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As the adoption of cryptocurrencies grows, it is becoming easier for users to understand how to purchase cryptocurrency with the fiat of their choice. In this article, we discuss the fiat on- and off-ramps and how they are pivotal in taking crypto mainstream.
The cryptocurrency space is full of terminology that may seem daunting to understand, but these terms are crucial for knowing the context of a new digitised space.
On-ramps for Fiat and Crypto
An on-ramp is a service that helps an exchange of fiat currencies, for instance, US dollars and Euros for cryptocurrencies like Ethereum and Bitcoin. Since fiat is by far the most widely used currency globally, exchanging fiat is an excellent way of accessing cryptocurrency.
Simply put, it is an “on-ramp” to the world of cryptocurrency. While there are millions of people who have already purchased and invested in crypto, the process can be challenging to begin with. A straightforward and intuitive on-ramp process is crucial for crypto adoption to continue.
Off-ramps for Fiat and Crypto
On the contrary, an off-ramp is a process that allows for the exchange of cryptocurrencies for fiat. On-ramps are the most important means of mass adoption. However, the availability of an off-ramp is also important since it ensures that the funds of users are not locked in a cryptocurrency and that they can easily exit at any time.
Off-ramps are thus complementary to the on-ramps and play an important role in bridging the gap between the traditional and the crypto marketplace. Fiat off-ramps are critical mainly in the context of decentralized finance too. Needless to say, the easier it is for users to purchase crypto with their debit card or bank account, the more likely they are to participate.
What are the Problems that Crypto Ramps Solve?
Cryptocurrencies are the bridge between the new world and the old. Perhaps one day we won’t need bridges and cryptocurrency will dominate the economy. The reality is, despite the growing adoption of crypto, for now, the majority of the global economy still runs on these legacy fiat rails.
Web3 must tap into the value of crypto ramps to gain more traction. For everyday users, the steep learning curve and the effort needed to buy or sell cryptocurrencies can turn all but the most committed from using the Web3 apps. Crypto ramps essentially reduce the time, cost and complexity involved.
As for the business, this friction and cost can limit growth and hinder a lot of Web3 use cases - particularly for the less finance-centric applications. The cost of implementing as well as maintaining your fiat-to-crypto rails is just not realistic for all projects.
Thus, an end-to-end ramp provides a turnkey solution that allows them to easily turn their applications into a two-way bridge between fiat and crypto. This also frees developers to focus on their business case instead of maintaining direct financial rails in each jurisdiction where they want to operate.
How do Crypto Ramps Work?
An end-to-end crypto ramp solution is a simplified and maximally optimized exchange/swap mechanism that sits between crypto and fiat - two different economic paradigms. Crypto ramps handle all the steps in moving between the two realms in one unified and unbroken experience.
The steps often include identity verification, compliance checks, asset pairing, counterparty matching, payment processing and delivery of funds. However, unlike traditional exchanges, crypto ramps focus on ease of use and speed. Unless you are a professional trader, these attributes make crypto ramps more efficient than exchanges for most use cases.
Why Should You Use Crypto Ramps?
End-to-end crypto on-ramps and off-ramps are certainly not for everyone. Professional traders or use cases that involve high-frequency exchanges may find it difficult to use a crypto ramp each time. The same is applicable for “high-rollers” and massive orders where capital efficiency is more important.
However, that is not the case for most businesses and people. For everyday users, crypto ramps reduce friction drastically, allowing them to focus on using crypto instead of the process of buying and selling. This has clear positive implications for real-world usage and crypto adoption.
On the business front, crypto ramps enable Web3 entrepreneurs to focus on what they do best instead of trying to reinvent payment each time. This leads to more innovation and a better user experience across the board. Exchanges and crypto ramps are complementary, with each having its use case and both contributing to Web3 adoption. This, ultimately, brings a more decentralized future.
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