*This is in collaboration with BloombergQuint Brand Studio

The crypto market is witnessing extraordinary growth as blockchain, Web3 and the metaverse are rapidly becoming mainstream. While there are over 4,000 different versions of crypto floating around, many of them have found unique use cases and solutions in fintech.

Here are five of the most popular crypto use cases in play around the world and much of the focus in 2022 will remain on these:

1. Decentralized Digital Currency

Among the buzz around shiny, new technologies paving the way for disruptive applications, crypto’s main use case is why blockchain technology came into existence: independent and decentralized digital currencies. From the early days of complex mining to simple trades on exchanges today, crypto has come a long way in proving its usefulness.

The decentralized nature of crypto along with minimal transaction fees, privacy and security has attracted a whole generation of investors, entrepreneurs and tech enthusiasts aboard the crypto train. Thousands of crypto exchanges carry out millions of crypto trades every day, and that trend is increasing every day.

P2P transactions have found a huge home in one of the largest crypto markets in the world by users: India. While some sources like BrokerChooser research claim that India has more than 10 crore crypto users, WazirX CEO Nischal Shetty says that the actual number is closer to 2 crore users† Ultimately, more and more Indians are definitely going to invest in crypto.

2. Crypto Banking

Despite the fundamental differences between traditional banking and crypto transactions, there is a convergence point where banking services are available for trading crypto and fiat currencies. It’s called crypto banking. Its burgeoning popularity is due to the fact that anyone with a smartphone and an internet connection can trade digital currencies.

Just as traditional financial institutions hold stock and cash for investors and consumers, crypto banks hold digital assets as well as traditional fiat currency. Banking firms such as Goldman Sachs, JP Morgan and Barclays, to name a few, are some of the major players that have adapted their services to manage digital currencies, offering services such as crypto interest accounts and savings accounts.

While India has some catching up to do in this area due to expected regulatory clarity, there is growing optimism that crypto may soon be regulated, which is what crypto exchanges and the ecosystem in India are demanding. A prime example of this optimism came in December 2021 when Kotak Bank partnered with WazirX to facilitate payments to crypto investors.

3. Asset Tokenization

While digital currencies offer some tempting features, there are a few chinks that need to be ironed out. One of these is sometimes tricky liquidity. Fortunately, with asset tokenization, the answer exists within the blockchain framework itself.

Asset-backed tokens have an inherent value that is directly linked to the underlying physical assets. The tokenization of assets improves the market liquidity of real-world assets such as real estate. The digitization of assets also opens up markets for investors who previously could not participate. While traditional financial institutions often prohibit clients with insufficient cash from investing, tokenization of a physical asset allows a high degree of fractionation or the division of an asset into much smaller units.

By dividing the ownership of an item into several small fractions, all investors gain in proportion to the value of the asset they own, requiring only a minimal amount of money to invest. This promises to be a popular use case in India, especially in Tier-2 and Tier-3 cities.

4. On-Chain Governance

Crypto is also being used to develop a more sophisticated way of driving policy, often at private organizations or clubs.

Entities are often looking for new ways to give their users more power and responsibility. One way to do this is to form a Decentralized Autonomous Organization, or DAO, and force members to deposit their own funds in exchange for voting rights i.e. governance tokens. This way of distributing control among stakeholders is known as ‘on-chain governance’. The powers of the governance tokens can include traditional management functions and the ability to change the entity’s protocol.

5. Smart contracts

Smart contracts are a type of paperless digital code that offers a series of guarantees based on specified terms that have already been agreed. This basic concept can be used to automate actions or entire networks, such as DAOs using smart contracts.

The most prominent benefit of smart contracts is the automation it provides. In principle, this means that there are no interruptions and that third parties cannot change the agreement or decision. Security features in smart contracts’ also set them apart. Smart contracts work properly due to encryption and the data generated cannot be updated or changed in any way as they work on networks with immutable data. This ensures that all data is safe.

It’s no surprise that smart contracts are finding a place in a number of areas around the world in healthcare, finance, governance, privacy and more. In India, while there is still some ambiguity surrounding crypto, smart contracts are slowly but surely making their way into the commercial sector.

This post 5 Crypto Usage Scenarios To Watch Out For – WazirX Cryptocurrency

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