Cryptocurrency has always been known as a speculative asset for investors, many of whom purchase Bitcoin, Ethereum, and other digital coins with the intention of holding these assets long-term in hopes of price appreciation.
However, as the crypto space matures, investors are discovering a variety of ways to utilise their digital assets beyond just holding. The blockchain ecosystem has expanded into areas like passive income opportunities, NFT investments, and spending crypto on real-world purchases, offering crypto holders a diverse array of options.
Earning Passive Income: Staking and Yield Farming
One of the most popular ways for crypto investors to generate passive income is through staking and yield farming. These options allow investors to earn rewards or interest without having to sell their assets.
Staking involves locking up a specific amount of cryptocurrency in a blockchain network to help maintain its operations, such as transaction validation. In return for staking their coins, investors are rewarded with additional crypto tokens. Ethereum 2.0, for example, allows investors to stake their Ether (ETH) to help secure the network and, in turn, earn rewards. This system provides a way for investors to grow their crypto holdings over time, much like receiving interest on a savings account.
Another increasingly popular method is yield farming, which takes place mainly within the decentralised finance (DeFi) sector. In yield farming, investors provide liquidity to decentralised platforms by lending or depositing their cryptocurrency into liquidity pools. In return, they earn interest or new tokens. Yield farming can offer higher returns compared to staking but comes with greater risk, particularly due to the volatility of some DeFi projects. Still, for those looking to actively grow their portfolios without selling assets, these two strategies are becoming vital tools in the crypto investor’s toolkit.
Spending Cryptocurrency: Real-World Purchases
In recent years, more and more businesses have started accepting cryptocurrency as a method of payment, which has opened up opportunities for investors to spend their digital assets. While it was once a challenge to use crypto for anything other than online purchases, it is now possible to buy a wide range of goods and services, from luxury cars to holidays.
A growing number of online retailers, including large platforms and smaller independent shops, now accept digital currencies like Bitcoin and Ethereum. This allows crypto investors to use their holdings directly to purchase electronics, clothes, and even household items without needing to convert crypto into fiat money. Additionally, crypto can now be used to play casino games, like slots, poker and roulette, at online casinos. In recent years, crypto casinos UK players can access have grown immensely popular as they allow bettors to buy in, wager, and withdraw funds with coins like Bitcoin and Ethereum. By using crypto to wager, bettors are able to transfer funds quickly at a reduced cost in most cases and enjoy enhanced anonymity while playing online.
The travel industry has also embraced crypto, with a range of companies now accepting it for booking holidays, flights, and accommodation. Platforms like online travel agencies are allowing users to book hotels and flights with crypto, offering a seamless method for investors to spend their digital assets while travelling. The ability to book travel with cryptocurrency allows investors to utilise their holdings as they would any other currency, all while avoiding foreign exchange rates or high transaction fees.
Some investors have even started using crypto to purchase real estate. Although still in its infancy, the real estate sector is increasingly open to cryptocurrency as a form of payment. Buyers can now purchase property using Bitcoin or Ethereum, making it easier for investors to diversify their portfolios into physical assets while using their digital currencies.
NFTs (Non-Fungible Tokens): Investing in Digital Assets
Another innovative way that investors are using cryptocurrency is through NFTs (Non-Fungible Tokens). Unlike regular cryptocurrencies that are interchangeable, NFTs represent unique digital items, and each token holds its own value. NFTs can represent anything from digital artwork to virtual real estate, offering a new avenue for investment in the digital realm.
For example, investors can buy, sell, and trade NFTs tied to rare digital art or limited-edition collectibles. The popularity of NFTs has grown exponentially, with high-profile sales attracting significant attention from both investors and creators. Investors now see NFTs as a viable way to diversify their portfolios, often viewing them as digital collectibles that can increase in value over time. This is particularly true in the worlds of online gaming and virtual real estate, where NFTs are used to represent in-game items and virtual land that can be bought and sold within gaming ecosystems.
DeFi (Decentralised Finance): Loans, Insurance, and More
For investors seeking alternative financial services, DeFi (Decentralised Finance) has emerged as a significant innovation. DeFi platforms operate without intermediaries, using smart contracts to facilitate lending, borrowing, insurance, and other financial services.
Crypto investors can use their holdings to take out loans or earn interest by lending their assets on DeFi platforms. This allows investors to unlock the value of their crypto without needing to sell it. In some cases, investors can also participate in liquidity pools, where they provide liquidity in exchange for rewards or a share of the platform’s fees. The DeFi ecosystem provides high levels of flexibility and control, allowing investors to diversify their crypto portfolios and gain exposure to alternative financial products.
Cross-Border Transactions: Sending Money Globally
Another powerful use case for cryptocurrency is its ability to facilitate cross-border transactions. Traditional banking systems often involve long waiting periods, high fees, and currency exchange issues when sending money internationally. Crypto, on the other hand, allows for nearly instantaneous transactions that can be completed at a fraction of the cost, making it an ideal solution for sending money across borders.
Investors who work with international partners or need to send funds overseas can use cryptocurrency as an efficient payment method. The use of crypto in global transactions continues to grow, and it provides a convenient option for anyone looking to send money internationally without the delays and costs typically associated with traditional banking.
