Selling Bitcoin is a process that many people fear, especially those unfamiliar with the process. Since we are now cruising a period in which the crypto markets may see rapid growth. It is essential to understand the basics like how to cash out bitcoin so you know how to navigate the process when the time comes. Therefore, if you are holding cryptocurrencies, or want to buy bitcoin sometime soon, make sure you remember the following five ways of cashing out your coins:
Sell On An Exchange
There are many types of exchanges, but not all allow users to cash out their funds. Brokerage platforms (like Coinbase and Kraken) enable users to sell their coins and send the money directly to their bank account. Trading platforms like Binance enable users to sell their crypto into stablecoins, which is similar to fiat and can buy things for those who have a crypto debit card.
The process of selling your coins on an exchange is relatively simple to follow, and each platform will have at least one guide to walk you through the process step by step. This is by far the easiest and most secure method of cashing out your coins but also the least private option. Hence, if you cash out a sizeable amount, you need to keep your tax obligations in mind as well.
Selling Through A DEX
DEX platforms, otherwise known as decentralized exchanges, enable users to sell their crypto into stablecoins without making an account or going through KYC. This is the best option for those who wish to remain anonymous.
DEXs are mainly Ethereum-based, which means that you can only exchange ERC-20 tokens. Hence, you will need to wrap your BTC, which will give you an ERC-20 token known as WBTC. This type of Bitcoin can be traded on decentralized exchanges and enable you to get ahold of stablecoins. While this may not be the best way to cash out your funds in, say, a bank or card, it is ideal for those who temporarily wish to exit the market volatility before reinvesting their money.
Selling through LocalBitcoins
LocalBitcoins is a website that has been around for many years, offering the best P2P transaction options. This website connects you directly with other users who want to buy your BTC. You can choose from a large number of payment methods that are often not found on traditional exchanges.
When entering a trade, you send BTC to an escrow address owned by the platform. The coins remain safe there until you receive your payment from the party you interact with. Upon successful deposit of the funds, you approve the release of BTC, which is then delivered to its new owner.
LocalBitcoins also offers the option to cash out your Bitcoin by meeting up with people and making cash exchanges. However, we do not recommend this method for safety purposes. If you’d like to receive cash for your coins, it is best to use a Bitcoin ATM.
Cryptocurrency ATMs, and mostly Bitcoin ATMs, were relatively widespread during the latest bull run. They are also easier to understand by people who have never been part of the crypto market. Essentially, the ATM acts as an intermediary between you and cryptocurrency exchange, offering BTC for a slightly higher rate (due to commissions) and allowing you to pay with cash. You can also sell your Bitcoin and receive some money (Again, the bitcoin price will be slightly lower due to the fees).
Nowadays, Bitcoin ATMs have limitations to ensure that people don’t abuse the added privacy offered. For example, some ATMs ask their users to provide a phone number for transactions that exceed 1000 dollars or go through a complete KYC process for amounts higher than 2000 dollars. Of course, these regulations are different depending on the location and passing the time. However, regulations continue to become increasingly tighter.
That said, it is a great way to obtain some quick cash if you happen to live close by.
Crypto Debit Cards
Finally, the best way to start “living off your BTC” is to get a crypto debit card. Nowadays, many exchanges and wallets offer the possibility to acquire such cards. Do so simply by going through KYC, and conversion of your funds happens at the point of purchase.
For example, if you choose to buy a coffee, you need to add cryptocurrencies to your card’s virtual account. These coins will then automatically convert to the vendor’s preferred currency. Also, they will be sent to their business bank account through the POS machine you pay at.
Some of our favorite debit cards belong to Binance, Crypto.com, and the forthcoming Blockchain Wallet.