You may consider yourself to be a Bitcoin HODLer and you have no plans of selling your bitcoins anytime soon. Be that as it may, it is still important for you to know how (and when) to turn bitcoin into cash. Bitcoin has performed well as a store of value and that value can transfer into many different types of assets, including fiat currency, or cash.
Through your efforts and dedication, you were successful in making millions in bitcoin. Congratulations! Now, what are you going to do with it? Well, you could HODL it like many other traders and investors, but there is another option. You could always cash it out.
“Wait,” you may be thinking, “Bitcoin is a digital form of currency. How could I possibly cash it out?” Believe it or not, it is actually possible. In fact, there are a few methods to choose from.
This also raises another question: “What’s the reason for doing it?” Unless you live in a big city, chances are pretty good that you will need to convert cryptocurrency to cash before you spend it. A grocer may not accept cryptocurrency as a form of payment. It’s true that there are plenty of businesses that accept Bitcoin, Litecoin, and other cryptocurrencies. However, it can still be difficult to use your coins everywhere on the regular. So, while there are places that allow you to pay with cryptocurrency, having fiat currency on you is still a wise idea.
This article will go on to explain what Bitcoin is and how to turn that Bitcoin into cold cash!
Cryptocurrency: the ultimate replacement?
The idea that Bitcoin will go on to replace fiat currencies holds enough merit to be plausible. So much so that it is the main reason why many people are investing in it now. Theoretically speaking, there will come a day when you will be able to use Bitcoin for any type of purchase. That will be the day when it officially replaces fiat currencies – like USD – which will no longer be necessary. Or at the very least, it will no longer be the dominant method of payment.
For the time being, there are still a few businesses or individuals that accept payment in the form of bitcoin. If nothing else, this should be the key reason why you may want to convert your bitcoin to USD or another fiat currency. By doing this, you can use the value of your bitcoin to purchase actual things. An additional reason relates to when the market finds itself on the decline. Suppose that it gets so bad that you believe the price of bitcoin will inevitably keep sinking. In this situation, you would no doubt want to protect yourself from losses. Therefore, it seems logical to convert bitcoin to cash while you wait for the recovery of the bitcoin price.
Different ways to cash out
Okay, so you’re on board with the idea of cashing out your bitcoin to dollars. That’s great, but you should not dive headfirst into it quite yet. First things first, there are some things that you need to take into consideration. Here are a few questions you need to ask yourself:
Which method do you want: the easiest or the cheapest?
Do you want to deposit the money into your bank account or PayPal?
Exactly how long do you want to wait to receive your cash?
Which currency are you looking to convert your Bitcoin into?
These are only a handful of the many questions that you will need to ask yourself before cashing out. Only after considering them can you finally begin turning your digital currency into cash. With that in mind, we can start going through the various methods on how to cash out bitcoin. Afterward, you can decide for yourself which is the best one for you.
1 – How to sell bitcoin or exchange it at a Third-Party Broker
A third-party broker is merely another way of referring to an exchange. A majority of cryptocurrency exchanges typically do not allow for the deposit of funds using fiat money. However, there are some that do.
There are some measures you need to take to make sure brokers do not break money laundering laws. To do this, you will need to withdraw to the same bank account that you deposited with in the first place. Let’s assume that you were never depositing fiat on to a broker exchange. In this case, you will in all likelihood need to make at least one deposit first.
Indeed, this tends to be rather annoying, but that’s the way it is. Moreover, in the long-run, it can prove to be advantageous.
If you make the choice to cash out your bitcoin with a broker exchange, then be ready to wait. Normally, it takes about 1-5 days for the money to reach your account. For EU customers, payments are made with the use of SEPA (withdrawals paid in Euros). If you wish to sell bitcoin for USD, then brokers will often use the SWIFT payment method.
Brokers that you may access will depend on your region, but a few general examples include Coinbase and Kraken. More information on how to use both of these platforms may be found further down in this article.
And with that, you now know how to cash out Bitcoin using a broker exchange. If this method sounds appealing, we will go over instructions on how to do it later in this guide. If, however, you would prefer a more anonymous and less time-consuming approach, then there is another way. From here, we can transition into selling bitcoin for cash using a peer-to-peer platform.
2 – Peer-to-Peer (P2P)
Many people aren’t fond of the idea of having to wait three days to officially cash out bitcoin. If you’re one of those people, then perhaps using a peer-to-peer selling platform like LocalBitcoins would be the better option.
When you sell bitcoins to other people on LocalBitcoins, you can choose which payment method you want the buyers to use. Your options include the following:
Cash deposit: With this method, you can ask the buyer to deposit cash into your bank account. Remember that you should always ask them for proof of ID and proof of payment first. Upon receiving this information, you can finally give them your bitcoins.
Bank Transfer: This method pertains to you asking the buyer to send you a bank transfer payment. Before going forward with this method, make sure that you always request proof of ID from the buyer. Once you receive the money, you can then release the bitcoins to them.
Meet in-person to acquire the cash: An oldie but a goodie. You always have the option to make arrangements to meet up with a buyer who is near you. It is a simple way to receive a cash payment for your bitcoins.
Selling with a P2P system is safe, but only if you know what you are doing. It is imperative that you remain vigilant about fraudsters. LocalBitcoins is a platform that offers a solid level of safety due to its escrow service. It will keep your bitcoins in a secure place until you can confirm that the buyer now has the payment.
Be sure to read our “10 Alternative to LocalBitcoins” to learn more about peer-to-peer bitcoin transactions.
Wait, what’s an escrow?
