4 Ways To Bridge The Gap Between Bitcoin & Fiat
Despite bitcoin and fiat currency being polar opposites, the reality is that the world will have to live with both of them on the way to hyperbitcoinization.
Many great Bitcoin companies have built themselves to operate within the confines of fiat architecture, whereas others are pushing the boundaries to create entirely new possibilities. Both are essential to keep adoption moving forward.
Bitcoin Vs. Fiat
Bitcoin and fiat money could not have less in common with one another.
How they look, feel, and work in practice is all based on polar opposite philosophies about the nature of money.
On one hand, you have fiat currency, which you’ve likely been living with your entire life if you’re reading this today. Governments issue new supply of fiat (translated to “by decree” in Latin), and determine – based on variable metrics – how to adjust supply to keep the economy in “balance”: not too hot with overspending, and not too cold with stagnation.
It’s a delicate balance to be met, and over time, fiat’s purchasing power erodes with monetary expansion, causing greater volatility and requiring ever-increasingly drastic swings in monetary policy to maintain things.
Put simply: it’s unsustainable over a long period of time, hence why every fiat currency in the world’s history (besides those in circulation today) has failed against harder monetary assets.
The problem with money, historically, is that we’ve never had an escape route from this monetary policy. Our economic systems served us as well as they could alongside humanity’s growth, but now that technology is moving faster and faster, our outdated monetary design is having a harder and harder time keeping up, thus creating more economic and social rifts.
On the other hand, Bitcoin came around in 2008 as the first working instance of a digital currency that successfully mitigates the problems of fiat while maintaining its integrity. Plenty of entrepreneurs can spin up a new cryptocurrency with any monetary policy of their choosing, but creating one with an unchanging monetary policy, upheld by Proof of Work, and designed only to adapt to the majority rather than a single party, is much more difficult.
Today, prices are getting more and more expensive, despite all of our innovation, because our money supply is simply expanding too fast to keep up with. So what does the world on a Bitcoin standard look like, as opposed to fiat?
It’s rather simple: Deflation rather than inflation.
Money that falls in line with the natural order of things, resulting in cheaper prices over time that drop alongside the productivity gains achieved from better technology.
Bridging The Gap Between Them
Of course, there’s still a long road ahead of us before we totally do away with the fiat system. Adoption is what has to take place, and thankfully bitcoiners have all kinds of companies serving the bitcoin-fiat hybrid world we live in today to drive adoption forward.
1. Buying Bitcoin
This is where most people will start getting their hands on bitcoin of their own. While there are plenty of great options, here are some of the best KYC and non-KYC places to buy bitcoin with fiat.
KYC Bitcoin Exchanges
Swan (Affiliate) is the first place you want to look if interested in buying bitcoin from a Bitcoin-only company. Swan offers recurring purchases to make bitcoin dollar cost averaging (DCA) simple, at the same time offering some of the lowest fees and automatic withdrawals.
Buying and moving bitcoin to cold storage couldn’t be easier with Swan, and their services directly align with the key steps of hyperbitcoinization.
Besides Swan, CashApp (Affiliate) is one of the best overall Bitcoin services in the United States, period. Its simplistic user interface makes for a highly intuitive experience for buying, sending, and receiving bitcoin.
Beyond how easy to use CashApp is, you can essentially use the app as a bank account:
- Receive direct deposits and auto-convert to bitcoin
- Deposit fiat cash and checks
- Transfer fiat to other banks or CashApp users
- Spend fiat at retail stores with the CashApp debit card
- Make automatic recurring Bitcoin buys (DCA)
- Withdraw bitcoin on-chain or with Lightning
Swan and CashApp, while both are great options for bitcoin buyers, require giving up personal information to enjoy some of those services that provide greater synchronicity between your bitcoin and your fiat.
Non-KYC Bitcoin Exchanges
If you prefer to use bitcoin anonymously and purchase bitcoin using non-KYC platforms, consider Bisq, Hodl Hodl, RoboSats, or our affiliate AgoraDesk. You can find a complete list of all of the non-KYC platforms to buy non-KYC bitcoin online at KYC Not Me.
And of course, ensure you’ve taken the proper steps to create a safe Bitcoin cold storage location for your sats.
Bitcoin Vouchers
Perhaps an unfamiliar method to you, but a good option for someone new, is buying bitcoin with Bitcoin vouchers. Azteco offers these online vouchers which you can buy with fiat. Once you have a Bitcoin wallet set up, you or the recipient can redeem the voucher code and transfer the bitcoin directly to the wallet, which may be handy for those looking to get someone started with bitcoin simply without also imposing KYC requirements on them.
