The 7 main use cases for Bitcoin
Many reasons can be given for why one should own Bitcoin. The first digital currency has had quite a success since its start and has found its way into the portfolio of many people from around the world. But although many people have bought it on centralized exchanges like Binance and Coinbase. Only a small group of these people really understands what it does.
So if you already have some Bitcoin or are interested in holding some in the future. Have you already asked yourself “what are the use cases for Bitcoin?”. Or how to use Bitcoin?
Well, let us dive right in and check out the use cases for the first cryptocurrency Bitcoin.
Number 1: Digital Money
Well, the first and foremost you have probably heard of is digital money. A simple concept that many are not too familiar with. Because why do you need digital money? My Euros and Dollars can already be sent over the internet, right from my bank’s app. So does that not make Bitcoin unnecessary?
Well, no. Although (if you are from a developed nation) you can send money over the internet in a matter of seconds. That money does not really travel at the speed of light over the internet. No, instead your bank just agrees that it will receive the money from your friend’s bank (the sender). So in the meantime, it will give you access to the money that your bank holds. The real transaction that happens between the banks still has to occur. And this can take very long before they even settle it. This can cause all sorts of problems down the road as banks to own each other money all the time. Plus that sending these transactions will finally come at a cost that you the end-user will pay for in one way or another.
Because Bitcoin does not exist as a physical coin you will never have to settle at a later point and can just directly transact at a cheaper price and without being indebted to each other all the time. This is just a simple use case of how you but also the banks can transact with each other much more efficiently.
Number 2: Super cheap transaction network
As of now (online) transactions networks may seem cheap. But they aren’t. When you pay online or in-person using a debit/credit card. You make use of a payment provider. These payment providers charge you an extra fee usually between 1% and 8% of the purchase. This might be new information to you as you do not really see this. Because this percentage is already put into the price of the products and is paid by the merchant. So you do not have to see it.
However, merchants just raise their prices to pay for these fees. Making you to one that really pays for it all. Bitcoin can help solve this problem. Although transacting on the main Bitcoin network can cost you quite some money (Sats). Transacting over the Bitcoin lightning network costs you almost nothing. On top of the fact that the Bitcoin lightning network settles your transaction instantly.
With the Bitcoin lightning network, you do pay a small transaction fee. But it is minimal compared to the fees of companies like Visa and Mastercard. Much less than 1% usually and in some cases, it is actually completely free. This comes as most operators in the lightning network charge you a higher fee if the amount you send is also higher. So if you want to send just 1 Satoshi (a fraction of a USD cent these days). You normally don’t pay anything. This makes the network ideal for microtransactions and streaming payments. On top of the fact that it is cheaper compared to the traditional banks and payment networks.
Number 3: Digital Gold
Yes, one of the narratives we have heard a lot in 2021 and probably will hear a lot more. Digital Gold! But gold does not do anything? Exactly. And that is what we want. Because fiat currencies that do something like the Dollar and the Euro only do one thing. Inflate! Which no one wants.
In the last 2 years, the United States printed more than 40% of all dollars in existence. And it will probably increase even more in the coming years. If you use another currency but not the dollar that does not mean you don’t have this problem. Most countries around the world have printed more or less the same amount and in most cases much more than just 40%. We now see this slowing turn into inflation of prices and we fear that it will harm many people everywhere.
Now Gold has worked fine against inflation in the past. But transacting in gold right now would not bring the world forward. As gold inflates slowly and can not transact digitally without a central entity.
Here Bitcoin comes in to solve both these problems. It can move digitally at the speed of light without any central control over it. But most important Bitcoin has a fixed cap of 21 million Bitcoin. Meaning that no one can inflate Bitcoin more than the 21 million. This way it can protect everyone that holds it against inflation caused by central governments. And yes 21 million Bitcoin is not enough for the whole population. But we can each Bitcoin into 100.000.000 Satoshis. In which you can transact. And just in case the price of Bitcoin goes up to much overtime we could divide a Satoshi even more on the second layer (transaction layer) level. So transacting could go a bit easier.
Number 4: Anti-corruption
I don’t think there has been one moment in history that the world did not have any corruption. Yes, it’s a bit sad to realize that everywhere in the world we can find corruption at all times. In some places, you can see it more and in some less. Or you could say it is just hidden better. Although corruption can come in many forms, it usually has in one way or another a currency transaction somewhere. For corrupt politicians etc these transactions need to go unseen. And many banks or other money transacting tools help facilitate these transactions sometimes knowingly and sometimes not.
