If you follow crypto news relatively closely, you may have caught wind of Binance’s expansion into Latin America with a new fiat gateway that will be available to residents of Brazil and Argentina. While many terms in the crypto industry are familiar to those who trade or hold these assets, concepts like fiat gateways can be new to users both experienced and those just entering the space. When these types of concepts show up, it’s important to familiarize ourselves with them as they become more commonplace in the industry.
So, what are fiat gateways?
Ditching the Bank Account Model With Fiat Gateways
To better understand the concept of a fiat gateway, think about a coin machine in an arcade. In order to get the coins you need to play the games in your arcade of choice, you need to put fiat currency into the machine, which will then pay you out an equal number of tokens. A fiat gateway essentially serves the same purpose, allowing users to trade fiat for crypto, which gives them the opportunity to participate in the system without needing a bank account, a common feature that is required by most exchanges. This makes it easier for users to access crypto if they do want to purchase some of their own.
Why Are Fiat Gateways Important?
At first glance, these services can seem like a new way for crypto enthusiasts to get their hands on the coin of their choice. To a certain degree, this is a fact, but the truth is that a fiat gateway’s use goes much deeper than this initial assumption.
While much of the world is fortunate enough to be able to access crypto assets and participate in their systems, much of the world does not have the same level of access, either due to a lack of technology or a lack of banking resources, which also take their economic toll or those who live in underdeveloped countries. What fiat gateways achieve is allowing these individuals to participate in a global permissionless system that they can use for their own to help them store wealth and make payments to others.
More importantly, cryptocurrencies have a better store of value than the fiat currencies that are found in underdeveloped countries, which is largely due to the fact that most suffer from inflation. Even if crypto may still deal with price swings, it still gives them the opportunity to build their wealth, potentially earn more, and begin to experience some relief from poverty.
In crypto, innovation is everything as the potential that both crypto and blockchain hold can revolutionize a number of various industries. While there is no telling how fiat gateways will perform in the long run, they are certainly useful applications now that will greatly benefit those who belong to unbanked populations.