2. Accepting & Spending Bitcoin
Once you’ve gotten involved with bitcoin, you’re probably wondering what you can do with it in the fiat world besides holding it and growing your purchasing power.
Sending Bitcoin From Your Checking Account
In order to send your bitcoin to friends, merchants, and others, or receive some yourself, one of your best options is going to be Strike for a Bitcoin wallet that’s integrated with other fiat services.
Strike lets you send bitcoin on-chain or over Lightning directly from the app while only being charged fiat. If you have your checking account linked to Strike, then you can simply open up the Strike app and send bitcoin over the Lightning network without having to make any prior deposits; it just pulls straight from your bank account.
Like CashApp, Strike also offers plenty of tools to help you bridge the gap between bitcoin and fiat, including direct deposits with auto-converts to bitcoin, adjustable DCA setups, low fees, and flexible withdrawals.
Bitcoin Payment Processors
BTCPay Server is one of the most popular Bitcoin payment processors out there, with integrations with all kinds of major e-commerce platforms to make bitcoin and fiat conversions a breeze.
OpenNode is another great Bitcoin payment processor that enables quick, low-cost Bitcoin payments and payouts. It offers its own in-house API, ecommerce plugins, or hosted payment pages to support your business in a myriad of ways.
Bitcoin Point of Sale (POS)
BTCPay Server OpenNode are great options for e-commerce and other online payments, but for a physical Point of Sale (POS) system, you have even more options.
LNBits’ LNPoS device is an excellent compact set of hardware that accepts both online and offline Bitcoin payments, and it integrates with LNBits’ greater suite of tools to make business with bitcoin simple.
Alternatively, the Bitcoinize Machine is an Android 12 tablet serving as a POS device that comes pre-installed with a thermal printer, NFC capabilities, and apps that are optimized for bitcoin and Lightning..
Bitcoin Gift Cards
Bitrefill is one of the go-to locations for buying gift cards with bitcoin. If you prefer spending your bitcoin and want to do so without selling and incurring a capital gains tax, Bitrefill lets you send your bitcoin to them in return for gift cards that you can use at Amazon, Walmart, or whatever traditional businesses you’re used to.
The Bitcoin Company is another great option. It lets you buy prepaid Visa cards with bitcoin and spend them anywhere that Visa accepts payments, while earning back bitcoin in certain cases too!
Fold (Affiliate) also offers Bitcoin gift cards within its mobile app, enabling you to take advantage of the service’s own debit card and earn Bitcoin back on top of gift card purchases.
Gift card companies like these, while maybe a simple business model, expand the capabilities of bitcoin far beyond what’s normally possible in the fiat financial world.
You’re able to “spend” your bitcoin at larger retailers and online e-commerce giants that don’t accept bitcoin by just sending bitcoin to a company that does beforehand. While this introduces additional complexity in the spending process, getting used to buying fiat gift cards with bitcoin is a great idea for those looking to live on a Bitcoin standard now as opposed to later.
3. Financial Services
Beyond simple payments and transfers, there are still plenty of ways to bridge the bitcoin and fiat gap with all different kinds of Bitcoin-based financial instruments.
Bitcoin-Backed Loans, Insurance, & IRAs
For retirement planning, estate planning, loans, and other traditional financial services, Unchained Capital is one Bitcoin company that serves as a bridge to move bitcoin from one generation to the next as we transition from the fiat world.
Traditional single-signature custody doesn’t offer all of the possibilities enabled by collaborative custody models like Unchained, so if access to these services is important to you and your Bitcoin finances, then look no further.
Alternatively, other platforms like Bitcoin Keeper, Nunchuk, or AnchorWatch offer similar (though maybe not as extensive) services that operate through your desktop or mobile device, keeping the process as simple as you’d like it to be.
Bitcoin Bill Payments
Bull Bitcoin is a Canadian-based platform that offers comprehensive services to pay for bills with bitcoin alongside its non-custodial trading platform. Thanks to its collaboration with Bylls, Bull Bitcoin can essentially replace your bank account:
- Use the platform’s biller list to pay your bills
- Make e-transfers directly from Bull Bitcoin to your landlord
- Spend fiat with your credit card, but pay it off with bitcoin from your wallet
- Withdraw fiat with your credit card and pay off the advance with bitcoin
Bitrefill also enables you to pay your bills using its services, in case you don’t happen to live in Canada.
Bitcoin Payroll
Services like Bitwage specialize in setting up Bitcoin payroll with your business so that your employees have the option to receive paychecks, bonuses, or even company gifts in bitcoin if they so choose.