As a majority of these transactions are hidden from the public we have no idea of what really goes on behind the scenes. Bitcoin could solve some of these cases of corrupt transactions. As the transactions on the public Bitcoin blockchain are visible for everyone to see.
Let’s say a government would decide to use Bitcoin for its transactions. We, the people could ask or demand the government to show their public Bitcoin address to which taxes go and the spendings go out off. This way we have the possibility to see all the spendings they make and double-check if that money is not partly going to someone’s personal account. Or if they do not make a suspicious transaction of one-hundred million dollars to create a government blog website.
This way Bitcoin can help fight corruption when a whole country adopts the standard. Making it much easier for the people to demand clarity of where their money really goes to.
Number 5: Permission-less money
If you live in one of the African, South American, or almost any other country where you see high levels of inflation these days. The chance is high that the government makes it difficult for you to switch from your currency to any other. Usually because of inflation and they want to force their people to keep using it. This can harm people in cases of inflation. On top of that if your government thinks that buying a newspaper that speaks out against what they do is bad and you should not do that. They could force the bank to cancel your account or just take all the money out of it. Making you essentially a monetary slave to the bank as well as your government.
In Bitcoin’s case, this cant happen. The network uses a decentralized structure making it so that anyone can help support the network and no one government or bank can cancel or take your money. Plus you can add some layers of privacy in case you would want to buy a piece of news that your dictatorship ruler does not like. This way you do not have to be scared that the police will fall down your door because you read an article that says your leader is not blessed by God or whatever.
Number 6: Metaverse currency
From Decentraland, The Sandbox, to Facebook and Microsoft the whole world starts to build in the Metaverse. These digital worlds also need digital currency. Most of the decentralized metaverses already have their own in-world currency. But few will probably make use of fiat currencies within these worlds. To transact well and efficiently in these worlds you do need a digital currency.
As Bitcoin starts being used in some games. The use case of it in a metaverse could work just as well. Even if that Metaverse does not run directly on top of Bitcoin. Bitcoin just as the Metaverse has a digital existence which could make them a good match for each other or as a base currency between the Metaverses. For now, playing Bitcoin games is the nearest thing we have to in-game Bitcoin. But it would be interesting to see Satoshi’s getting more integrated into larger games and eventually a Metaverse. Not just as a reward you could earn but as an in-game currency as well. That lets you buy and sell things in Sats (BTC).
One of the Bitcoin wallets that focuses on gaming with Bitcoin is the Zebedee wallet. Check out our Zebedee wallet review here!
Number 7: Web3
Web3 is the latest hype in crypto and something that will shape our world in the future for sure. However, whether it will run on top of multiple chains, or a centralized/decentralized mega computer. We still have to find out. Many participants work on building the age of web3. But all of them do it their own way. Although for now, Bitcoins infrastructure does not allow you to build a fully functioning web3 directly on top of it. Building it on a second layer level could work for the blockchain network. With projects like Stacks, DefiChain, Omni, and many others trying to give more functionality to the cryptocurrency. Especially Stack stands a good chance of making the web3 on top of Bitcoin. If web3 still is a bit of a question mark for you. Put it very simply. It is the internet as we know it build on top of a blockchain structure. Giving it all the features we mentioned in this article. With most focussed on a censorless and permissionless internet infrastructure.
The use cases for Bitcoin that we mentioned are not all of them. Mostly because new use cases could be found in the future as the network is still relatively young. The ones we mentioned in this article we find to be the best use cases for Bitcoin. Now you understand why Bitcoin. It’s time to learn how Bitcoin. From our blog about “How to start using Bitcoin”. We hope you understand the use cases for Bitcoin a bit better now. If you feel ready to start using your own Bitcoin wallet? Then check out our Wallet finder function. Or read one of our other blogs or reviews to learn more about Bitcoin and other cryptocurrencies!
What is the use case of cryptocurrency?
Many cryptocurrencies focus on the same use-cases as Bitcoin does. However, some of them put a more specific focus on one of these use-cases and not on the others. We will follow up with a blog with more info about the use cases of other cryptocurrencies. For now, always make sure you know the use cases of any crypto before you acquire some.
Is crypto scalable?
That depends on what level. But yes, most cryptocurrencies can be scaled with the right tools and layers built on top of them. Read about how we could scale Bitcoin here!
What use cases does Ethereum have?
Ethereum has a lot of the same use-cases as Bitcoin does. But puts more focus on the web3 aspect. With many revering to Ethereum these days as the decentralized application network and Bitcoin as the decentralized monetary network.