What is cryptocurrency used for?

Cryptocurrency is used mostly for trading and for holding as a speculative asset. It is also used to send money across borders, to hold digital dollars in the form of stablecoins, and to run financial apps. Paying for everyday goods, the purpose bitcoin was designed for, remains a minor use.

What is the most common use?

Investment and speculation. Most people who own crypto bought it on an exchange in the expectation that its price would rise. Some treat bitcoin as a long-term store of value and compare it to gold. Since January 2024, US investors have also been able to hold it through spot bitcoin exchange-traded funds in an ordinary brokerage account.

Critics note that a coin produces no earnings or interest of its own, so its price depends entirely on what the next buyer will pay.

Is crypto used for payments?

Sometimes, but not often. Some online merchants and a small number of shops accept bitcoin or other coins. Few customers pay that way. Prices can move sharply within a day, network fees vary, and a payment cannot be reversed if something goes wrong.

Tax is another obstacle. The IRS treats digital assets as property, so in the United States spending crypto can create a taxable gain or loss, as explained in the guide to how crypto is taxed in the US. Rules differ by country.

Sending money abroad is a more established use. A transfer can arrive within minutes at any hour, which appeals to workers sending money home. The saving depends on how cheaply the receiver can turn the crypto into local cash.

What are stablecoins used for?

A stablecoin is a token designed to stay worth one unit of a currency, usually the US dollar. Stablecoins handle much of the day-to-day movement of money in crypto.

Traders use them to shift funds between exchanges without touching a bank. People in countries with high inflation or strict currency controls use them to hold dollars. Some businesses use them to settle international invoices. The holder depends on the issuer keeping enough reserves to honor the peg.

What else is it used for?

• Financial apps. DeFi, short for decentralized finance, lets users lend, borrow and trade through software instead of a bank or broker.
• Digital collectibles. NFTs record ownership of items such as art, game items and tickets.
• Network fees. Coins such as ether are needed to pay for transactions and programs on their own networks.

These uses are real, but they are concentrated among people who already hold crypto. Crypto is also used in crime, including ransomware and fraud, although public ledgers mean such payments can often be traced.