No matter how much advertising and aggressive marketing in cryptocurrency space tries to promote the idea of a fully digital economy and the advent of complete digitization, the statistics paint out a rather realistic image of ongoing fiat dominance. There are a little over 330 million cryptocurrency users worldwide, with 100 million of them being based in India. The given numbers indicate that fiat is firmly entrenched in every single economy and remains the dominant form of transacting.
Cryptocurrency projects are known for their extraordinary claims and the elaborate schemes they employ as part of their marketing and advertising campaigns. The only real ways a user will be willing to enter cryptocurrency space is either because of sheer belief in the application of digital assets as practical instruments in everyday life, or for profiteering via platform trading or speculation. Ethereum and other altcoins are part of the ongoing war of conviction whose ultimate goal is to convince new users to inject their liquidity into the cryptocurrency industry.
In fact, most Bitcoin holders are not even users of cryptocurrencies, they are just holders. The reasons for holding may vary, but most end up in Bitcoin being used as a means of value storage and a long term investment instrument that fluctuates violently in price over time. Cryptocurrency exchanges are no less aggressive in their strive to convince users to pour fiat into the industry. By offering direct on-ramps without verification, they give straight gateways for the purchase of cryptocurrencies. Users resort to exchanges to buy altcoins and Bitcoin for a chance of partaking in the cryptocurrency frenzy that often ends up in scandals and catastrophes, as evidenced by the collapses of Terra/Luna and FTX.
The security of exchanges has been placed under doubt in recent times, considering the utter collapse and bankruptcies of such platforms as FTX, AAX, Hoo, and others. Your wallet is your bastion – a non-custodial storage that can be used to purchase Bitcoin. The secure way of buying BTC is relying on a direct peer-to-peer approach without any intermediaries.
High quality exchanges are hard to come by, since the main ones on the market are centralized and their integrity has been put under question after the bankruptcy of FTX. Any exchange website can also be fraudulent, considering the abundance of scams and phishing schemes on the market. Therefore, in order to pay for Bitcoin and be sure that the asset will be transferred to the designated wallet, users need to be extra careful and make sure to follow a few simple rules of security.
A debit or credit card is the first thing users think of when connecting on-ramp gateways to the exchange wallet account once they pass the mandatory Know Your Customer verification procedure upon registration. However, users must remember that the credit card can be used to purchase Bitcoin and other currency types only if the appropriate security layers are in place on the hosting exchange. Among such measures is 2-Factor Authentication using email, SMS via phone binding, or Google Authenticator services. Since the chances that the hackers gain access to the exchange account and the device of the user are slim, the possibility of losing funds are lowered in case proper security measures are taken.
If users really need to buy Bitcoin with a debit card, then a safe means would be to connect to a trusted non-custodial wallet that allows them to retain their private keys and thus maintain security. The essence of using a non-custodial wallet is that hot wallets provided by exchanges are on the exchange side, meaning that the platform retains the private keys and custody of users’ funds. If the hackers manage to bypass the exchange’s security systems and gain access to an administrative account or access passwords, then the first thing they will do is enter the funds repository and withdraw users’ funds to an external wallet that will be impossible to trace.
However, it is unprofitable and next to impossible for hackers to tap into the repository of an individual user, since that would mean spending a lot of time trying to match complicated passwords and gaining access to the device storing the 2-Factor Authentication. As such, it is much easier for hackers to target centralized venues. Research from Certik indicates that over $13.1 billion were stolen from cryptocurrency holders in 2022 alone, placing just questions regarding the use of vulnerable debit cards for the purchase of digital assets.
Many non-custodial wallets have their own on-ramps and off-ramps, allowing users to top up accounts using debit cards and thus bypass the risks of resorting to centralized exchanges. The process of buying cryptocurrencies with a debit card via a wallet will entail a certain commission and the price of the selected asset will be determined based on aggregated market price data.
Fiat is still the dominant form of payments even in the digital economy. Users will still have to resort to their bank cards and accounts for purchasing cryptocurrencies. However, these methods entail certain risks, since the hackers are constantly probing exchanges and payment services for vulnerabilities. Users are encouraged to stay safe by remaining non-custodial in terms of asset storage and fiat transfers.