Everything you need to know about the crypto superhighway.
Trading crypto can seem intimidating– especially for new and retail investors. As major cryptocurrencies begin to trade for thousands (if not tens of thousands) of dollars each, it can seem fairly cost-prohibitive for the casual investor to buy into. But this is actually not true. Investing small amounts of money into cryptocurrencies can not only turn a tidy profit, but it can also help protect existing assets against inflation, or save crossborder transactors a ton of money in associated fees.
Thanks to the ever-increasing plethora of options that investors have when it comes to avenues for buying and selling crypto, even those who have little to no access to legacy financial institutions still have the ability to invest in crypto. Creating a truly global financial network that can be accessed with ease. All by using the right ramps.
Simply put, without ramps, there would be no way to transact Bitcoin and other cryptocurrencies. Ramps off a means to both buy, sell, and trade cryptocurrencies– which is important for investors for sure, but also important for market health and value.
This is because, by and large, cryptocurrencies rely on “artificial scarcity” in order to retain their value. Much like other steady assets (Gold and diamonds for example), the supply of most cryptocurrencies is tightly controlled. This is one of the major advantages that crypto has over fiat. With bitcoin, for example, there are only 21 million BTC in existence. There will never be anymore. They cannot be made or artificially inflated.
This means that market value is based on liquidity– or how many bitcoins there are in the market that can be purchased at any time. The higher the demand for bitcoin, and the fewer bitcoins available for purchase, the more money each is worth. This should probably be bringing back some less than vivid memories of your high school Econ classes. As supply and demand is a cornerstone principle of how most assets gain or lose value. In an over saturated market– one where supply greatly outweighs demand, prices of a given asset will plummet.
For many people, cryptocurrencies represent a way to engage with the financial world in ways that they may otherwise be unable to. Ramps allow even the underbanked, or unbanked, an avenue for purchasing cryptocurrencies and moving these assets around the world in a borderless, low-cost, and frictionless environment. In traditional, centralized banking structures– a client is expected to provide an incredible amount of personal information in order to be able to apply for bank accounts, certain types of loans, or mortgages.
In order to open an account at most legacy institutions, clients must supply utility bills, credit checks, background checks, and a number of extremely sensitive, personally identifying documents. Let alone large sums of money as collateral. If someone doesn’t have access to any of these things, their ability to interact with the world of finance is stunted, if not all together prohibited.
With cryptocurrencies, little more than your name and an email is required to interact with the market. Once cryptocurrencies are owned, investors then have access to a multitude of different financial offerings– such as real estate, goods and services, and even lending institutions. Regardless of credit history or current financial standing. Ramps also provide avenues for institutional investors to be able to move large sums of money around on the network– providing a viable space for anyone who chooses to interact with crypto.
On-ramps are any place where an investor can exchange fiat to gain crypto. There are three main types of crypto on-ramps:
Exchanges are online networks that allow users to exchange their existing assets (like fiat or other cryptocurrencies) for crypto. These platforms often offer a number of ways to pay for your crypto, wire transfers, bank transfers, or debit and credit cards. Many also offer wallets in which clients can store their cryptocurrencies in, as well as a number of other advantageous features.
Peer-to-peer (P2P) networks function similarly to exchanges, except instead of dealing with one business entity, an investor purchases their cryptocurrencies directly from another person. These exchanges are usually done anonymously, and most P2P networks have some sort of internal vetting system that is used to rate sellers based on their previous transaction history.
Bitcoin ATMs function similarly to traditional ATMs in that you put money in to get money out, however, instead of fiat coming out, bitcoin ATMs provide bitcoin. The downfall to these machines is that there are still few in the world and they only deal in bitcoin– with many only allowing users to buy bitcoin, not trade or sell it.
Off-ramps work exactly opposite to on-ramps. So, instead of allowing access for investors to purchase crypto, off-ramps offer them the ability to sell their crypto for fiat or other cryptos.
Many of the on-ramps mentioned above also function as off-ramps. Allowing users to sell or trade any cryptocurrencies that they have bought in a similar fashion to how they purchased them. With the notable exception of Bitcoin AMTs, as only a small percentage of them are considered bidirectional (where users can buy and sell on the machine).
Payment portals are another type of off-ramp that are particularly useful for retail investors. These are any online payment system that allows users to exchange their crypto for goods and services. There are a number of crypto friendly payment portals and retailers, with more popping up each day.