Convert digital currencies to cash
Are you ready to convert your cryptocurrency or bitcoin into cash? This is a common step in the cryptocurrency investment journey for many people. It doesn’t matter if you are cashing out your cryptocurrency for returns or to free up capital, you need to know your options so that you can cash out safely and without increasing fees.
The best ways to convert cryptocurrency or bitcoin to cash
The choice of how to exchange cryptocurrencies depends largely on where you currently hold them. If you currently hold cryptocurrencies like Bitcoin and Solana in your Coinbase wallet for example, your easiest option is to sell your cryptocurrencies from the exchange. Similarly, many cryptocurrency wallets such as Ledger allow you to sell cryptocurrencies for cash directly from their wallet.
Here are some common ways to convert cryptocurrencies or bitcoins into cash:
1- Central exchange
One of the easiest ways to convert cryptocurrencies into cash is to sell them on an exchange. Leading cryptocurrency exchanges such as Coinbase and Gemini offer such services, all you have to do is use the Buy/Sell tab, choose the asset you want to sell, and then select USD as the payment option. Once confirmed, deposit cash into your Cash Wallet, and then you can withdraw funds to your linked bank account.
2- Peer-to-peer system
Another way to convert your cryptocurrency or bitcoin into cash is to sell through decentralized peer-to-peer (P2P) exchanges. You can exchange your Bitcoin for cash with another buyer for example, or exchange your Bitcoin for Cardano if you find a buyer.
There are also many benefits to using a P2P exchange on cryptocurrency exchanges like Coinbase. P2P exchanges usually charge lower trading fees, and you can negotiate with buyers to get the best possible rate. Plus, many P2P networks are decentralized, which means you don’t have to verify your identity to use the platform. Popular P2P cryptocurrency exchanges include:
- Binance P2P
- Bisq
- Bybit
- KuCoin
- OKX
The downside to withdrawing cryptocurrencies using P2P trades is that it takes longer than selling through a centralized exchange. This is because you have to post your offer, find a buyer, and possibly negotiate before making a sale.
3- Sell from your wallet
If you currently hold digital currencies in a hardware wallet, there is an opportunity to sell them directly from your wallet. The popular Ledger hardware wallet, for example, allows you to sell bitcoin for cash through Ledger Live. Ledger partners with Coinify to allow you to convert your Bitcoin into cash, and you can complete the entire process through Ledger’s interface.
The downside to this option is that most hardware wallets do not support many cryptocurrency transactions, Ledger for example only supports Bitcoin for cash.
4- Money transfer applications
If you hold cryptocurrency with popular money transfer apps like the Cash App and PayPal, you can also use it to convert your cryptocurrency or bitcoin into cash.
Currently, the Cash App only supports buying and selling Bitcoin, but PayPal supports four different types of cryptocurrencies:
- Bitcoin
- Bitcoin Cash
- Ethereum
- Litecoin
Both platforms make it extremely easy to exchange cryptocurrencies. All you have to do is pay a selling fee that depends on the amount of coins you are selling and the network speed, then pay the transaction fee and the final value of the sale before confirming.
5- Digital debit cards
If you’d rather spend your digital currency piecemeal rather than selling it for a lump sum, you can check out some of the digital debit card options the marketplace has to offer. Crypto.com for example, has its own Visa card. This prepaid card does not charge an annual fee and allows you to top up your account with various digital currencies.
The Crypto.com card also offers perks like free ATM withdrawals and cashback for spending on platforms like Shopify, Netflix, and Amazon Prime.
6- Bitcoin ATMs
If you live in a big city, there is a good chance that you will find a Bitcoin ATM near you.
Some Bitcoin ATMs allow you to convert BTC from your wallet into cash. All you have to do is scan the QR code of your wallet and then enter the amount of BTC you want to sell and the ATM will display the amount of cash you can get.
Not all Bitcoin ATMs support the ability to sell BTC for cash, and some of them may require you to verify your identity or create an account with them, which can make the task a little difficult.
What to consider before converting cryptocurrencies or bitcoins into cash
Fortunately, there are plenty of options for cryptocurrency investors to exchange their coins if they need to. But before making any decision, there are several implications to consider.
Tax implications
When you realize gains or losses on your digital currency holdings, you create a taxable event. So you must report the sale or use of cryptocurrency to pay for goods and services on your tax return.
You must have proper cryptocurrency bookkeeping because you have to report any capital gains resulting from your sale even if you are selling your cryptocurrencies at a loss.
You can check out programs like TaxBit and ZenLedger, which do an excellent job of consolidating all your digital transactions for a given year and breaking down all taxable events.
Trading fees
Another factor to consider when converting cryptocurrency or bitcoin to cash is the potential trading fee. Different exchange and money transfer apps charge different fees based on the digital currency you are selling, network traffic, and the amount you are selling.
Opportunity cost
Unlike stocks or traditional securities, selling your cryptocurrency closes a lot of doors. For example, there are many profitable cryptocurrency savings accounts such as Celsius and Hodlnaut that allow you to deposit your cryptocurrency to earn passive income. Depending on the digital currency and the price, you can usually earn 5% to 15% APY or more. When you compare this interest rate to a regular high-yield savings account, you’re giving up a lot of passive income potential when selling your digital currency.
Summary
Converting cryptocurrency or bitcoin to cash doesn’t have to be very complicated. Between Coinbase, P2P exchanges, and other options, it’s fairly easy to sell your cryptocurrency when you need to.
Just remember to consider each deal carefully, and that you do enough research to avoid scams. If someone asks you for your private wallet key or to send them cryptocurrencies first before paying for example, then this is a scam. As long as you adhere to legitimate and reliable processes, you will have no problems selling your Bitcoin or any other cryptocurrency.
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