If you decided to buy some bitcoins a few years ago when others were wondering if it was worth investing in them, then today you can already reap the benefits of that wise decision. In order to be able to use your crypto assets, you should learn how to cash out your bitcoins. In this guide, we will cover the main methods of cashing in Bitcoin.
But before learning how to convert Bitcoin into cash, let's take a quick look at some things to consider.
1, If you've been in the industry for a while, then you're likely aware that almost all crypto transactions require a commission to be paid. Withdrawing Bitcoin is no exception.
2, Unlike instant cryptocurrency to a cryptocurrency exchange, withdrawing bitcoins from a regular exchange can take some time. Therefore, if you need money urgently at the moment, you should be aware of alternative methods of withdrawing your bitcoins, such as peer-to-peer platforms or using an ATM.
3, Every day there are new legislative initiatives aimed at regulating the cryptocurrency market. Therefore, before you start cashing out your bitcoins, you should familiarize yourself with the local laws that regulate the cryptocurrency market in your country/region.
Preference in choosing a bitcoin withdrawal method may also depend on the amount of bitcoins you plan to convert into fiat currency. If the transaction amount is significant, you may need to notify your bank of this operation in person to avoid having the funds in your bank account frozen.
Now that we've discussed the preparation phase, it's time to move on to the most popular methods of cashing in your bitcoins.
Cashing in Bitcoins on an Exchange
Firstly, you will need to identify the exchange that will be used for cryptocurrency withdrawals. While not many exchanges have allowed their users to cash out their bitcoins so far, there are some popular crypto exchange platforms that offer this feature.
The process of withdrawing bitcoins from an exchange usually involves the following stages.
1, You will definitely need to create an account on an exchange if you have not already done so. Please note that when creating an account on a trading platform you will need to go through a verification process.
2, Once you have entered your account, you may need to make a legal tender deposit. This is essential as it helps to ensure the successful linking of your bank account to the exchange account.
3, Now that you have created an account and ensured that all settings are correct, you will need to top up your cryptocurrency exchange account with bitcoins.
4, Once the bitcoins have arrived in your account, cash them out to the bank account you have previously linked. Once it has arrived, withdraw the required amount to your bank account and wait for the funds to show up. Please bear in mind that it can take between one and five days for available funds.
Now, using the Kraken crypto transaction as an example, outline the details of the transaction, such as timing and fees.
Withdrawal period
As we have already mentioned, withdrawing bitcoins from a cryptocurrency exchange to your bank account is not instant and can take up to 5 working days. So be patient.
Transaction fees
The fees you pay to cash out your bitcoins may vary depending on the bank account you choose. It also varies on the exchange platform. If you have a SEPA bank account (for EU residents only) then Kraken will offer lower withdrawal fees. Each withdrawal costs just 9 cents. If you use a US bank account, the fee is $5, which is still not much. When using other exchanges, fees can vary between $1 and $25. However, the amount of the fee is usually fixed and publicly available, so this should not come as a surprise.
Cryptocurrency withdrawal limits
To withdraw cryptocurrency on Kraken, an exchange account will need to be upgraded to level 2. The daily legal tender withdrawal limit is set at $100.000, while the cryptocurrency withdrawal limit exceeds $500.000. If you wish to withdraw more money, this can be done from multiple exchanges to a single bank account. But first, make sure that your bank does not freeze your account for making suspicious interactions.
Peer-to-peer platforms (P2P)
Peer-to-peer is a type of transaction that takes place directly between two people. This type of exchange is also known as an over-the-counter transaction. If you wish to cash out your bitcoins anonymously, then this option is for you. However, please note that as the other party also remains anonymous, please make sure they are not a scammer. To protect yourself, use the right p2p platform and take some time to research the person you are dealing with.
Among the most trusted and popular peer-to-peer platforms are Local bitcoins and Paxful, which have a very similar method of operation and are available in almost every country in the world.
