General
Fiat
Government-issued currency not backed by physical commodity. In crypto, fiat refers to traditional currencies like USD, EUR, or GBP used to buy cryptocurrency.
Last updated: January 5, 2025
What is Fiat?
Fiat is government-issued currency that isn’t backed by a physical commodity like gold. Its value comes from government decree (“fiat” means “let it be done” in Latin). In crypto, fiat typically refers to traditional currencies used to buy cryptocurrency.
Common Fiat Currencies
| Currency | Symbol | Country/Region |
|---|---|---|
| US Dollar | USD | United States |
| Euro | EUR | Eurozone |
| British Pound | GBP | United Kingdom |
| Japanese Yen | JPY | Japan |
| Australian Dollar | AUD | Australia |
Fiat vs Cryptocurrency
| Aspect | Fiat | Cryptocurrency |
|---|---|---|
| Issuer | Government | Protocol/algorithm |
| Supply | Unlimited (can print) | Usually fixed |
| Control | Centralized | Decentralized |
| Physical form | Cash exists | Digital only |
| Transactions | Banks, cash | Blockchain |
Fiat On-Ramps
What They Are
Ways to convert fiat to crypto:
- Exchange deposits
- Credit/debit card purchases
- Bank transfers
- P2P trading
On Major Exchanges
- Bank transfer
- Credit/debit card
- P2P trading
- Many fiat currencies
- ACH (US)
- Wire transfer
- Debit card
- Apple/Google Pay
- Wire transfer
- ACH
- Various fiat currencies
Fiat Trading Pairs
What They Mean
- BTC/USD - Bitcoin priced in US dollars
- ETH/EUR - Ethereum priced in euros
- Direct crypto-to-fiat trading
vs Stablecoin Pairs
- BTC/USDT - Bitcoin vs Tether (stablecoin)
- More liquidity typically
- 24/7 availability
Converting Fiat to Crypto
Step-by-Step
- Create exchange account
- Complete KYC verification
- Add payment method
- Deposit fiat
- Buy cryptocurrency
- Withdraw to wallet (optional)
Payment Method Comparison
| Method | Speed | Fees | Limits |
|---|---|---|---|
| Bank transfer | 1-5 days | Low | High |
| Wire transfer | Same day | Medium | Very high |
| Debit card | Instant | High | Medium |
| Credit card | Instant | Highest | Low-medium |
Why “Fiat” in Crypto?
Historical Context
Crypto community often contrasts:
- Fiat = “old money,” centralized
- Crypto = “new money,” decentralized
Common Critiques
- Government can print unlimited
- Inflation erodes value
- Centralized control
- Can be frozen/confiscated
Reality
- Fiat still dominates economy
- Needed to enter crypto
- Exit back to fiat common
- Coexistence likely
Fiat Off-Ramps
Converting Crypto to Fiat
- Send crypto to exchange
- Sell for fiat
- Withdraw to bank account
Considerations
- Exchange withdrawal limits
- Bank acceptance
- Tax implications
- Fees
Fiat-Backed Stablecoins
Stablecoins backed by fiat reserves:
- USDT - Backed by dollar reserves
- USDC - Fully backed by USD
- BUSD - Binance USD
Bridge between fiat and crypto worlds.
Tax and Fiat
Tax Events
- Crypto to fiat = taxable
- Fiat to crypto = establishes cost basis
- Keep records of all conversions
Record Keeping
- Date of transaction
- Amount in fiat
- Amount in crypto
- Exchange used
- Fees paid
Regional Differences
Fiat Access Varies
- Some countries restrict crypto
- Banking relationships vary
- Local currencies not always supported
- P2P may be only option
Popular Local Options
- Brazil: PIX
- Europe: SEPA
- UK: Faster Payments
- Australia: PayID
The Future
Trends
- More fiat on-ramps
- Better UX
- Lower fees
- CBDCs (Central Bank Digital Currencies)
CBDCs
Government digital currencies:
- Digital fiat
- Blockchain-like tech
- Centrally controlled
- Not cryptocurrency
Ready to Start Trading?
Now that you understand fiat, explore the best exchanges to begin your crypto journey.