What Is Fiat Currency And Which Exchange Platforms Accept It?

Fiat Currency is the term coined to describe money which is government-issued but is not backed by any type of commodities, such as silver and gold. Today, the majority of national funds fall under this category, with the value of the currency set by individual governments or central banks.

Although they might appear worlds apart, fiat currencies and cryptocurrencies have numerous similarities and remain interlinked as technologies continue to evolve into the future.

Fiat Currency in 100 Words

The main purpose of fiat currency is to facilitate the exchange of goods and services by being an accessible, functional and practical medium. This resource is virtually infinite, with governments being able to print as much as they deem necessary. However, this power does come with the risk of flooding which results in hyperinflation, making the currency worthless.

In order to support an economy, the value of fiat currencies tends to be stable, with only minor fluctuations. Nevertheless, since the currency is not tied to any commodity there is always a greater risk of an economic bubble than conventional currency.

Using Fiat Currency in Exchanges

While, perhaps, the ambition of diehard crypto advocates is to have a world where decentralised cryptocurrencies completely replace fiat alternatives, this does not seem likely for the foreseeable future. Instead, fiat and crypto co-exist in an evolving dynamic, which makes crypto resemble a commodity, rather than a just a medium of exchange.

Cryptocurrencies, such as Bitcoin, Litecoin, Ethereum, and hundreds of others, can be purchased through exchanges with the use of fiat currency. For example, CEX, a popular exchange for margin trading, allows you to buy Bitcoin with USD, EUR, GBP, and RUB.

Many traders use these exchanges to purchase crypto and hodl in the hope that the currency’s value will explode, as it has done several times in the past.

This increase in popularity has given rise to some mega exchanges, including EXMO, which is often seen as an ideal platform for beginners. Attracting millions of users from across the world, EXMO allows you to buy DASH, Monero and others using EUR, USD, RUB, and many other fiat currencies.

The value of crypto and fiat currencies is affected by several common factors, including supply and demand, utility and perceived value, and market dilution. At the same time, a loss of confidence in one type of currency can have a considerable effect, both positive or negative, on the other.

The intrinsic relationship between fiat and cryptocurrencies has led to the creation of trading pairs, similar to those used when trading commodities or stocks. Coinbase, one of the largest global exchanges recently began offering the trading of Bitcoin pairs. Coinbase is also one of the few exchanges which accept alternative payment methods, including PayPal. You can buy Bitcoin using GBP, AUD, EUR, and a variety of other fiat currencies.