While some companies may choose to pay their employees with Bitcoin directly, many companies today still have to pay out traditional fiat direct deposits to people’s bank accounts.
As previously mentioned though, platforms like CashApp and Strike offer direct deposit support from employers that also enables you to set an auto-conversion rate. That way, whenever a paycheck hits your account, a percentage of it will instantly convert to bitcoin at the best exchange rate, as if you were paid directly in bitcoin.
From here, you can have auto-withdrawals set up to then also instantly move that bitcoin off of the custodial platform you’re using and protect it with cold storage security. And just like that, you can have a steady stream of bitcoin entering cold storage automatically, without you needing to step in to facilitate the transfers.
Bitcoin Rewards
Plenty of small Bitcoin companies out there offer Bitcoin rewards for everyday purchases.
Besides its gift cards, Fold (Affiliate) is an excellent all-in-one suite of Bitcoin tools to accommodate the typical debit card experience. With every purchase (above the small minimum threshold) using your Fold debit card, you can either receive a flat 1% bitcoin back, or you receive a “spin”, which lets you spin the Fold wheel to earn higher percentages back, or sometimes even luckier rewards.
I personally earned over 100,000 sats one time after purchasing a $9 lunch. So it’s the nice surprises like these that Fold offers that make it stand out from the competition.
Lolli is another great platform that you can install as a web extension online. Lolli lets you earn bitcoin back for online purchases, supporting over 25,000 online stores.
4. Financial Inclusion & Accessibility
Of course, bitcoin is here to make financial services safer and more accessible to anyone.
Bitcoin Remittance Services
Bitcoin makes remittances simple and more efficient than ever before. What used to be a multiple day (or even week) long processing periods and 10-50% cuts off the top to fund inefficient money transmitters like Western Union, now simply requires a funded Bitcoin wallet and a recipient address to send bitcoin to.
Though transaction fees can be quite high occasionally, whether you send bitcoin as a remittance on-chain or over the Lightning network, you’re saving countless time and money that would’ve been wasted if routed through legacy financial rails.
Currently, Strike is one Bitcoin company that’s spearheading Lightning remittances. The platform’s “Send Globally” feature connects bitcoiners in over 65 countries, and new countries are joining that list with each passing year.
Bitcoin ATMs
Besides all of the more complex financial actions you can take using bitcoin and fiat services, Bitcoin ATMs strip things back to the basics and provide a service more basic than all the others: converting paper cash to bitcoin.
If you have excess physical fiat lying around that you don’t normally spend, consider converting that spare change to bitcoin with a Bitcoin ATM.
While they aren’t as popular in already highly-digitized societies, less-developed nations that still rely on cash may find Bitcoin ATMs extremely useful for supporting their financial lives.
And the big thing with Bitcoin ATMs is that they provide access to bitcoin where it may otherwise be difficult. Without the internet or banking infrastructure, let alone dedicated Bitcoin companies, Bitcoin ATMs may serve as the only point of contact that some people can have with bitcoin.
The one negative is that most Bitcoin ATMs charge incessantly high fees for providing the service, making them impractical for swapping between bitcoin and fiat if you have cheaper methods available to you.
Learn About Bitcoin Vs. Fiat
Finally, having a thorough understanding of bitcoin can improve your relationship with both bitcoin and fiat money.
Read Saifedean Ammous’s The Fiat Standard and The Bitcoin Standard, both of which are some of the best Bitcoin books to get you started on your educational journey of bitcoin vs. fiat and how you can live while balancing both.
Learn why fiat is a drain to productivity, and how bitcoin reorients our incentives to work for us, rather than against us.
Understanding the nature of custody and who really owns your money – and the power that comes with such one-sided relationships – is critical to ensuring your own financial sovereignty.
Final Thoughts
While it’s important that we bridge the gap between bitcoin and fiat, what bitcoiners are ultimately building towards is a new world entirely that runs on a different set of financial rails. One that anyone can gain access to regardless of their national jurisdiction.
Creating a Bitcoin-based company that works outside of the fiat system, while staying attractive to those within the fiat system, is where adoption will happen the fastest. And the good news is: creating a business like that is much easier than it sounds.
Accept bitcoin at a local market for your products alongside cash. Make it clear that you accept (and prefer) bitcoin vs. fiat! It’s all about being the change that you want to see in the world.
You don’t need to set up a grand mining operation or otherwise reinvent the wheel with bitcoin – just assimilate it into your financial life as early on as you can, and you’ll be better positioned for an increasingly-hyperbitcoinized world.
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