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How Crypto Helps Achieve Financial Independence

By February 10, 2022February 23rd, 20225 minute read
Note: This blog is written by an external blogger. The views and opinions expressed within this post belong solely to the author.

Innovators and cryptographers strived to build a reliable, decentralized, and working digital currency for many years. Hence, the invention of Bitcoin and Ethereum was the most influential breakthrough in the crypto market. 

Yet, many investors still believe these cryptocurrencies can solely be used for economic speculation. While this was true till a few years back, the scenarios have changed, and now, cryptocurrencies are proving to be highly beneficial for ordinary people using a blockchain-based application. 

Ways to attain financial freedom through Crypto 

Cryptocurrency with no physical model is generated and maintained electronically. At some places, it can be used to purchase even your essential items, such as coffee, electronically and is not very distinct from the traditional currency in its electronic forms. 

However, the functioning of Bitcoin, ethereum, and other cryptocurrencies is different from the traditional currencies that have remained in use all over the world. Apart from this, cryptocurrencies provide a decentralized financial system open to all, which offers its users a commercial and trade value system better than the existing fiat money system. 

The entire market capitalization of all the leading cryptocurrencies has moved to USD 830 billion in the present times, and Bitcoin represents a substantial share of the total. 

Mentioned hereunder are the top ways to attain financial freedom through crypto. 

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Opt for a Crypto funded loan 

Some cryptocurrencies provide investors with a crypto-funded loan. This means that now you can quickly fulfill your financial obligations without giving up on your crypto. This loan facility was initiated on cryptocurrency when decision-makers and lenders understood the drawbacks of selling crypto for cash. 

The biggest drawback was the higher tax rate on sales, and the other one was the speculation of increasing rates in the future. This is the reason why crypto-funded loans came into existence to help investors retain their currencies. However, you must understand that these loans are unprecedented in various ways, unlike conventional loans. 

  • Firstly, crypto-backed loans are entirely collateralized as they use your existing crypto assets. Also, since the lenders do not evaluate your creditworthiness, you can get a crypto loan without furnishing any individual information. However, if you fail to repay your acquired loan, the lender can liquidate your collateral. 
  • Next, the interest rate on the crypto loan is variable and differs from 0.5% to 20% depending on the position of the crypto market.
  • Lastly, the loan lender will liquidate your collateralized cryptocurrency and return the funds after levying a 12% penalty if the collateral falls below a specific limit. This process is governed through smart contracts operating on the blockchain with no humans required in the loop. 

Hence, crypto-funded loans are beneficial for people who hold crypto assets, and it is no different than taking a loan against property to make your existing assets more liquid. 

Purchase ETFs and stock from other countries using Crypto

Earlier investors only had access to stocks listed in their own country even though they had good knowledge and funds to own other countries’ equities. However, the tables have turned now, and investors can easily purchase electronically Traded Funds (ETFs) and stocks from other countries using their cryptocurrencies.  

This purchase of stocks and ETFs have become possible due to a method known as mirror protocol. This mirror protocol generates artificial assets that trace the performance of their actual counterparts, and it is widely popular in countries like Malaysia, Thailand, and South Korea, facilitating a $20 million per day trading volume. 

Hence by moving your national assets into the international blockchain, you can readily accomplish financial inclusion.

Receive interest on a cash deposit

When you deposit in your regular savings accounts, the deposited sum can lose value due to inflation and interest rates nearing zero. On the other hand, various crypto lending platforms offer a whopping interest of 10 percent on your deposits (interest rates in the west are tending to 0%). 

Apart from this, crypto lending accounts can vary from bank term deposits in two ways. Initially, there is no set interest rate. The (APY) Annual Percentage Yield on stablecoins has wavered from 2 percent to 20 percent in the preceding year. Next, there is a zero term limit on the made cash deposits. Also, deposits can get initiated and withdrawn at any point without attracting any penalty other than conventional transaction fees. 

However, keep in mind that these deposits usually possess some risks, and you must never compare them with federally insured bank deposits. Notwithstanding these shortcomings and risks, you can try your hands at emerging marketing possibilities in crypto deposits to earn some yield and attain financial independence through crypto. 

Send money as quickly as an email 

Transferring funds is the key use case of crypto. However, unlike conventional email addresses, a significant limitation was that crypto addresses are long, unreadable, and cannot get memorized quickly. As a result, many traders were reluctant to use crypto as a mainstream money transfer option. 

However, ENS (Ethereum Name Service) identified this commonly faced problem and made crypto addresses readable and memorable by converting them to end with the address ‘.eth’ as a universal internet money standard. This is what made it effortless to transfer money quickly across the globe within seconds. 

Create and trade digital art

Despite the abundant information available over the internet regarding Non-Fungible Tokens (NFTs), people still find them confusing. Hence to help you better understand, these NFTs (Non-Fungible Tokens) help create multiple digital items such as artwork, paintings, and many more online. 

These non-fungible tokens come with a cryptographic signature that rules out the possibilities of your artwork getting copied or counterfeited and further helps artists trade their artwork on a digital platform smoothly by mining these NTFs.  

The bottom line 

The phenomenon of cryptocurrencies is advancing at a rapid speed. In the present times, Ethereum and Bitcoin get recognized as the leader in the cryptocurrency market. They are the principal players in the crypto world with the highest liquidity and are estimated to be the most trustworthy and stable varieties of cryptocurrencies. 

This is why many investors, including big corporations and businesses organizations, have shown interest in trading in Ethereum and Bitcoins. Also, apart from being the leading asset for financial speculation, crypto’s ability to sell and purchase digital goods adds novel value to the economic situation and helps investors attain financial independence through crypto.  

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
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Shashank is an ETH maximalist who bought his first crypto in 2013. He's also a digital marketing entrepreneur, a cosmology enthusiast, and DJ.

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