Cryptocurrency News

On-Ramping: What Does This Term Mean In The Cryptocurrency Industry?

The world of cryptocurrencies is filled with jargons that need the patience to understand

With the advent of personal computers, various terminologies have found a place in our vocabulary. Some of them are so popular that we sometimes use them as if by default. For instance, we store data on files that are in turn stored in folders. When we open a file, a window pops up. Closing all the open windows shows the desktop. Similarly, we use analogies in the world of cryptocurrencies as well. For example, we store money in a wallet (online or offline), which in reality isn’t a wallet but a pair of digital keys needed to open the wallet.

As for computers, analogies for cryptocurrency are also inspired by real life. Consider the process of obtaining or spending crypto coins as getting on to a highway or getting off it. These processes are called on-ramps and off-ramps.

How does this work?

The simplest way to join the crypto industry is by making an investment, meaning you buy coins by exchanging fiat money. Most people do this through online exchanges. Not all exchangers, however, allow for direct fiat purchases. Thus, when you receive crypto coins in exchange for fiat money, you are using an on-ramp. When you spend cryptocurrency for something that is not a digital asset, you are using an off-ramp.

Both on-ramps and off-ramps are key to maintaining the cryptocurrency industry’s smooth functioning. How? Consider this: you work for a company that is paying you salaries either in part or fully in a cryptocurrency. In that case, the company is on-ramping its employees. Usually, employees are fine with this payment system, since most of them want to trade or hold digital assets anyway.

But this could create problems for vendors, who accept crypto payments for their goods and services. These businesses want to get off the highway as soon as possible after receiving payments in crypto coins. So, these vendors act as off-ramps. Relatively speaking, you are an on-ramp for the vendor and the vendor is an off-ramp for you.

What are the ways to get on-ramp?

There are mainly two other ways to get on-ramp, besides centralised (online) crypto exchanges.

1) Get in touch with your local traders. But this is no longer in vogue. It’s not possible to meet regularly and requires immense trust that the traders won’t scam you.

2) Use cryptocurrency ATMs. Crypto ATMs function a little differently from traditional ATMs. At crypto ATMs, you need to insert cash in the machine and the machine sends crypto to your wallet. But, again, there’s a big problem with this method as well: there are neither such ATMs nor in all cities.

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