Since Bitcoin emerged in 2009, its popularity alongside other cryptocurrencies has been on the rise. Cryptocurrencies have grown in terms of trading volume, invested capital and demand. Before investing in cryptocurrencies, many beginners are faced with the challenge of converting their Bitcoin to fiat at the cash out stage.
This article looks at the different means of cashing out cryptocurrencies to fiat. We have multiple ways that enable crypto investors to cash any amount of funds. Security is always the major concern when it comes to converting Bitcoin to fiat. The options covered below have a reputation for being safe and cost-effective.
Coinbase offers one of the easiest ways to convert cryptocurrencies to fiat. Generally, cryptocurrency exchanges are the most popular ways of converting digital currencies to fiat. However, most exchanges have limitations. Coinbase has a good reputation in the market and has achieved a high degree of integration with the US banking system. Coinbase supports users from over 30 countries, but before cashing out, you need to be a registered US client. You can also check out guide to avoid paying Coinbase fees
The exchange is effective if you have the right credentials. All you have to do is connect a US bank account to your Coinbase account, and then order the transfer. Alongside other exchanges, Coinbase offers affordable fees for cashing out. However, they come with some disadvantages. Traders cannot get instant access to the funds that they have exchanged. The long wait can be discouraging.
Furthermore, Coinbase has integrated with PayPal. This partnership makes it easier to convert Bitcoin to PayPal at the cahs out stage. Users can also use PayPal to deposit funds in their Coinbase accounts. Notably, Bitcoin to fiat with Coinbase is usually instant.
Once the amount has been exchanged and delivered to the user bank accounts, cryptocurrency owners can simply withdraw via an ATM or directly from the bank teller.
Gemini was the first licensed exchange globally and it offers the option of cashing out cryptocurrencies in fiat. The exchanges support Bitcoin and Ethereum only. Before cashing out on Gemini, you must be a US-based customer since it only supports US bank accounts. US customers can also use the ACH and wire transfers. Note that ACH transfers take about four days while wires transfers can take up to a day.
However, clients need to know that Gemini only supports fiat conversions and transfers for personal accounts. Once you have an account with Gemini, you need to ensure your bank account details match with the Gemini account and cashing out will be smooth.
This Luxembourg based exchange has a reputation for attracting wealthy cryptocurrency investors. Before converting your cryptocurrency to fiat with Bitstamp, you need to provide a lot of information compared to platforms like Coinbase. Many find this process tedious. To withdraw your funds to your personal bank account, you must ensure to enter all of your bank account details correctly to avoid any further delay.
The exchange converts Bitcoin to cash as well as Ethereum, Litecoin, Ripple and Bitcoin Cash. It is ideal for customers outside the US.
bitFlyer is a global exchange with users in Asia, Europe, and the United States. To convert cryptocurrencies to fiat, bitFlyer will wire your funds directly to your bank account. The exchange is known for being a hub for Bitcoin trading. To get started, you need to create an account and go through the verification process. The exchange needs to very your identity and bank account details before cashing out.
Apart from exchanges, we have other local platforms that you can use to convert cryptos to fiat. These platforms offer some amount of protection for both the buyer and seller, which makes them preferable to doing a cash deal. All you need is an understanding of how the platforms operate and the charges you will incur.
One such platform is LocalBitcoins.com. LocalBitcoins.com is peer to peer marketplace where cryptos buyers and sellers meet. The platform serves as an intermediary between the buyer and the seller. Both parties make arrangements on how to do the trade. They agree on things like payment method and the period transaction will last. LocalBitcoins.com supports PayPal. It is one of the easiest ways for transacting Bitcoin to PayPal. Users can sell and buy Bitcoins along other cryptos through PayPal.
Bitcoin Prepaid Cards
Bitcoin prepaid, or debit cards are among the best means of exchanging your digital currency into cash. Prepaid cards are generally issued by Visa or MasterCard and can be credited through cryptocurrencies like Bitcoin. Note that the process of getting your own card is very long. You will need to submit your government issued ID card and proof of address.
However, you get advantages like the ability to pay at any POS system, cashing out at worldwide ATMs, instant conversion from BTC to fiat. Furthermore, you get access to low commissions and transparency. With cards, withdrawing is instant you don’t need to wait for long. However, Bitcoin prepaid cards are only available in selected countries.
We have a number of firms that enable cryptocurrency holders to borrow loans. In this case, the digital assets serve as the collateral. Through this model, you can get fiat currency to your bank from the cryptos you hold. Users need to deposit cryptocurrencies into a smart contract where it will be held and you receive fiat currency. Users will, therefore, pay back the loan based on the agreement with the lender.
It is a new option that has its own unique advantages. First, you are not exposed to a taxable event and you get a loan without necessarily selling your digital assets. Another benefit that comes with the crypto loans is that it hedges you against rises in the price of your assets. Coins like Bitcoin have the potential of increasing in value hence you will still benefit from the price hike. Salt and Ethlend are the main platforms that offer cryptocurrency loans. Look at our comprehensive guide on cryptocurrency loans.
We have a number of private banks that can offer crypto to fiat conversion services. However, these facilities only attract investors with deep pockets. Note that most private banks have a high compliance rate compared to cryptocurrency exchanges. Private banks have compliance officers to ensure everything is in order. This is vital since cryptocurrencies can be used in money laundering and other illegal activities.
Compliance officers are of great help because they don’t want your activities to blow back on the bank, or that the money you are receiving wasn’t from illegal activity.
Paying Your Taxes
Cryptocurrencies come with capital gain taxes. When you buy a cryptocurrency and then sell it at a profit, you will have to pay tax for the transaction. In some jurisdictions, you can partially deduct trading losses. However, to understand the taxes issue you need a professional to guide you through the process. Here is a guide on cryptocurrencies and taxes.
If you are looking for the best option for withdrawing your cryptocurrencies, always remember the golden rule of doing your research. You need to learn more about the reputation of the service provider to avoid losing your funds. Most importantly, look at other client reviews about the service. Be on the lookout for paid reviews since you can be misguided. Additionally, take a look at the terms and conditions and charges you will incur.
If you are a beginner with cryptocurrencies, it ideal to use reputable exchanges to convert your assets to fiat. This minimizes the risk. Some of the local options might turn out to be scams. Furthermore, make use of escrow protection when using local options. This will make your Bitcoin to cash smooth.
Image source: Bitcoin Magazine
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