Being in the world of cryptocurrencies is about taking an intelligent view of money. We know that Bitcoin (BTC) is the future, both as a store of value and as a means of payment, as layer 2 solutions like the Lightning Network begin to flourish. Therefore, it is vital that every cryptocurrency user makes sure that they always get the most competitive price for each service. Although millions of cryptocurrency users convert fiat to crypto using a debit or credit card, this is by no means a low-cost option.
Pay the overhead: Converting from fiat to crypto
According to The Motley Fool, people who use credit cards to pay for their crypto purchases may be subject to at least 7% additional fees. For example, if you were to purchase $1,000 worth of Bitcoin with a credit card, you could pay up to $70 in fees if your card issuer treated the transaction as a cash advance, in addition to standard fees and processing charges.
Although cryptocurrencies are accessible worldwide, one of the biggest obstacles to their adoption by the general population is not the acceptance of digital assets, but rather bridging the gap between the world of cryptocurrencies and that of fiat money. . Failure to do so has meant that most individuals lack the necessary tools to interact with digital currencies or face exorbitant costs when interacting with the ecosystem.
A cryptocurrency investor or user can execute a wide variety of cryptocurrency transactions, each of which has its own cost structure. The cost of any cryptocurrency transaction can change regularly and at short notice, which means that users must be diligent in checking those fees – a time-consuming and less-than-ideal action when entering and exiting positions. quickly.
We live in a time when so-called disruptive fintech apps and services, like the digital banking app Revolut, are creating a seamless banking experience. However, when it comes to converting fiat money into cryptocurrencies, users are plagued by expensive and impractical solutions that are more akin to cashing out chips at a casino than buying the future form of money.
Exchanges battle entry fees
Exchanges like Bitfinex are integrating innovative solutions into their platforms to make converting fiat to crypto cheap and efficient. In collaboration with OpenPayd, a digital banking and payment solutions provider, Bitfinex allows its users to transfer fiat currency from their bank account to the Bitfinex platform at a cost of just 50 euro cents per transaction. At the moment, the service is only available for euros, but the exchanges plan to expand it to other major cryptocurrencies.
Other exchanges are also trying to make buying crypto cheaper by launching a suite of software development tools that will allow self-custodial wallets like MetaMask to offer users a new way to buy or transfer crypto to a wallet. The goal is to streamline the Web3 onboarding experience for users and reduce the fees users incur when moving existing crypto balances from their accounts to a self-custodial wallet/DApp using these new types of services.
Reduced incorporation costs by replacing outdated rails
With the advent of Web3 and cryptocurrencies, the outcome of these payment innovations may very well confirm the 2017 prediction that the era of credit cards may be coming to an end. Major payment service and solution providers such as FIS and BCB Group are also innovating new fiat-to-crypto conversion solutions, alongside younger startups such as Fireblocks to introduce cross-currency instant settlement networks. local and stablecoins. These innovations are likely to turn antiquated payment infrastructure upside down as a new crop of solutions becomes available to all businesses that are going to touch cryptocurrency in one way or another in the coming decades.
As retail and institutional money continues to enter the crypto markets, nearly every major company has its sights set on streamlining the onboarding experience and making crypto payments more secure, accessible, and instant. By doing so, these companies will reduce overhead for businesses, which can then pass the savings on to customers. Charging high fees just for moving fiat currency in and out of the crypto ecosystem is an unnecessary hurdle for investors. The fiat on-ramps and off-ramps that exchanges are using play a vital role in bringing new investors into the cryptocurrency ecosystem and the Web3.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, readers should do their own research when making a decision.
The views, thoughts and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Paolo Ardoino he joined Bitfinex in early 2015 and is now its chief technology officer. After graduating from the University of Informatics Sciences of Genoa in 2008, he began working as a researcher on a military project focused on high-availability networks, self-healing, and cryptography. Interested in finance, Paolo started developing finance-related applications in 2010 and founded Fincluster at the end of 2013. Backed by two rounds of funding investment, Fincluster delivered an advanced, modern and accessible web platform serving different clients with capabilities of personalization.
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