Bitcoin Use Cases: From Digital Payments to DeFi

1. Payments:

   The main purpose of Bitcoin was to serve as a peer-to-peer electronic cash system. Individuals and businesses can use Bitcoin to transact globally without intermediaries, making it especially valuable in countries with limited banking infrastructure or capital controls. Payment gateways like Bitpay accept Bitcoin, providing seamless transactions. Bitcoin’s lightning network, which enables instant payments at minimal fees and its ability to be divided into satoshis, has opened more areas of payment like content tipping and digital purchases, where Bitcoin is transacted.

2. Store of Value:

   Bitcoin’s most prominent use case as of now is as a store of value. Bitcoin has a hard cap on its total supply of 21 million coins which offers built-in scarcity similar to precious metals like gold. This makes Bitcoin more appealing in regions where inflation weakens local currencies.
   
   Retail investors in countries like Argentina and Venezuela have used Bitcoin to protect their savings from rapid currency devaluation. Bitcoin is also gaining traction in developed countries as a hedge against inflation and macroeconomic instability. Public companies like Strategy and Tesla have added Bitcoin to their treasuries, while Asset management companies like BlackRock and Fidelity now offer Bitcoin ETFs to Retail Investors.
   
   Over time, Bitcoin has become a non correlated asset, which means it doesn’t always move in sync with traditional markets. This makes it more appealing to investors looking to diversify their portfolios.

3. Investments:

   Bitcoin has delivered massive returns over the past few years, positioning itself as a high growth asset, its price appreciation has attracted investors who seek capital gains. Strategies like Buy and hold are quite commonly used to capitalise on its price movement, in fact over 30% of the Bitcoin addresses have held their Bitcoin for the past five years, sitting on substantial gains. Regulated instruments like ETFs also provide efficient access to its return potential.
   

   Source: Bitbo

4. Remittance:

   Many people around the world send money to their friends and family abroad as remittance through traditional banking channels. Bitcoin’s decentralised network allows faster and more efficient cross-border transactions compared to traditional channels. Bitcoin transactions can be settled within minutes, moreover, its borderless accessibility allows recipients in remote regions to receive funds without depending on the local banking network.

5. Crisis:

   Bitcoin has emerged as a powerful financial tool during times of crisis, its censorship resistance allows for donations and humanitarian aid in any part of the world. During the period of hyperinflation in Venezuela, people used Bitcoin to preserve their savings and access global markets. Ukraine also received Bitcoin in donations from people around the world as it allows it to bypass financial institutions that might block payments to Ukraine.

6. Integration with DeFi:

   Wrapped versions of Bitcoin allow Bitcoin to be used within the DeFi protocol. With Wrapped Bitcoin, users can lend, borrow, or earn interest on their holdings via protocols such as Aave and Compound. These tokens mirror Bitcoin’s value while operating on smart contract-enabled platforms like Ethereum. With this, Bitcoin becomes a productive asset, users can borrow stablecoins against their Bitcoin without selling it, enabling liquidity while maintaining long-term exposure. This integration bridges Bitcoin’s liquidity with the innovation of DeFi.

7. Real Estate:

   Bitcoin is gradually getting used in real estate transactions, there are a few cases from Miami and Dubai, where property deals involving Bitcoin were reported. Companies like DAMAC and Binayah in Dubai now accept Bitcoin for property purchases. Bitcoin allows real estate buyers and sellers to complete deals directly and efficiently without the need for intermediaries.