By Ivan Tomic, co-founder of Safegram
The emergence of digital assets or cryptocurrencies came as a silver lining to the under-represented, unbanked and under-developed population of our world who are to date deprived of bare minimum financial facilities. Their global accessibility and affordability are a striking contrast to the lack of accessibility of brick-and-mortar banks and the expenses of international bank transfers. However, while cryptocurrencies are globally accessible, they are not globally acceptable. These digital assets are yet to find viable use in the everyday lives of people.
Sure one can use cryptocurrencies to make cross-border international payments within minutes, but the crypto payment in many cases cannot be of any real immediate use to the receiver. This is where the complexities arise.
Moving value between two financial systems
For instance, think of an online business accepting cryptocurrencies as a form of payment. The business owner has an easy on-ramp onto the crypto highway, and as a result of payments from across the globe, also has significant crypto holdings. However, if the business owner lives in the part of the world where cryptocurrencies are not recognized or accepted, they will have trouble getting off of the crypto highway to putting those holdings to real use.
This is because the transition from crypto-fiat or vice-versa is essentially moving monetary value between two financial systems that play by different rules. So, such transactions are naturally met with friction. In the early days of the industry on-ramping was the bigger problem. Converting different fiat currencies into their crypto counterparts was a huge task. However, the emergence of a wide variety of cryptocurrency exchanges provided a viable solution.
Today, it is easier than ever to get onto the crypto highway with not just exchanges but also with opportunities to earn crypto for work, accept crypto payments, and through reward schemes like airdrops. But, getting off the highway is where users still struggle. Centralized exchanges are an option but users are still left with the task of finding an exchange that allows off-ramping to the currency of their choice. And even then, exchanges sometimes take days to dispense the amount and some of them have a limit on withdrawals. All of which contribute to the friction of off-ramping.
When off-ramping is a problem, the mass adoption of cryptocurrencies is hindered because simply holding onto crypto savings is not an option for everyday users. So, what the crypto industry today needs is a mechanism that allows users to not only easily get on but also get off of the crypto highway, at their convenience to cater to their various needs. And in this regard, the industry’s latest innovations in terms of crypto-fiat bridges could provide a solution.
The goal of these crypto-fiat bridges is quite simple. They allow for the easy conversion of crypto holdings into fiat currencies. Some of these platforms take the debit card approach and allow users to load their crypto holdings into the card to be used for everyday payments.
Then there are others like SafeGram that allow users to send a 1:1 ratio of their crypto holdings in fiat format anywhere in the world. This approach is not only the most practical but also the most efficient one. It seamlessly connects the two financial systems and allows users to shift from one to the other easily.
If we go back to our example, business owners can still provide customers with the convenience of paying in crypto while they themselves receive in fiat. On the other hand, if they choose to have crypto holdings, they can use these holdings to directly make fiat payments for their everyday needs. This not only lowers entry barriers into crypto but also creates new use-cases for the asset class.
Tapping into the convenience of DeFi
Despite its many successes, the global financial system has long failed the vast majority of the population in low and middle-income countries. But the advent of blockchain technology and digital assets propel us towards a possible future where superior financial services are served on a platter to everyone across the globe. In this context, the importance of the newly emergent crypto-fiat bridges cannot be overstated. By placing themselves in between these two financial ecosystems, they make it easy for people to access the convenience of decentralized finance and enjoy cutting-edge financial infrastructure, even within the realm of traditional finance.
About the author:
Ivan Tomic is the co-founder of Safegram, a secure, efficient, and the only ecosystem in the world of decentralized finance, enabling you to send 1:1 value of your blockchain holdings in fiat format to anywhere in the world.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.