Cryptocurrency adoption is rapidly increasing globally.
Cryptocurrency is a virtual currency that does not exist in physical form. Nowadays investing in cryptocurrency has become very popular as it enables people to buy, sell or trade securely online.
It also offers the opportunity to convert your cryptos into your local currency that you can use cash in hand. Because cryptocurrencies are volatile, their value can rapidly increase and when you then trade it against your local currency, you may make a high profit. However, you must time it right as otherwise, you may encounter losses.
In this blog, we will discuss how to quickly and easily convert cryptocurrency into cash for spending.
How to cash out your cryptocurrency quickly and easily?
There are two ways to quickly and easily convert your cryptocurrency into cash, which are as follows:
- Using a third-party broker
- Peer-to-Peer Platforms
A third-party broker is basically a cryptocurrency exchange. Converting your cryptos into cash using investment platforms or trading apps will be the same as exchanging currency at the airport. You will deposit your cryptos on the exchange. Once the platform receives your funds, you can request a withdrawal in the currency of your choice or supported by that platform. You will receive the withdrawal in your bank account.
Converting your crypto through this method is easy but not quick. It can take 4 to 6 days for your funds to reach your bank account. Such trading platforms also charge fees for this service. The time taken for fund transactions and fees associated varies with each broker you are using and the country where your bank is located.
The most popular cryptocurrency exchanges for buying and selling crypto are Coinbase, Kraken, Binance, Bittrex, etc.
There are money laundering restrictions on brokers. Therefore, while using brokers, you will have to use the same bank for the deposit and withdrawal of your funds.
Bitcoin ATMs and debit cards are also considered third-party brokers. In both cases, you will have an account through which you can sell your Bitcoins and easily withdraw cash.
However, the transaction costs can be high.
Peer-to-peer platforms provide a faster service for converting your cryptocurrency into cash. On these platforms, you sell your cryptos to others for cash. You can decide the payment method for buyers. The payment methods can be direct cash deposit to your bank account or pay bank transfer, even buyers can use PayPal.
This method allows faster transactions, and the exchange fees are also lower. Another plus point is the exchange rate can be better as compared to third-party brokers. These platforms also allow you to stay anonymous.
However, in this case, you need to be careful of scammers. An option can be, ask buyers for their ID and proof of payment. Also, the most convenient and secure way to use a platform that allows you to lock cryptos until you receive payment confirmation, a receipt from the buyer.
How does cashing out Cryptos exactly work?
Let’s consider an example:
- Suppose Justin wants to buy Bitcoin. He will search for the seller, most preferably in his country. He finds out that Bryce is selling 1 Bitcoin at a good price, in his budget and, he can pay for it through bank transfer.
- Justin sends a request to Bryce for buying 1 Bitcoin from him. Bryce accepts his requests.
- Bryce puts that Bitcoin into escrow which will hold it until he receives payment from Justin.
- Justin transfers the agreed amount to Bryce’s bank account.
- Once Bryce receives the amount, he releases the Bitcoin from escrow which is sent to Justin’s account.
Things to know when converting your Cryptocurrency into Cash
There are a few things that you need to consider when cashing out your cryptos, which are as follows.
If you are making profits on selling cryptocurrency, then you will have to pay tax on your profit. Any reputable broker will report their transactions to the IRS, (if you are in the U.S) for tax purposes. For users outside the U.S., the transactions will be reported to their local authorities. Therefore, you should read the tax details before cashing out your cryptos.
Brokers and peer-to-peer platforms charge certain fees for exchanging your cryptos. Compare different platforms and choose the one with the fee structure that meets your requirements.
Funds transactions to your bank account can take a couple of days. Therefore, read the fine print first, before choosing the platform.
Converting cryptocurrency into cash using peer-to-peer platforms is easier, quicker, more cost-effective, and safer. However, you can still try brokers for cashing your cryptos. It is recommended to do your research before choosing to invest in any cryptocurrency or using any investment platform. Read about people already using any investment platform or broker to better understand such services and their advantages and disadvantages. If you are interested in other cryptographic tokens and digital assets like NFTs then read this guide.