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We are all familiar with wallets. We take them everywhere we go, we use them to keep important things like our credit cards and cash, and we sometimes even lose them and panic.
However, there are actually different types of wallets – both physically and digitally.
One type of wallet that often catches our people new to cryptocurrency will be caught out by the term ‘fiat’ wallet.
It’s actually a very common term but yet so many people still don’t know what a fiat wallet is or how you can use it when purchasing cryptocurrency and NFTs.
But don’t worry – that’s why I’m here! I’m going to go through everything you need to know about fiat wallets including what they are and how you use them.
It’s actually way easier than you’d expect so keep on reading and soon, you’ll know everything you need to know about fiat wallets.
What Is A Fiat Wallet?
When working with cryptocurrency, you will notice that you have a different digital wallet on each website or platform you use.
Your digital wallet is easy to understand because that’s where you store your cryptocurrencies and assets but it can also serve as a fiat wallet.
Fiat wallets are wallets that carry or represent fiat currency, and fiat currency is the currency we all use every day in real life.
These are currents that are backed by material things like gold reserves, and are issued by the main bank of a country’s government. Basically, fiat currencies include the US dollar, the Euro, or the Japanese yen.
So a fiat wallet carries real life money and allows you to purchase things using fiat currencies instead of cryptocurrencies.
They can be found on digital platforms that also use cryptocurrencies so you can keep an eye on your fiat and cryptocurrencies all in one place.
How To Use Fiat Wallets?
Because fiat wallets are defined as any kind of account that stores fiat currencies, this means that your online bank account also counts as a kind of fiat wallet.
However, some platforms that host digital wallets for cryptocurrencies also offer a fiat wallet where you can store fiat currencies on the same platform.
This means that you can transfer fiat currency from your bank account into your fiat wallet on a cryptocurrency wallet such as Coinbase or Pitpanda.
Most people use this feature when they want to buy cryptocurrency using fiat money so you can easily with little fuss.
Sometimes when using your bank account to purchase cryptocurrency, your bank will take a few days to clear the transaction – which means that you could miss out on auctions and sales because you haven’t got enough crypto currency in your crypto wallet.
To avoid this situation, a lot of people tend to store a backup fund of fiat currency in their fiat wallet.
It’s a lot quicker to buy cryptocurrency using fiat currency kept in your fiat wallet on cryptocurrency platforms – so if you ever find yourself a little bit short for a sale, you can quickly buy some with using the fiat currency you have stored in your fiat wallet.
So basically, a fiat wallet works just like a regular wallet because that’s what it is really.
It stores fiat currency (such as your US dollars) and you can use that to buy cryptocurrency units, which you can then use to buy assets and more such as NFTs.
They’re handy to use for additional funds (mostly as back up to avoid your bank’s annoyingly long authentication process for transfers) but we recommend that you don’t use it like an actual bank account.
Only keep as much fiat currency in there as you need and keep a bulk of your main fiat currency in your actual bank account based in your country.
Are Fiat Wallets Safe To Use On Cryptocurrency Platforms?
One of the main concerns a lot of people have around fiat wallets is their safety.
While cryptocurrency is pretty contained on crypto websites and wallets, the thought of transferring real money to cryptocurrency platforms can raise fears around scams, hacked accounts, and having real money stolen from your fiat wallet.
However, a fiat wallet is just as safe as the crypto wallet on a platform. So, if you are not concerned about cryptocurrency going missing from your crypto wallet, then your fiat wallet and currency will be just as safe.
It’s also important to remember that there’s no such thing as a 100% secure fiat wallet.
You can lose your physical wallet, have your bank account hacked, and it is possible for the same to happen to your fiat and crypto wallet on crypto platforms.
So, you need to make sure that the platform you are using to buy and sell cryptocurrency has the measures in place to keep your funds secure.
Most crypto platforms have many security measures and protocols in place to help ensure their customers that their currencies (both fiat and crypto) are safe.
Such measures include biometrics, security passwords, multi-factor authentication, and more.
You can even opt to use third-party registers to help secure crypto assets so you have additional proof of ownership of your assets.
So, most fiat wallets on crypto websites and platforms are perfectly safe – as long as you are sure it has the right security measures.
So, what is a fiat wallet?
It’s a wallet that stores fiat currencies, which are the currencies backed by banks and governments and used all around the world every single day!
This means that a fiat wallet can range from the wallet you take with you to buy your groceries, to your bank account, to the fiat wallet used and kept on cryptocurrency platforms.
Some people will keep a fiat wallet with a stock of fiat currency so they can quickly purchase units of cryptocurrency for quick deals and sales. If not, you could end up waiting a few days for your bank transfer to be finalized
So, if you want to use a fiat wallet – then go for it!