Another major advantage of using a p2p platform is that you can choose from a variety of payment options, whether it is a bank transfer, a cash deposit or a personal cash negotiation. Whichever option you choose, make sure you ask the purchaser for proof of identity and proof of payment to protect yourself. After all, P2P methods of selling Bitcoin are quite safe if you know every stage of the process. For example, ensuring a high level of security for Local bitcoins through an escrow service means that buyers will not be able to access your bitcoins until you confirm the funds to your bank account.
Consider an example where you want to cash out 1 bitcoin via Local bitcoins. To do this, you need to create an account on the platform. Once you have created an account, start looking for someone to sell your bitcoins to. Make sure that the buyer accepts a transfer to a bank account as a method of payment. Then send your request to this person. Once the buyer approves your sale request, you can put the bitcoins into an escrow account and they can send the agreed amount of legal tender to your bank account. Almost done all you have to do is wait for the funds to arrive and then unlock the bitcoins from the escrow account. Congratulations on your successful bitcoin withdrawal!
Withdrawing Bitcoins via ATM
Probably the most instant way to cash out your bitcoins is to use a bitcoin ATM, and since modern people interact with traditional ATMs on a daily basis, this withdrawal method is probably the most familiar to most cryptocurrency traders. Bitcoin ATMs are very similar to their "traditional brothers": like regular ATMs, you need to have a bank card in order to withdraw legal tender (i.e., USD, EUR, GBP, etc.) from them in exchange for the bitcoins you hold.
One of the major advantages of Bitcoin ATMs is their anonymity. Considering that you do not need to create an account and be authenticated, withdrawing bitcoins via an ATM is the best way to ensure your identity is secure.
However, be prepared to pay an additional fee if you wish to remain completely anonymous. For ATMs, withdrawal fees can amount to 10% of the withdrawal amount. If you feel it is feasible, please take the time to find an ATM in your immediate area.
How to find a Bitcoin ATM near you
The number of crypto ATMs is growing every day. However, there are still very few of them on display around the world. The easiest way to find a Bitcoin ATM near you is to use a cryptocurrency ATM radar app. Such apps typically provide ATM locations as well as other details such as fees, limits, and availability of buy/sell options.
Once you have found the ATM, all you have to do is perform the withdrawal yourself. This is done as follows.
1, select the option to cash out bitcoins on the ATM screen.
2, set the withdrawal amount.
3, Send the bitcoins to the encrypted address provided on the screen. Make sure you have a QR code scanner on your phone, as it is not a good idea to enter the address manually.
4, Receive your cash.
Other ways to withdraw your bitcoins
You can also cash out your bitcoins using an instant crypto transaction service. SEPA bank account owners can use the bitcoin withdrawal option, which allows them to convert bitcoins into euros.
Last but not least, another option for bitcoin withdrawal is to use a decentralized peer-to-peer exchange, such as Hodl Hodl. The main principle behind how this works is very similar to regular peer-to-peer platforms like Local bitcoins. However, there are some differences that need to be mentioned.
As we have already said, conventional peer-to-peer exchanges offer the ability to hold user funds while waiting for delivery of fiat currency to the seller's bank account. In a decentralized p2p exchange, bitcoin escrow is held in a multi-signature smart contract in a non-centralized manner, thus providing a higher level of security.
Another major difference in cashing out bitcoins through a decentralized exchange is the anonymity of the user, which means that only you decide whether or not to provide personal data. In short, such an exchange is completely anonymous. In this respect, such an exchange service will potentially replace a centralized exchange service. It is only a matter of time.
Now that you have read this article in detail, let's review the main points again.
1, To date, there are three main options for cashing out bitcoins. Each is suitable for a particular use case and depends on what you need most at the time: to remain anonymous, to pay a small fee or to withdraw immediately.
2, Before you start, don't forget to inform your bank and check the tax and legal aspects of bitcoin cashing operations in your country/region.
