One challenge when investing in any developing technology, including crypto, is imagining how technological breakthroughs might translate into real-world value. Blockchain, the tech behind Bitcoin and various forms of decentralized finance (DeFi), is a great example. Decentralization — cutting out middlemen such as banks and central governments from finance — is a big blockchain innovation.
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But adoption has been slow for a host of reasons. Mainstream blockchain adoption would require enormous changes to current financial systems, including regulatory, human, and infrastructure shifts. Trust is also a significant factor. It was a huge technical achievement to create money that doesn’t rely on intermediaries, but many consumers like using a trusted, regulated bank to manage their money.
As a result, it is only now that traditional financial institutions are starting to incorporate blockchain that we can truly see, rather than speculate on, real-world use cases for crypto. The cryptos with potential are those that can partner with existing banks and payment providers, rather than hoping large swathes of users will leave established systems.
Here are three to consider.
1. USD Coin (USDC)
According to research from The Motley Fool, USD Coin (USDC +0.00%) is the second-biggest stablecoin by market capitalization. Stablecoins are blockchain versions of traditional currencies, and USDC combines the benefits of on-chain transactions — almost instantaneous settlement and low-cost processing — with the stability of the U.S. dollar to which it is pegged. Two prime uses for stablecoins are international money transfers and crypto trading, but that could change if people start to use them for everyday payments.
The way USDC’s issuer, Circle Internet Group (CRCL 0.35%), handles reserves puts USDC in a strong position to attract partnerships with traditional finance. Stablecoin issuers have to keep accessible funds in things like U.S. Treasuries to back every coin in circulation. It gives some protection against people panicking and making mass withdrawals and helps ensure that, for example, one USDC is always worth $1.
Today’s Change
(-0.35%) $-0.35
Current Price
$99.66
Key Data Points
Market Cap
$25B
Day’s Range
$97.56 – $103.00
52wk Range
$31.00 – $298.99
Volume
6.6M
Avg Vol
16M
Gross Margin
5.88%
Circle’s compliant, transparent approach sets USDC apart from its biggest competitor, Tether’s USDT, which has been dogged by questions about its reserves — so much so that in 2021, the New York Attorney General fined Tether for false claims about USDT’s backing. That makes USDC, which publishes monthly independent audits, more attractive than USDT to big banks and payment providers.
By design, USDC’s price will never take off in the way Bitcoin’s might. However, Circle shares could soar if stablecoins become part of mainstream finance.
2. Ethereum
Ethereum (ETH +0.28%) was the first cryptocurrency to introduce smart contracts, tiny pieces of self-executing code that elevate the blockchain from being a glorified Excel spreadsheet to a programmable ecosystem. Smart contracts allow Ethereum to power real-world financial tasks such as moving money, approving loans, and paying interest.
Put simply, they are what make stablecoins and DeFi possible. Their automation also means that blockchain transactions are faster and cost less than those involving a middleman.
Today’s Change
(0.28%) $6.54
Current Price
$2319.70
Key Data Points
Market Cap
$280B
Day’s Range
$2306.22 – $2331.32
52wk Range
$1745.65 – $4946.05
Volume
10B
Ethereum dominates this space: It accounts for more than 50% of stablecoins in circulation, and almost 55% of the funds in DeFi applications. Although Ethereum is far from the only smart-contract cryptocurrency on the market, it has a reputation for security, reliability, and constant technological innovation. As traditional financial institutions integrate blockchain into their operations, these factors make Ethereum a dependable option.
Even if other blockchains take some market share from Ethereum, both stablecoins and DeFi could grow dramatically in the coming decade, particularly if the infrastructure changes and stablecoins become, for example, the way you pay for your groceries or morning coffee. In a best-case scenario, some experts predict that stablecoin issuance could surge from $280 billion in 2025 to $4 trillion.
3. Chainlink
Chainlink (LINK +1.09%) underpins many crypto use cases, including stablecoins and DeFi. Known as an oracle crypto, Chainlink feeds reams of data from the real world and other blockchains to smart contracts. Without accurate inputs, they’d be like broken robots in a dystopian sci-fi movie, moving aimlessly in circles and triggered by all the wrong things.
Today’s Change
(1.09%) $0.10
Current Price
$9.41
Key Data Points
Market Cap
$6.8B
Day’s Range
$9.26 – $9.44
52wk Range
$7.40 – $27.70
Volume
182M
Chainlink can verify that stablecoin issuers have the funds in reserve to support the tokens they issue. It might check that someone has enough collateral for a decentralized loan approval or provide information that prompts an automated decentralized insurance payout. It is already working with major existing financial organizations, including SWIFT, J.P. Morgan, and Mastercard.
Understanding decentralization can help identify opportunities
Decentralization has been a running theme here because the best way to understand which cryptos have real-world use cases is to unpack how these intermediary-free systems might work. It won’t be an easy process, and one of the many risks of crypto investing is that a lot can go wrong.
That said, USDC, Ethereum, and Chainlink could all benefit from and contribute to increased blockchain adoption, something that looks more likely today than ever.
