Cryptocurrency is a thriving ecosystem that is attracting a flood of new users for a variety of reasons. Crypto’s learning curve is now known as “the rabbit hole” by newcomers busy educating themselves on its finer details as a substitute monetary system with its own rules and dynamics.
The on-ramp process helps to convert fiat currency into cryptocurrencies, while the off-ramp process refers to exchanging your coins or tokens to fiat money or, in some cases, products and services. Using a highway analogy, on-ramps assist you to get on the crypto-highway and off-ramps help you get off of it. This concept enables users to easily enter and exit the highway at any time. In an ideal world, the on-ramp and off-ramp usability should be seamless.
What Does On-Ramping Mean?
On-ramping entails using your fiat money to purchase cryptocurrency. When you on-ramp, you leave the traditional monetary system and enter the decentralized, blockchain ecosystem.
1. Centralised Exchanges
A centralised exchange (CEX) is the most common way for new crypto users to get started.
These platforms, which typically serve as people’s first stop on the journey, allow users to take their first steps into the cryptocurrency industry by accepting credit card payments in exchange for coins and tokens.
On-ramping via a CEX typically necessitates new users to submit official documentation for verification. These details could include their address proof, signatures, or even a picture. This Know-Your-Customer (KYC) process is critical for reducing fraud, and some exchanges will only allow you to use their services if you provide the KYC.
2. NFT Marketplaces
A fascinating recent development is on-ramping via NFT exchanges. Some NFT platforms have enabled users to take their first steps into crypto through NFTs by allowing crypto to be purchased on the platform using a credit card.
Apart from offering another medium for entering the cryptosystem, this new on-ramp tells us something about the industry as a whole. Since NFTs are increasingly the point of entry for new users compared to cryptocurrencies themselves, which speaks to the evolution of the industry from a financial niche to something more culturally mainstream.
Off-Ramping From Crypto
Once you have done well with your crypto/NFT portfolio but do not have enough cash to acquire physical products, this is where the off-ramp comes into the equation as you “cash-out” your gains.
1. Off-Ramp Through An Exchange
Most centralised exchanges allow you to off-ramp your fiat currency in the same way that you can on-ramp it into CEXs. Before you choose the CEX to which you want to on-ramp, make sure the exchange supports the fiat currency to which you want to off-ramp.
Since most conversions have an exchange fee, it all comes down to which exchange you use. This can be as simple as selling your cryptocurrency and receiving the corresponding fiat equivalent deposited into your bank account.
2. Off-Ramp Through Crypto Debit Card
The central premise of crypto debit cards is that they allow you to spend your cryptocurrency just like cash. The entire purpose of crypto was to remove the barriers to moving value around – that is, to be able to spend your crypto whenever and wherever you want. Instead of searching for stores that accept cryptocurrency or checking your bank for a couple of days to see if your exchange funds have arrived, you can simply load your card and start paying.
Crypto is about freedom, the freedom to save and spend the value of what you earn. However, keep in mind that once you’ve converted back into fiat – regardless of which of these options you use, you may have incurred a wealth tax. This is something that all users should be aware of in order to make the most of this flexibility.