Tech
The main fiat currencies used to trade Bitcoin
Bitcoins can be acquired via extractionreceived as payment for the provision of goods or services, exchanged for fiat currencies (such as the US dollar or Japanese yen), or exchanged for other cryptocurrencies.
Because it has many uses, promises a certain degree of anonymity, and is cheaper than official currencies in some areas, Bitcoin has spread to many countries. In some of them it is traded in large quantities. Here are the main fiat currencies with which Bitcoin is exchanged.
Key points
- You can buy Bitcoin and other cryptocurrencies using fiat currencies on a cryptocurrency exchange.
- Some people purchase cryptocurrencies to use as everyday currencies, while others treat cryptocurrencies as an investment similar to buying stocks.
- The most traded national currencies for Bitcoin are the US dollar, the South Korean won, the Japanese yen and the European Union euro.
- Due to government regulations, the Chinese yuan holds 0% market share of currencies traded against Bitcoin.
Who buys Bitcoin?
Changing rapidly Bitcoin valuations have fueled a high volume of speculative trading activity around the world. Many people who trust blockchain Bitcoin-based technology and monetary ecosystem buy virtual currency as long-term investments.
If Bitcoin were increasingly accepted by all types of businesses, from local coffee shops to large corporations, it could help fuel its adoption as a virtual currency. Before making a purchase, some people might compare whether it is better to pay for an item in fiat currencies or Bitcoin.
For others, Bitcoin and other cryptocurrencies are investment assets similar to stocks. They can even trade derivatives or buy exchange-traded funds. These investors and traders make purchases with their local fiat currency, just as they would buy stocks through a brokerage.
Best Fiat Currencies for Bitcoin Transactions
Coinhills provides a list of the most traded national currencies for Bitcoin trading based on information from currencies, markets and exchanges registered on Coinhills. The following data refers to March 17, 2024.
1. United States Dollar (USD)
The US dollar currently ranks first in the list of fiat currencies trading Bitcoin, with 71.45% of the market share. The US dollar’s consistent top position in Bitcoin transactions is due to several factors.
Quickly adopting any new technology, the United States has found a large user base in blockchain-based Bitcoin, which has quickly gained popularity in the country. Meanwhile, many other nations and their regulators have been slow to embrace Bitcoin’s development. For example, in populous countries like India, people holding Bitcoin directly or through intermediaries have purchased them by first converting Indian rupees into US dollars and then using the dollars to purchase them.
2. Korean Won (KRW)
The South Korean won ranked second, with 14.95% of the market share.
KRW’s share of Bitcoin trading declined for a while after 2018 because the country’s regulators banned cryptocurrency traders in Korea from using anonymous bank accounts. The country’s then finance minister, Kim Dong-Yeon, stated that “there is no intention to ban or suppress the cryptocurrency (market).” In 2020, Korea became one of the first countries to pass comprehensive cryptocurrency laws.
However, when Bitcoin prices increased in 2021, around 10% of the population invested in cryptocurrencies. However, similar to many other countries, Bitcoin and other cryptocurrencies are not legal tender in South Korea.
3. Japanese Yen (JPY)
With a market share of more than 7%, the Japanese yen ranks third when used for trading Bitcoin. Japan was previously the leader for many years thanks to multiple bans imposed by the Chinese government on China-based Bitcoin exchanges starting in September 2017. All Bitcoin exchange activity from China quickly moved overseas, benefiting Japan the most.
Japanese regulators were also among the early adopters and adopters of virtual currency. They were very proactive in establishing the necessary regulations and promptly simplified Bitcoin trading, allowing it to gain a large share of the global market.
4. Euro (EUR)
The European currency, the Euro, is fourth on the list with a 3.5% market share in Bitcoin trading. Part of what hinders the euro’s growth when it comes to buying Bitcoin is that it remains confined to certain regions. The German city of Berlin has welcomed Bitcoin, while the Netherlands, Spain, France, Italy and Switzerland also serve as major hubs for the cryptocurrency.
No Chinese yuan
Interestingly, the Chinese yuan no longer features in the list of major fiat currencies used to trade Bitcoin. In 2014 and 2015, when the Chinese yuan was devalued, it rose to first place, beating both the Japanese yen and the US dollar. It maintained its lead until late 2017. However, amid increasing state-imposed regulations and a crackdown on illegal Bitcoin trading, transactions quickly moved to other locations, including Japan and Hong Kong, leaving the yuan out from the main list.
What currency does Bitcoin use?
Bitcoin does not use a currency; it is a convertible virtual currency, meaning it can be exchanged for fiat currency in countries that allow it.
Which exchange uses Bitcoin?
You can buy Bitcoin or any cryptocurrency on various cryptocurrency exchanges. You can fund your account on the exchange using your bank account, credit card or debit card, then exchange your dollars or other currency for coins. These coins are then stored in a cryptocurrency walletwhere they can be stored, used as currency or traded in the future.
Where is Bitcoin traded from?
Bitcoin is exchanged via digital methods, using a program called a wallet, or via an interface provided by an exchange.
The bottom line
While new Bitcoins are created through mining, existing ones can be purchased using fiat currencies on a cryptocurrency exchange. The most traded national currencies for Bitcoin are the US dollar, the South Korean won, the Japanese yen and the European Union euro. Singapore and the United Kingdom follow these four, with the Chinese yuan and several other countries holding 0% market share of currencies traded for Bitcoin due to government regulations.
The comments, opinions and analyzes expressed on Investopedia are for informational purposes only. Read ours warranty and exclusion of liability for more information. As of the date this article was written, the author does not own cryptocurrency.