Bitcoin was originally designed as a means of transacting for the average person – a so-called free currency that would be liberated from the shackles of oversight on the part of authorities. The decentralized basis for Bitcoin, or the blockchain, was supposed to serve as the foundation for a new economy, a digital environment of trustless transacting and interaction on a peer-to-peer basis. As the technology developed, it quickly became clear that it would be impossible to separate the concept of cryptocurrencies from their ideological influence – fiat funds.
Every Bitcoin is valued in fiat terms, as it is impossible to place a value mark on an asset in modern realities without resorting to a common denominator. In financial terms, that denominator is the default global reserve currency – the United States Dollar. And though the latter has been losing its foundation recently due to a series of financial crises and the surfacing vulnerabilities based on its lack of commodity backing, there is simply no alternative at the moment that can cope with the tasks reserved for the currency.
Fiat is an inextricable part of the cryptocurrency industry for a very simple reason – users entering the blockchain space have no assets to them that they could start using from the get go. As such, newcomers are forced to resort to on-ramp services – special infrastructure projects connected to fiat gateways from traditional finance, such as VISA and MasterCard. These services allow users to connect their bank account to a specific online wallet and make transfers. The bank transfers serve as gateways of fiat into the cryptocurrency industry, allowing users to buy digital assets.
Once users have entered the crypto world and topped up their account on currency exchanges, they can start purchasing their first digital assets. Crypto exchanges act as critical instruments in the blockchain industry, effectively connecting users with the services that release cryptocurrencies into circulation. Naturally, the availability of fiat in such an environment is vital, meaning that the crypto exchanges must have reserves available. It is a completely different question whether they actually have reserves, as evidenced by the string of bankruptcies that started with the collapse of the FTX exchange.
Nonetheless, once users access their first account, they can find Bitcoin among the list of assets presented on the platform. Virtually all exchanges allow their users to buy Bitcoin and hold it in custodial wallets. The latter have become a point of debate in the cryptocurrency community after the incident with FTX and other exchanges, but the fact remains that such wallets can be used to store both digital and fiat funds, placing both types of assets at risk in case of an exchange failure.
Exchanges also allow their users to withdraw funds via special services called off-ramps. These specialized gateways also leverage their connections to VISA and MasterCard, as well as other payment services, to allow users to cash out their assets in the form of fiat. Digital currencies are not as widespread as many cryptocurrency community members are made to think through the various crypto media channels. Just over 17,000 outlets around the world accept Bitcoin and other cryptocurrencies, and even that is dependent on the country.
With such a reality facing them, cryptocurrency holders and users have to contend with the fact that their assets are essentially confined to the blockchain environment and the few Web2 services connecting to them. The adoption process may be slow, but interest in Bitcoin is still high enough to encourage trade. As such, many users search for ways of how to buy Bitcoin using fiat to start their cryptocurrency careers. Most Bitcoin operations take place for fiat, since so-called “whales” – large investors in the cryptocurrency market, enter the space with considerable capital for many purposes, the most common of which is long term portfolio buildup.
As for ways to sell Bitcoin for cash, there are many avenues open to users. The ways to sell your Bitcoin for fiat start with the availability of said Bitcoins on a wallet. The buyers willing to purchase Bitcoin are just as many as there are Bitcoins, therefore finding a buyer will not be a problem. The availability of chats and specialized forums on cryptocurrency topics makes peer-to-peer communication simple and straightforward.
However, the abundance of scams and fraudsters in cryptocurrency spaces makes it essential for users to exercise caution. There are plenty of malignant market players willing to hack your bank account and steal the fiat stored therein. Many mistakenly believe that the hackers are only after digital assets in cryptocurrency space. However, research indicates that users routinely lose fiat funds as well on a variety of phishing schemes and outright fraud that takes place through forums, YouTube, chats, fraudulent websites, and many other venues.
When deciding to sell Bitcoin for cash, users need to think of security measures to ensure the safety of their transaction. Trust is not a commodity that can be found on the decentralized market, therefore the use of escrow services should be a solution. These services allow users party to a transaction to resort to it as an intermediary providing guarantees of execution of the terms of the contract. Users can vest the assets they wish to pledge to the transaction to a contract. Once the terms are implemented, the service will release the assets to their respective new holders. The buyer will receive the Bitcoin, and the seller will receive fiat funds to the wallet or bank account they indicate.
Another way of selling Bitcoin for cash is through exchanges, both centralized and decentralized. All users need to do is post an order for the sale of the amount of Bitcoins they wish on the open market and wait for a corresponding purchase offer. The price should be set in the currency the user wishes to receive. However, considering that most exchanges operate with the United States Dollar or Euros makes it more difficult to cash out other currencies that are specific to countries.
Some exchanges that operate in countries like Nigeria or other states allow users to cash out using local currencies through national or indigenous payment systems. These services give users the opportunity to automatically convert the received United States Dollars or Euros into local fiat and cash hem out to bank accounts or local cards. However, users should bear in mind that the services will always retain a commission for the transaction amount and the ultimate sum will be slightly lower than the posted sale price.
Bitcoin is a digital currency that has its price denominated in fiat currencies. Such a state of affairs is part of the ongoing and unavoidable connection of the blockchain industry with traditional finance. Without injections of liquidity from fiat sources, the cryptocurrency industry will simply stall. As such, it is normal and easy for users to sell their Bitcoin for cash using exchanges, peer-to-peer services, and currency exchangers that operate both locally and globally.