Exchange or service provider platforms that provide the transition between crypto money and fiat units offer “on-ramp” and “off-ramp” solutions.
What is a cryptocurrency on-ramp?
The trading platform, exchange or service provider for purchasing cryptocurrency in exchange for fiat units used in the traditional financial system is called the “fiat on-ramp platform”.
All exchanges that offer cryptocurrency trading services fall into this category. Users can convert traditional currencies into cryptocurrency options either from their bank accounts or by credit card.
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Crypto currency exchanges, which are among the first options of users who are new to the ecosystem and want to buy crypto money for the first time, act as a kind of “transition ramp” from traditional currencies to virtual assets.
In addition to the normal cryptocurrency exchanges called “spot”, there are also alternative money markets called “over the counter” or OTC. Here, users can trade directly at the agreed price, regardless of the condition that the exchange rate in the exchanges is exactly appropriate. OTC options are generally preferred for purchases and sales where large amounts change hands.
Both exchanges and OTC services often have API named application solutions that can be integrated with other applications and make it easier for advanced users to trade in more than one market.
Finally, Bitcoin ATMs are also an “on-ramp” service. Crypto money can be bought by depositing traditional currencies in these devices. As reported by Cointelegraph, the internet browser called Opera also started to provide on-ramp service by announcing its integration that will facilitate the transition from fiat currency to crypto money.
What does off-ramp mean?
Thanks to the “off-ramp” services, which are the exact opposite of the crypto money “on-ramp” service, crypto currencies can be converted into traditional currencies (fiat) or various products and services can be purchased with crypto money.
Just as users need to pay in fiat currencies to buy cryptocurrencies for the first time, they need similar platforms when selling their cryptocurrencies.
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As fiat is still the primary means of payment in much of the world, it is necessary to use the middleman to purchase goods or services with cryptocurrency. Although it is possible to shop directly with digital assets in some alternatives, in general, most users prefer to convert their cryptocurrencies first to traditional currency and then to pay with fiat.
Almost every, if not all, “on-ramp” cryptocurrency exchanges and Bitcoin ATMs also provide an “off-ramp”, ie crypto to fiat conversion service.
What should be noted here is that while there are no restrictions (weekends, working hours, holidays, etc.) when purchasing crypto currency, it is necessary to be in working hours in order to switch to the traditional currency through the “off-ramp” service. Since the vast majority of users exchange their cryptocurrencies, they transfer to traditional financial institutions and banks, so they can only receive their money during working hours.
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On the other hand, since OTC trading tables work in two directions, it is possible to switch from crypto to fiat money and from fiat money to virtual money. However, such platforms may not be a suitable solution for small-scale and inexperienced investors.
Why are cryptocurrency on / off-ramp services needed?
“On-ramp” and “off-ramp” services are of great importance to enable new users and new money entry into the crypto money market. They also play a critical role in bridging the gap between the traditional financial world and the crypto industry.
It is important for the expansion of the industry that new users of the ecosystem can easily purchase cryptocurrencies using the money in their bank account or through their credit cards. Likewise, the easy transformation of cryptocurrencies into fiat money can enable people distant to the sector to become involved in time.
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Today, many startups offering financial technology services and even direct crypto money exchanges are trying to act as a bridge between crypto money and fiat money by offering “debit card” service.
Are “on-ramp” and “off ramp” services safe?
Legal cryptocurrency exchanges and financial technology (FinTech) service organizations operate in accordance with the regulations of the countries in which they are located. Such entities apply the Know Your Customer (KYC) procedure for new users and ensure the security of personal data.
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DISCLAIMER: The statements contained here are not investment advice. Never trade without researching the markets thoroughly and without comments from different circles. Read the comments of the investors you trust and consult their opinions. Remember that every trading transaction involves risk. Make your own decision when taking any action. Cointelegraph cannot be considered directly or indirectly responsible for any damages or losses arising or allegedly arising from investment products or services.