Does crypto have a future beyond speculation?
When you think of cryptocurrency, one thing probably springs to mind: its ever-fluctuating value. There’s a good chance you’ve heard it referred to as a “get-rich-quick” scheme on social media, or labelled a “speculative bubble” by the mainstream media.
But will the applications of cryptocurrency ever extend beyond investment opportunities? We decided it was time to find out.
For the second year running, we joined forces with the Stellar Development Foundation (SDF) to conduct research into the current attitudes towards crypto. This time around, we not only collected data from our combined customer bases, but from a representative sample of the general public as well, in order to include a wider range of perspectives.
Once again, our research revealed some surprises. As well as dispelling many other myths about crypto, the report found that digital currency is “no longer just for speculation”. But how was that conclusion reached, and what other use-cases will it have moving forward?
Crypto and speculation
It’s no secret that the current value of crypto is based on speculation about its future value. As conventional cryptocurrency isn’t backed by anything, it can only have long-term value if it’s widely accepted as a medium of exchange and, consequently, a store of value.
How long until that happens? It might just be sooner than you think.
Crypto and payments
According to our research, 59% of the Wirex and Stellar databases have sent crypto to someone else, compared to 45% of the general public sample. The latter is particularly surprising - almost half of the group consisting of both crypto-aware and non-crypto aware individuals has made a crypto transfer before.
On top of this, it’s clear that there’s a very real demand for international crypto transfers, particularly among migrant workers who need to send money back to developing countries. Our findings demonstrated this, with 45% of the general public sample having previously sent crypto to someone in another country.
One of the reasons for this appears to be the rising cost of remittance fees, which are charged by the financial institutions facilitating cross-border transactions.
Our research confirmed this fact, with over half of the general public sample stating that the fees they pay for sending money abroad are too high. It would seem, then, that the more people are required to pay in money transfer fees, the more likely they are to consider digital assets as an alternative.
But in which other areas is crypto being used?
Crypto and charity
When Russia invaded Ukraine in February, the need for humanitarian assistance quickly became urgent. Numerous charities began trying to support those in crisis, and among them was a surprising amount accepting donations in crypto.
In fact, the Ukrainian government itself began tweeting crypto wallet addresses, requesting donations in the form of BTC, ETH or USDT.
Why has Ukraine turned to crypto? In short, to save time and money. Unlike fiat currency, crypto can be sent directly, in an instant, without the need to be converted to the appropriate currency or be sent via an intermediary. It can also be kept safe without any fear of it being stolen, or of the banking system collapsing.
Its ability to eschew bureaucratic red tape commonly faced by charities makes it an increasingly popular alternative to fiat that can reach those who need it straightaway.
Crypto and NFTs
These days, it seems as though just about everything is shifting from physical to digital. It isn’t surprising, therefore, that the demand for NFTs is so high.
NFTs represent an innovative new use-case for crypto that many believe is here to stay. With creativity at the core of the NFT industry, it attracts all types of people - even those who haven’t previously dabbled in digital assets.
What does the future hold for NFTs? It’s been said that their application will evolve from digital asset ownership to social opportunities within virtual communities like the Metaverse.
The crypto industry currently has more eyes on it than ever before. BTC and ETH constantly make headlines for hitting new all-time highs, the US government are in talks about new crypto regulations, Elon Musk has shown he can send a meme coin’s value soaring with one Tweet - you get the picture.
But while crypto is frequently referenced in popular culture and the news, it's mainly as a speculative asset. So, how long until we acknowledge its other benefits?
Last year, it was estimated that less than 30% of transactions in bitcoin are currently related to payments, with trading, speculation and investment making up the rest. This year, the Wirex and SDF report found that approximately half of all respondents have used crypto to make a payment. Could it be said that it’s gradually realising its original purpose?
As for its other uses, while NFTs apparently make up just 1% of the cryptocurrency market, crypto philanthropy looks to be on the rise, with crypto donation platform The Giving Block expecting to facilitate donations worth more than $1 billion this year alone.
While it’s safe to say that crypto does have a future beyond speculation, it’s perhaps taking a little longer to get there than Satoshi Nakamoto initially predicted back in 2008.