 12%. Notably, USDT accrues 5% interest per year, and as it is pegged to the dollar, it makes it a reliable savings tool and hedge against inflation. <\/p>\n\n\n\n\n\n

    A quick thought before we move on. Have you considered why some banks ban their members from putting money into platforms like Binance, Coinbase, and Kraken? It\u2019s because they\u2019ve finally realized that these exchanges are now their direct competitors. As a result, these platforms are unbanking the banked, creating an enormous problem for traditional finance outlets.<\/p>\n\n\n\n

    \"Coinbase<\/figure><\/div>\n\n\n\n

    Investing with Crypto<\/h3>\n\n\n\n

    Crypto in itself is an investment because, as you\u2019ve likely heard before, the gains can be astronomical. But, ridiculous growth aside, crypto is simply a good hedge against inflation. Many investors, especially in the US, use mutual funds and portfolios, which tie together stocks, bonds, and securities, into a neat package. This allows them to ensure that their savings are more or less growing at a slightly better rate than inflation.<\/p>\n\n\n\n

    The cryptocurrency world looked at this mechanism and thought, \u2018we can do this so much better. DeFi funds allow you to buy a tokenized fund and enjoy the growth of grouped assets, the same as a mutual fund, except the returns are typically far, far greater. Projects such as yearn.finance\u2019s \u2018Vaults\u2019 allows you to trade the tokens representing these grouped assets. You\u2019d put your money in a fund in traditional finance or pull it out. You can trade the fund itself against other funds with tokenized funds while also holding YFI tokens to profit from the platform\u2019s overall success. <\/p>\n\n\n\n

    Exchanges are still getting to grips with this innovation, and Binance recently de-listed the feature while it grapples with regulation. However, FTX<\/strong> embraces it, and<\/strong> you can find the YFI token on their platform.<\/p>\n\n\n\n\n\n

    Spending<\/h3>\n\n\n\n

    Five years ago, spending crypto, and Bitcoin, in particular, was complicated. Any business claiming to accept crypto was usually just one individual taking the decision and receiving the coins directly to their wallet. There was little business infrastructure for both making and receiving payments. All that has changed.<\/p>\n\n\n\n

    \"\"\/<\/figure>\n\n\n\n

    Binance Pay, Coinbase Card, and Gemini Card! These are just three examples. The pioneer, Crypto.com, saw that they could create a prepaid Visa debit card that allowed users to sell their cryptocurrency into a fiat currency via an app and make transactions like any other card. The three cards mentioned above managed to make it even easier. You don\u2019t even need to sell the crypto now manually. You select which of your held tokens you\u2019d like to make payments from, and they instantly convert the token to fiat currency and make the payment for you. <\/p>\n\n\n\n

    The majority of readers here have no idea what goes on behind the scenes at Visa or Mastercard. Does it matter? Your money changes hands for the goods or services. It\u2019s the same for crypto now. Do you care about the technical details? It\u2019s not essential for mainstream adoption to know how it works, just that it does. Reliability is key.<\/p>\n\n\n\n

    Gemini is probably our favorite of the three, as it offers up to 3% cash back rewards, paid in the cryptocurrency of your choice (40+ options), with no foreign transaction or exchange fees. The only fee incurred is during conversion:<\/p>\n\n\n\n

    Trading<\/h3>\n\n\n\n

    You\u2019re probably thinking, \u2018crypto trading happens all the time; this one is obvious!\u2019. But, crypto trading is its own beast, its own market and economic system. It is not replacing the stock market — is it? Not in the way you might think.<\/p>\n\n\n\n

    Synthetic Assets, tokenized cryptocurrencies pegged to popular stocks, like Microsoft, Tesla, and Netflix, are becoming widely available. This changes the landscape entirely, as it means you will be able to trade both crypto and stocks without leaving the blockchain. Unfortunately, the stock market would not do the same in reverse.<\/p>\n\n\n\n

    The benefits go further. When you engage with the stock market, you pay broker fees that line the pockets of some rich guy looking to buy his third beach house. The transaction fees are redistributed among the asset holders when you engage with synthetic assets! This means simply by holding \u2018synths\u2019 (for short), you make a passive income. <\/p>\n\n\n\n

    This is in its infancy, but it could be the next big thing in a year. <\/p>\n\n\n\n

    Sending with Crypto<\/h3>\n\n\n\n

    Let\u2019s try something else. Have you ever sent money to your friends by Wise<\/a>, PayPal, Skrill, or a service of that nature? Did you get charged some fees? It\u2019s annoying, right? What about Western Union? On average remitting money through a Western Union-style service will cost you around 10%. 10%! It seems almost deranged in hindsight, but it\u2019s only through lack of options and a captive market that we grin and bear it.\u00a0<\/p>\n\n\n\n

    What if you knew that Ripple (XRP) and Stellar Lumens (XLM) cost less than $0.01 to send, regardless of the amount, regardless of the location. You don\u2019t need to show a passport, ID, proof of address, or open a bank account to send value. You certainly don\u2019t need to pay 10%. <\/p>\n\n\n\n

    Are you starting to see the point here? Crypto wasn\u2019t designed only for spending. It was designed to replace and improve upon the work done by traditional institutions and show a better way. Unfortunately, very few cryptocurrencies are suitable for spending due to their volatile nature and high network fees.<\/p>\n\n\n\n

    Lending and Borrowing<\/h3>\n\n\n\n

    If you want to take a loan from the bank, you have to risk collateral. This is how it has always been. You risk your house, your car, and your future, and even then, you might face rejection because of a mistake in the past, a bad credit score, or something of that ilk.<\/p>\n\n\n\n

    Cryptocurrency doesn\u2019t discriminate. Lending protocols still ask for collateral, but it\u2019s crypto that you risk this time. For example, if you have 1 BTC worth $60,000, you can take a loan of $30,000 cash to your bank account to go and use. Typically the Loan-to-Value ratio is 50%, but you may find other percentages. <\/p>\n\n\n\n

    Agree your payback terms with the protocol, and if you fail to pay it back and with the agreed interest, they keep the 1 BTC. If the price of BTC soars to $100,000, you still only owe $30,000 and so have even more incentive to pay back the loan. <\/p>\n\n\n\n

    Some of you reading this might be thinking, \u2018why not just sell half the Bitcoin instead of risking it?\u2019. Well, here\u2019s why:<\/p>\n\n\n\n