Simply saying, if you have a bank account, you’ve already got a fiat wallet. You pay bills and buy goods with it. But there is slightly another purpose and sense of this type of wallet in crypto. Here we will explain the meaning of the fiat wallet, the difference between fiat and crypto wallets, and how they work together to manage digital assets.
In this post you will learn:
- What is a fiat wallet and how does it works?
- How to set up a fiat wallet?
- Differences between fiat wallets & cryptocurrency wallets?
- Why it is important to have both wallets?
- Advantages and disadvantages of fiat wallets in crypto?
- Reasons to start using fiat wallet
- How to deposit to a fiat wallet?
- How to withdraw from a fiat wallet?
- Alternatives for fiat wallets
What Is a Fiat Wallet?
A fiat wallet is a digital wallet that stores fiat currencies. Fiat wallets are typically used to store fiat currency like USD, GBP, EUR, etc. Fiat wallets can also be used to store cryptocurrency like Bitcoin and Ethereum. Fiat wallets can be accessed anywhere as long as the user has an internet connection. A fiat wallet allows you to send and receive money from other people or organizations. The software will allow you to store your money in either a bank account or an exchange account.
A fiat wallet typically has two types of accounts: a checking account and a savings account. The checking account is used for making payments and transfers, while the savings account is used for storing money.
The process of sending money to someone’s bank account takes time and fees, but with a fiat wallet, you can send money instantly without any fees.
How Does the Crypto Fiat Wallet Work?
Fiat wallet is not bank account, but it works similarly. The software provider holds encrypted accounts that used as storages for user money. Usually fiat wallets allow just send and receive money and do not offer investing or other banking features. That is because their main purpose in the crypto apps — to deliver digital money instantly.
How To Set Up a Fiat Wallet?
There are 3 simple steps to start a fiat wallet:
- Download the crypto app with fiat support and sign up.
- Connect it to your bank account.
- Deposit your fiat currency in an encrypted wallet. Usually there are two ways to top up your fiat wallet: credit or debit card payment or bank transfer. Card payments take several minutes, while the bank transfer can long several days.
What Are the Differences Between Fiat Wallets & Cryptocurrency Wallets?
Cryptocurrency wallets are an electronic wallet for storing and managing digital currencies. These wallets are not controlled by any financial institution, which makes it possible to buy or sell cryptocurrencies without the need of a middleman.
The most significant difference between a fiat wallet and a cryptocurrency wallet is that they store different types of currency. Fiat wallets store traditional currencies like U.S. Dollar, British pound or Euro, while cryptocurrency wallets store digital coins like Bitcoin or Ethereum.
Cryptocurrency wallets are also help to save anonymity because they don’t require any personal information to use them. Fiat wallets require you to go through verification process. But due to that the provider has a possibility to revert the wrong transaction, and the crypto wallet cannot get your falsely sent coins back.
The Importance of Having Both
Having both a fiat and crypto wallet allows you to make timely and informed decisions when spending, saving, and investing. This way, you can maximize your crypto portfolio profits. You can use fiat to buy cryptocurrencies, pay for crypto products and services, buy mining machines and more.
What Are the Advantages and Disadvantages of Fiat Wallets in Crypto?
Fiat wallets are a solution for those who want to trade crypto but don’t want to use an exchange. The wallet gives them the choice of storing their funds in a fiat currency of their choice.
There are many advantages and disadvantages of using fiat wallets for trading crypto. One of the advantages is that you can store your money in a fiat currency of your choice, which is not possible if you use an exchange. On the other hand, there are many risks associated with using this type of wallet as it is not as secure as exchanges and it doesn’t offer any sort of protection against theft or loss.
The benefit of using a fiat wallet is that it’s easy for the person who created the wallet to send and receive funds with other people who use the same type of wallet without any third party involved.
With fiat wallets you can transfer money to any country without sanctions or restrictions. But traditional money are highly vulnerable to inflation, and fiat wallets do not save from that.
The disadvantage also is that there are transaction fees associated with using a fiat wallet which can reduce your profits when trading cryptocurrencies.
3 Reasons to Start Using Fiat Wallet Crypto
The cryptocurrency market is highly volatile. The value of cryptocurrencies can change in a matter of minutes. This is because it is not regulated by any government or organization and its price can be influenced by many factors such as political, social, or economic events. Fiat wallets are the best way to store your cryptocurrency as they are regulated by governments and organizations.
- Fiat wallets are safe. Fiat wallets are much safer than cryptocurrency wallets as they are stored on a centralized server which means that you don’t need to worry about hackers stealing your money.
- Fiat wallets allow to buy crypto. You can make an instant purchase of crypto just in moment you need to.
- Fiat wallets make it easier to buy goods. Since fiat currencies like USD and EURO already exist, it becomes easier for people to buy goods with them in their country without having to convert.
What Makes Fiat Wallets More Secure Than Other Cryptocurrency Wallets?
Fiat wallets are more secure than other cryptocurrency wallets because they have a built-in system that makes it harder for hackers to steal your money. Fiat wallets are also more stable and less likely to experience an extreme price fluctuation.
How To Deposit to a Fiat Wallet
Depositing to a fiat wallet is one of the most common transactions for people who want to buy Bitcoin or any other cryptocurrency. We will walk you through how to deposit funds using your debit card, bank account, or wire transfer.
Step 1: If you already have a digital wallet, or use an exchange as your primary means of buying Bitcoin, please skip ahead to Step 2. To create a fiat wallet, please click on the “Create new account” button and fill out the form.
Step 2: Enter your email address and password in order to create your account. Most providers have both an email address and password required for creating the account. You will then be transferred over to the website where you can confirm your email address.
Step 3: Once you’ve confirmed your new account and signed in, select “deposit” from the top of the window and enter the amount of funds that you want to deposit. You can choose between USD, EUR or GBP currency for your fiat wallet deposit.
Step 4: Deposit funds using a debit card or bank account; if using wire transfer please contact support.
Keep in mind that a fiat wallet does not store any cryptocurrency on its own, but it acts as a gateway between the crypto world and traditional banking.
How To Withdraw From a Fiat Wallet
Withdrawing funds from a fiat wallet is an easy and straightforward process.
Step 1. First, log in to the wallet and select “Withdraw”. This will bring up a withdrawal form with the amount of money and the destination you would like to withdraw your funds to.
Step 2. Fill in the form, submit it and confirm your withdrawal by entering a security code. You will receive your assets shortly.
Usually the wallet providers set the minimum withdrawal amount. For example, it’s €25 at Bitpanda, and at Crypto.com you should deposit or withdraw at least $500 for one time.
If you have any questions about withdrawing from your fiat wallet, contact wallet’s customer service for help.
Alternatives for Fiat Wallets
It is not necessary to have a fiat wallet in order to connect with the cryptocurrency ecosystem or use an exchange. Actuality, there were no fiat wallets at the beginning of the Bitcoin era.
Using stable coins or Bitcoin as the base unit of account for other cryptocurrencies are the two major strategies to achieve the same result as fiat wallets.
Therefore, customers may withdraw money to BTC or stablecoins like USDT or USDC instead of a fiat wallet. They probably won’t need to convert them back to dollars first when they wish to exchange them for another cryptocurrency.
Wrapping Up
Fiat wallets link commodity money and digital currencies. They allow quick conversions between digital currencies and other major global currencies for payments anywhere. Users who have a funded fiat wallet account can instantly trade across the cryptocurrency market. We recommend having one to maximize your cryptocurrency profits and make a quick way to buy crypto.
Updated on 01/30/2023: added information about alternatives for fiat wallets