Before we move forward, we should clarify what an escrow is. In order to properly explain it, let’s use a hypothetical scenario:
Person A wants to purchase 1 BTC and they currently live in the UK. They decide to search for sellers living in the same country.
Person A sees that Person B is selling 1 BTC at too good a price to ignore. In addition, they accept bank transfer as an option of payment.
Person A sends their request for 1 BTC to Person, and Person B wholeheartedly accepts the offer.
Person B places their 1 BTC into the escrow. This will effectively hold the bitcoin until Person A transfers the money to Person B.
Person A transfers the amount they agreed upon directly into Person B’s bank account.
When Person B receives the payment, they will release the bitcoins from the escrow. Afterward, they go directly to Person A’s account.
With that out of the way, we can conclude this section. Now you know how selling bitcoin for cash works on a P2P exchange.
Cashing out with a broker
So, you now understand the primary differences between the two popular methods. Having established that, we can start to explain how you withdraw bitcoins to cash using broker exchanges. We will start with Coinbase.
Coinbase is by far the most popular broker exchange that specializes in buying and selling bitcoin. Generally speaking, Coinbase processes more Bitcoin transactions than any other working broker. Moreover, they have a huge user base of over 30 million.
Withdrawal Methods: Coinbase allows you to sell bitcoins in exchange for cash. Afterward, you are able to withdraw that money into your bank account. You can only cash out your bitcoin into a bank account that you were using to purchase cryptocurrency on Coinbase. If you have not done this yet, then you should first buy a small amount of cryptocurrency.
Fees: The fees mostly depend on the country that your bank is in. Suppose, for example, that you want to sell bitcoin for USD. In this particular situation, a wire transfer is $25. If you reside in the EU and have SEPA, then this will only cost you $0.15.
Cash-out times: Similar to fees, withdrawal times also depend on the country that your bank is in. U.S. withdrawals will typically take between 4-6 working days to go through. EU withdrawals, on the other hand, only take 1-3 working days.
This all may seem a bit much to grasp. However, to make things a little easier for you, we will show you how to cash out bitcoin through Coinbase. First, you need to open an account with Coinbase, then link your bank account before making a deposit. If you already have this covered, then proceed to the next section.
Conversion with Coinbase
Upon setting up your account, you will need to send your bitcoin to your Coinbase Bitcoin address. To do this, click on the accounts tab and open your Bitcoin wallet. Then you click on “Receive,” which will show your Bitcoin Coinbase wallet address. This is the address that you will send your bitcoin to.
Once you are all set up, click on “Buy/Sell” at the top of the page, then “Sell.”
Now, assuming you have sent your bitcoin to your Coinbase wallet, you will see both your Bitcoin wallet and your default fiat currency. For example, if you open an account from the EU, your deposit wallet will be in Euros (EUR). Of course, this will change depending on where your location is. Another example pertains to U.S customers, who have the option to withdraw to USD. Likewise, Japanese users can withdraw to JPY. In addition, you will also get a look at your withdrawal limit. If your account already has the proper validation, your limits will be relatively high. If you need to increase this, then click on “See Limits” and follow the additional verification instructions.
You will need to exchange your Bitcoin to your local currency before you can make a withdrawal. For example, imagine that you are exchanging bitcoin to Euro (EUR). Enter the amount of bitcoin you want to sell and from there, the fiat currency equivalent will automatically update.
As soon as you click on the “Sell Bitcoin Instantly” option, your funds will immediately appear in your fiat currency wallet.
Click on your fiat currency wallet (ex. EUR/USD/YEN) and then click on the “Withdraw” option. It is important to note that your bank account details will be saved from when you had set it up earlier.
Kraken is another popular choice for brokers. This is an exchange that allows fiat currency deposits and withdrawals. Since its 2011 launch, it has made a name for itself by processing the most Bitcoin to Euro transactions. However, that is not all they specialize in. They also support an array of other major currencies like USD, CAD, and JPY.
Withdrawal methods: If you want to convert your bitcoin into cash using Kraken, you can withdraw to your local bank account.
Fees: The withdrawal fees at Kraken are actually quite low, especially in comparison to other platforms. A SEPA cash out, for example, is just €0.09. Furthermore, if you want to sell Bitcoin for USD using a local U.S bank, it is only $5.00. This is definitely one of the selling points of Kraken.
Cash-out times: On average, it will take between 1-5 working days for Kraken withdrawals to officially reach your bank account.
Conversion with P2P
Now, let’s go over how to convert bitcoin to cash with the use of a peer-to-peer exchange.
There are a variety to choose from, however, one that a lot of users recommend is the aforementioned LocalBitcoins. This is a platform that got its start back in 2012 and supports almost every country in the world. It doesn’t matter where you are currently living. No matter what, you should be able to track down buyers to sell your bitcoin.
Local Bank Transfer
International Bank Wire
Bank Cash Deposit
Sellers with knowledge on how to cash out bitcoin can also establish the price they wish to sell their bitcoin for. You can do this by way of advertisement creation. This will charge you a fee of 1% of the total sale. However, suppose that you sell to a buyer that lists the price they want to pay. Should this happen, then there are no fees.
This platform also has its own rating system; one share some similarities with eBay. With it, you can leave feedback for the buyer or seller. This arrangement helps you to remain safe whenever you are selecting a buyer. If you are a novice on the exchange, then try selling to buyers who have 100% positive feedback.
LocalBitcoins gives you the ability to maintain anonymity as well when choosing payment methods like web money or gift vouchers. This is especially true if you also utilize a safe and reliable VPN in order to properly secure your connection. There are some sellers who decide to ask new buyers (i.e. those who have no feedback) to provide identification.