To exchange fiat currency for cryptocurrency, you typically need to use a cryptocurrency exchange that has a fiat gateway. A fiat gateway allows you to deposit and withdraw traditional fiat currency, through bank transfer, credit/debit card payment or wallets. To find out more about crypto wallets check out:
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What is “fiat” or “fiat currency”?
A fiat currency is a government-issued currency that is not backed by a physical commodity like gold or silver. This means that the value of the currency is not directly tied to the value of a physical asset, but rather is determined by the supply of and demand for that currency in the market.
Since the United States ended the gold standard for the US dollar in the 1970s, all major currencies around the world have been fiat currencies. This means that their value is determined by a combination of economic factors such as inflation, interest rates, and geopolitical events, as well as the actions of their respective central banks.
The supply of a fiat currency is primarily determined by the decisions of its central bank, which has the authority to create new money and adjust interest rates to control the money supply. This means that the value of a fiat currency can be affected by government policies, such as fiscal and monetary policies, and macroeconomic conditions like inflation and economic growth.
The term “fiat” comes from the Latin word “facere,” meaning to “let it be done” or “it shall be done”. This refers to the fact that fiat currencies cannot be redeemed for a fixed amount of a physical commodity, like gold or silver. Instead, the value of a fiat currency is determined by its exchange rate with other currencies and its purchasing power within the economy.
What is a fiat gateway?
The term “gateway” simply describes a connection between the world of traditional fiat currency and the world of cryptocurrency. Hence, a fiat gateway would better be called “crypto-fiat-gateway”. It connects the fiat world with the crypto-world. It allows the exchange of fiat currency to cryptocurrency and vice-versa.
For individuals who are new to the world of cryptocurrency, a fiat gateway serves as the entrance gate to the crypto-world. In order to purchase cryptocurrency, one typically needs to deposit fiat currency through a fiat gateway. However, it’s important to note that not all cryptocurrency exchanges offer fiat gateways. Some exchanges only allow for the deposit of cryptocurrencies like Bitcoin or Ethereum, and do not allow for direct purchases using fiat currency.
For the provision of a fiat gateway, cryptocurrency exchanges usually charge a fee, which can vary depending on the exchange, the fiat currency, and the deposit method used. Fees may be calculated as a percentage of the amount transferred, and may also be subject to additional fees charged by banks or payment processors.
Overall, a fiat to crypto gateway provides a means for individuals to enter the world of cryptocurrency by allowing them to purchase cryptocurrency using traditional fiat to crypto payment. By connecting the worlds of fiat and cryptocurrency, fiat payment gateways facilitate the growth and adoption of cryptocurrency by making it more accessible to a wider audience.
Ways to buy crypto via fiat gateway
In order to deposit fiat and exchange it for cryptocurrency, you basically have these different options: bank transfer, debit/credit card payment, Crypto ATMs and Online payment platforms.
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Bank Transfer
The most common way to use a fiat gateway is to make a bank transfer to a crypto exchange. Practically all regulated exchanges have classical bank accounts that can be used to deposit fiat. Once the fiat deposit arrives in the exchange’s bank account, the corresponding amount of crypto will be sent to your crypto wallet.
In the Euro zone, bank transfers use SEPA system and are usually free. Outside of the Eurozone, the SWIFT system is used, usually incurring some fees. SEPA transfers are the cheapest option to buy crypto with fiat in Europe.
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Credit/debit card payment
Offered by payment providers, debit or credit card purchase of crypto for fiat is the most convenient and instant way of buying crypto. It can be done directly in a crypto app or desktop platform of the exchange by entering the debit or credit card information (card number and CVV code). However, this option is more expensive than bank transfer due to the commission charged by payment providers.
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Crypto ATMs
These special ATMs allow you to buy Bitcoin and other cryptocurrencies directly from your debit card. They are run by intermediaries who charge commission for processing the debit card payment. The BTC are bought immediately and sent directly to a wallet address created in the process to which only you have access. However, crypto ATMs are currently only available in big cities and quite rare.
4. Online payment platforms
Some crypto exchanges accept online payment platforms like PayPal or Apple Pay to buy crypto. However, this option is also more expensive than bank transfer due to the commission charged by payment providers.
It is important to note that different crypto exchanges have different options for buying crypto with fiat, and the fees and processing time may vary. It is recommended to compare the options and fees of different exchanges before making a purchase.
Conclusion
In conclusion, buying cryptocurrency using fiat currency has become more accessible with the introduction of fiat gateways. There are some main ways to purchase cryptocurrency using a fiat gateway: bank transfer, debit/credit card payments, crypto ATMs and online payment platforms. Bank transfers are the most commonly used method due to their cost-effectiveness, while debit/credit card payments provide a more convenient and instant option, albeit at a higher cost. Crypto ATMs offer a unique option for purchasing cryptocurrency directly from a debit card, but their availability is limited. Online payment platforms can be another option for buying crypto, but also incur additional fees. It is essential to research and compare the fees and options offered by different exchanges to ensure the most cost-effective method of fiat to cryptocurrency payment.
FAQ
What is a fiat gateway?
A fiat gateway is a platform that enables users to buy or sell cryptocurrencies using traditional or fiat currency.
Which payment method is the cheapest for buying cryptocurrency using fiat currency?
Bank transfer is generally the cheapest payment method for buying cryptocurrency using fiat currency. This is because bank transfers are usually free or have low fees, especially if you’re using SEPA transfers within the Eurozone.
What are the advantages of buying cryptocurrency using a debit/credit card?
The main advantage of using a debit/credit card to buy cryptocurrency is the convenience and speed of the transaction. It is also a good option for those who do not have a bank account or are unable to make bank transfers.
Are crypto ATMs a reliable way to buy cryptocurrency?
Crypto ATMs can be a reliable way to buy cryptocurrency if you use a reputable and trustworthy ATM provider. However, they may not be as widely available as other options and may charge high fees for the convenience they offer. It’s important to do your research and read reviews before using a crypto ATM.
