Being in cryptocurrency means being smart about 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 each cryptocurrency user always receives the most competitive price for each service. While millions of crypto users convert fiat to crypto with a debit or credit card, this is by no means a cheap choice.

Paying Overheads: Fiat to Cryptocurrency Conversion

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According According to The Motley Fool, people who use credit cards to pay for purchases in cryptocurrencies may be charged an additional fee of at least 7%. For example, if you were to buy $1,000 in bitcoin with a credit card, you could pay up to $70 in fees if your card issuer treated the transaction as a cash advance, on top of the standard fees and processing fees.

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Even though cryptocurrencies are available all over the world, one of the biggest barriers to mass adoption of cryptocurrencies is not the adoption of digital assets, but rather bridging the gap between the crypto and fiat worlds. Failure to do so means that most people lack the tools needed to interact with digital currencies, or incur exorbitant costs in interacting with the ecosystem.

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An investor or user of a cryptocurrency can perform a wide range of cryptocurrency transactions, each with its own cost structure. The cost of any particular crypto transaction can change regularly and in short order, which means that users must diligently check these fees – an action that is time-consuming and far from ideal when entering and exiting positions quickly.

We live in an era where so-called disruptive fintech services and apps like the Revolut digital banking app are creating a seamless banking experience. However, when it comes to fiat-to-cryptocurrency conversion, users are stung by expensive clumsy decisions that are more like cashing out chips at a casino than buying a future form of money.

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Exchanges like Bitfinex are integrating innovative solutions into their platforms to make converting fiat to cryptocurrency cheap and efficient. In partnership 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 for as little as 50 euro cents per transaction. For now, the service is only available for EUR, but the exchange plans to roll it out to other major cryptocurrencies as well.

Other exchanges are also trying to make it less expensive to buy crypto by launching software development kits that will give self-custody wallets like MetaMask the ability to offer users a new way to buy or transfer crypto to a wallet. This aims to simplify the user onboarding process for Web3 and reduce the fees users incur when moving existing crypto balances from their accounts to a self-hosted wallet/DApp using these new types of services.

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With the advent of Web3 and cryptocurrencies, the result of these innovations in payments may well confirm the forecast of 2017. forecast that the age of credit cards is coming to an end. Major payment solutions and service providers such as FIS and BCB Group, along with younger startups such as Fireblocks, are also implementing new fiat-to-cryptocurrency solutions to enable instant settlement networks between local currencies and stablecoins. These new innovations are likely to turn legacy payment infrastructure on its head as new solutions become available to all businesses that touch cryptocurrencies in one way or another in the coming decades.

As retail and institutional money continues to pile up in the crypto markets, almost every major company is aiming to streamline the onboarding process and improve the security, accessibility, and immediacy of crypto payments. In doing so, these companies will cut overhead costs for businesses, which can then pass the savings on to customers. Charging high fees just to move fiat currency in and out of the crypto ecosystem is an unnecessary hurdle for investors. The fiat entries and exits that exchanges use play a vital role in attracting new investors to the cryptocurrency and Web3 ecosystem.

This article does not contain investment advice or recommendations. Every investment and trading step involves risk, and readers should do their own research when making a decision.

The views, thoughts and opinions expressed here are those of the author only and do not necessarily reflect or represent the views and opinions of Cryptooshala.

Paolo Ardoino joined Bitfinex in early 2015 and is now its CTO. After graduating from the University of Computer Science in Genoa in 2008, he began working as a researcher in a military project dedicated to highly available, self-healing networks and cryptography. Interested in finance, Paolo started developing finance-related applications in 2010 and founded Fincluster in late 2013. Backed by two investment rounds of funding, Fincluster has delivered a cutting-edge, modern and affordable web platform that caters to a variety of clients with customization options.