Top 5 Use Cases of Bitcoin

Since its launch in 2009, Bitcoin has had a volatile trading history. When it started, the digital currency was worth almost nothing. In October 2009, just over 5,000 coins were sold for around $5 on PayPal.

This first transaction by Martti Malmi boosted the currency’s worth to $0.0009. It wasn’t until a year later that Bitcoin experienced its first real price jump past the $0.1 range. Then, between 2009 and 2011, the currency steadily grew in value, and in 2011, it passed the $1 mark for the first time.

By mid-2011, the coin peaked at $29.6. A market recession followed this, and Bitcoin closed the year at $4.7. While 2012 was uneventful for the cryptocurrency, 2013 was the year Bitcoin bounced back.

Substantial gains saw the coin start the year at $13.30. By April 2013, it crossed the $100 mark, and six months later, in October, it breached $200. By November, when most new investors were looking at how to buy Bitcoin with a credit card, a single coin was valued at over $1,000. Bitcoin ended that year at $805.90.

The coin’s price continued to climb in 2016. In mid-May 2017, Bitcoin broke through the $2,000 ceiling, and on December 16, it was priced at $19,345.49. The cost of Bitcoin would only reach the 2017 prices again in November 2020. The following month, Bitcoin was sitting slightly below $29,000, an over 400% increase from the start of 2020.

In 2021, Bitcoin smashed its previous price high and passed the $40,000 mark in the first week of January. Three months later, it reached over $60,000. After the launch of Coinbase propelled interest even further, Bitcoin peaked at $63,558 in mid-April. Prices dropped by 50% a few months later. In the months that followed, the price of Bitcoin fluctuated significantly, and on 10 November, a new all-time high was reached when the coin hit $68,789, and the $3 trillion total market cap for cryptocurrencies was reached.

With all these fluctuations, Bitcoin seems like the perfect asset for trading. But is it the only way the crypto can be used? Let’s consider the top 5 use cases of Bitcoin.

1. Crypto Crowdfunding

In the age of cryptocurrency, crypto crowdfunding has become the leading way for small and medium-sized enterprises to secure funding for business ventures. Bitcoin-backed crowdfunding has provided investors and start-ups with a transparent environment to launch new products, services, and platforms.

By sourcing funds through crypto crowdfunding, users remove intermediaries such as banks that charge interest on the money lent for project funding, even over a short time. Crypto investments are also not bound by region, state, or county. Investors and users worldwide have instant access to budding projects and funding at the push of a button.

2. Financial Services for Unbanked and Underbanked Populations

The decentralized nature of cryptocurrency can aid historically underprivileged communities. Bitcoin and other cryptos can offer financial inclusion to communities that previously did not have access to stable financial services. In 2021, El Salvador became the first country to use Bitcoin as a legal tender.

Historically, pioneering new FinTech works best in countries like El Salvador. More than 50% of El Salvador residents chose cash over banking cards. In a working paper by Fernando E. Alvarez, David Argente, and Diana Van Patten, it was reported that 90% of the 1,800 respondents to a face-to-face survey did not use mobile banking, and 70% did not have any bank accounts. Cryptocurrencies in these communities give residents inclusive access to the economy. 

3. Cross-Border Transactions

Cryptocurrencies such as Bitcoin have catalyzed change in the finance arena. In the last ten years, the decentralized nature of cryptocurrencies has revolutionized traditional banking. Bitcoin has replaced inefficient systems, with investors choosing the instantaneous nature of payments over conventional banking and transfers, which take several days to complete.

Cross-border transactions using cryptocurrencies end up more cost-effective, with users able to cut out payment processors and banking institutions. Through traditional cross-border transactions, banks and other intermediaries charge currency conversion fees. Cross-border transactions using cryptocurrencies eliminate these additional costs. 

4. Merchant Protection Against Chargeback Threats

Cryptocurrencies like Bitcoin are quickly becoming a preferred choice for merchants globally. Accepting cryptocurrency for goods or services means merchants no longer have to deal with tedious and often fraudulent chargebacks. Customers must contact the merchant directly if they want a refund for items bought online and paid for in Bitcoin or any other cryptocurrency.

5. Monetization of Excess Energy Resources

Bitcoin has evolved and is coming up with innovative solutions to use renewable energy. The integration of renewable energy could potentially drastically reduce Bitcoin’s carbon footprint. The surplus generated energy could further be harnessed for sustainable applications to drive change in the energy sector.

In the Democratic Republic of Congo, Bitcoin mining is being used to protect the wildlife and biodiversity of the Virunga National Park. A hydro plant in the facility powers the park’s mine. The sustainable electricity source also powers nearby towns. The facility is locally staffed, offering returns on Bitcoin mined and fighting against unemployment in the region. Investors buy the energy created by the hydro plant from the park and use it to mine the coins.

Conclusion

In 2009, Bitcoin started from nothing, and its first significant trade barely cost $5. Today, it is the gold standard in cryptocurrency. Bitcoin changed how users work with financial transactions, offering lower transfer costs and instant access to funds. Cryptocurrency has given users freedom from traditional banking structures and has seen the launch of countless ventures through crowdfunding. Now, Bitcoin is changing the environmental landscape by helping communities make better use of their renewable energy in the fields of conservation.