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I am trying to make sure that I have all the use cases for cryptocurrency. Whether or not a cryptocurrency is optimal in any sense is a different issue from this question. Also, whether or not a cryptocurrency is pure foolishness is also a different question. I see three use cases; are there more?

The first use case would be among a large number of parties that persistently interact with one another, with cash flows moving in both directions. Persisting interactions tend to generate costs, and the argument would be that using a cryptocurrency would reduce transaction costs. Arguably, the group would want to internalize its costs. So they should create their own currency, but that is a different issue. Having a cryptocurrency would permit spontaneous access to third parties.

The second use case would be to complete the execution of contracts. Again, there are existing methods to do the same thing that goes back well over a hundred years. However, such a coin may facilitate fast execution and repeating execution.

The third use would be in money laundering. It would require the acquiescence of a political jurisdiction by permitting sufficient anonymity, but that isn’t necessarily a difficult thing.

Is there a case that I am missing?

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  • I do not see how this is opinion based, there are many real world use cases to which cryptocurrency is put.
    – User65535
    May 31, 2022 at 14:58

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I shall list a number of uses they are put too. Do not take this is support for these uses, or the technology as a whole. While it does not answer the question, I have to add a pointer to evidence of their massive carbon footprint.

  • Store of value
    • Cryptocurrencies are not susceptible to central banks increasing the supply. While many do have inherent inflationary features built in, many (bitcoin is the prime example) are inherently deflationary as the supply is limited. Some consider this a good thing in a store of value, though it must be remembered that they are also susceptible to loss of value, potentially to zero.
  • Speculation
    • The value of cryptocurrencies against fiat currencies and other cryptocurrencies is massively variable. This makes taking a position on them an easy way to engage in speculation, if that is what you are into.
  • Gambling
    • While potentially similar to speculation, online casino style gambling is criminalised in some places, and heavily regulated in most places. There are no practical restrictions on gambling with cryptocurrencies, allowing anyone to wager on just about anything.
  • Purchasing things without being traceable
    • On Dark Net Markets you can buy lots of things that are difficult to access elsewhere. This ranges from the legally questionable, such as items that could be mistaken for goods that are protected by trademark (like brand name goods), through illegal but potentially moral such as mifepristone and misoprostol, to some of the most damaging forms of commerce such as child abuse images, guns and murders. This is enabled by cryptocurrencies.
  • International transfers
    • Most traditional means of sending money internationally between different currencies are expensive. Western Union is probably the best known, and it takes a significant cut of the transfer. Transfers with some cryptocurrencies are very cheap, for example the default transfer fee in the monero CLI wallet is ~0.002 GBP.
  • Online donations
    • Many entities solicit online donations. There are companies that facilitate this, but they take significant fees and are susceptible to pressure to withhold funds from some causes. Cryptocurrencies allow donations by just publishing a wallet address, avoiding those issues.
  • Smart contracts
    • The ability to create automatically executed code on blockchains allows for many things that would not be possible otherwise. Of note are decentralized autonomous organizations (DAOs). This form of business structure could not exist without a blockchain based store of value such as cryptocurrencies.
  • Non-fungible tokens (NFTs)
    • Smart contracts allow the formation of tokens that are unique, as opposed to currency tokens that are identical, or fungible (one dollar is identical to another dollar, so are fungible). NFTs can contain any data, and so can point at URIs and can be used to represent intellectual property.

If we stretch the definition of cryptocurrency to include other blockchain based tracking tools, you may get more ideas from China’s Supreme People’s Court opinion (in Chinese), machine translated PDF, reported upon in English here, They present blockchains as a solution to tracking a large amount of the business of government:

China’s Supreme People’s Court has issued an opinion calling for massive adoption of blockchain across China’s judiciary, financial sector, and government, and for the technology to underpin intellectual property in the nation.

Published last week, the opinion reveals that the Court has already recorded 2.2 billion items on a judicial blockchain. The Court now suggests 32 more initiatives, most of which concern using blockchain to enhance efficiency of, and trust in, the nation’s judiciary.

The recommendations also go far wider, calling for the creation of “an interoperation collaborative mechanism with blockchain platforms”. That effort will allow “market regulation, property registration … and enable inquiry about and verification of information related to the ownership registration and status of transactions, such as basic business profile, variation of corporate equities, correlation between businesses, ownership of immovables and movables, financial leasing, precious metal trading, to facilitate the identification of ownership and transactions of property rights, so as to intensify the development of the classified and categorized supervision system based on data and credit, and to further improve the national business environment.”

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  • One dollar is not identical to another dollar, they have different serial numbers and could have been printed for one of a handful of different reserve branch locations. And to people who collect paper currency repeating numbers in a serial number or many zeros are more collectible.
    – quid
    May 31, 2022 at 15:52
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    Those are all properties of dollar bills, not the theoretical dollar that such a bill represents.
    – chepner
    May 31, 2022 at 19:30
  • I guess. This bored ape is just like that bored ape except this one has a pink hat. Doesn’t seem much different than this dollar bill is just like that dollar bill except this one has 5 zeros in the serial number. Bills are serialized so they’re all technically unique, but almost no one values the uniqueness.
    – quid
    May 31, 2022 at 20:23
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I think you've missed buying and selling illegal things across national boundaries, without having to use the traditional banking system.

All bank-to-bank transactions are logged, and large transactions are flagged up for scrutiny. Cryptocurrencies are anonymized, so you need some kind of account ID, but not a real name.

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