How to Cash Out Bitcoin
Cashing out Bitcoin to your local currency is not complicated as it may seem but can be a little time-consuming. This process can be achieved either by using peer-to-peer exchanges (P2P) or third-party exchanges.
Like in the conventional narrative of life, the easiest method is not always the cheapest; hence, you should explore all possibilities before deciding.
Irrespective of the local currency you want to cash out your Bitcoins in, be it USD, GBP, EUR, Japanese Yen, or any other currency, there are a few things to know about how to cash out Bitcoin.
Did you know?
More than $2 billion worth of Bitcoin transactions takes place daily.
Considering Factors For Cashing Out Bitcoin
Before making a Bitcoin cash out, some factors need to be considered. In other words, some questions need to be answered before making the step:
1. Required transaction fees and steps by each process
2. The planned amount to withdraw
3. Whether the money should be deposited into a bank account or PayPal
4. The time for the money to get into the account.
5. The local laws/legislation and the currency needed to cash out.
However, depending on each of the factors mentioned above, some methods tend to be more convenient than others. For instance, withdrawing funds with PayPal might require some bit of research to be done in identifying cryptocurrency exchanges that support this payment platform.
Moreover, depending on some local tax regulations and the type of bank account you have, there might be a need for you to call your bank before cashing out a large amount in one transaction. Else, your account may get frozen.
How To Cash Out Bitcoin With A Cryptocurrency Exchange
The most common way to cash out Bitcoin is through a third-party exchange, such as Coinbase, Bitstamp, or Kraken. Most of these cryptocurrency exchanges have reasonable fees and security measures in place to help you turn your cryptocurrency into cash with zero assets risk.
Firstly, you will be required to create an account, send the required identification documents, and either buy BTC or deposit BTC into your account. You can be able to cash out to fiat via a bank transfer immediately after the exchange receives your Bitcoin.
NOTE: You must know that each cryptocurrency exchange has specific rules for withdrawals, so do well to go through their policies before depositing your crypto assets.
Sometimes, most platforms allow you to cash out only with the bank account you used to deposit funds.
You need to deposit a small amount of fiat first to be able to make a withdrawal. This step often slows down transactions, but it is meant to prevent money laundering and compliance with international AML regulations.
Also, depending on the platform, you work with and your country of residence, cashing out your Bitcoin can take between one and five days. When Bitcoin is changed to USD, brokers usually use the SWIFT payment method.
For European Union (EU) customers who request withdrawals in euros, payments are made via SEPA.
Regardless, the good news is that some third-party exchanges accept PayPal withdrawals for both US and EU customers, which speeds up the process.
Coinbase is the most popular broker exchange for buying and selling Bitcoin. Here, they process more Bitcoin transactions than any other broker, with a massive customer base of 13 million.
Coinbase offers 56 cryptocurrencies for United States customers to trade, and 59 on Coinbase Pro, a more significant number than many other platforms.
For instance, SoFi Active Investing allows 20 cryptocurrencies, eToro offers less than 20, and Robinhood less than 10. Coinbase is available in all states across the US, except Hawaii.
Coinbase users can trade on two platforms: the original Coinbase platform, which allows users to use USD to buy Bitcoins, and Coinbase Pro.
Previously known as GDAX. Coinbase Pro has advanced charting functions and enables users to make crypto-to-crypto transactions and place market, limit, and stop orders.
Pros Of Coinbase
1. Offers access to more than 50 cryptocurrencies.
2. Cryptocurrency is insured in the event website is hacked.
3. Low minimum to fund account.
Con Of Coinbase
1. The fees are higher than other cryptocurrency exchanges.
Methods Of Withdraw
Coinbase allows you to sell Bitcoins for cash, which you can then withdraw into your bank account. However, you can only cash out your Bitcoin into a bank account that you have already used to buy cryptocurrency on Coinbase. So, it is sacrosanct to buy a small amount of cryptocurrency first.
The charged fees largely depend on the country of your bank. For instance, selling Bitcoin for USD will incur a wire transfer of $25, and if you are in the EU with SEPA, the charge will be just $0.15.
The number of times for withdrawal is also dependent on the country of your bank. Normally, US withdrawals take between 4-6 working days, while EU withdrawals take between 1-3 working days.
How To Turn Bitcoin Into Cash Using Coinbase
Here are the steps on cashing out Bitcoin at Coinbase:
- An account needs to be opened with Coinbase, thereby linking your bank account, and make a deposit
- After setting up an account, you will need to send your Bitcoin to your Coinbase Bitcoin address.
To do this, click on the accounts tab, open your Bitcoin wallet, and click “Receive.” your Bitcoin Coinbase wallet address shows up. That will be the address to send your Bitcoin to
- Click on Buy/Sell at the top of the page
- Click on “Sell.”
- The next step on how to cash out Bitcoin is in the wallet. Assuming you have now sent your Bitcoin to your Coinbase wallet, you should be able to see your Bitcoin wallet and your default fiat currency. Also, you will be able to see your withdrawal limit. Meanwhile, your limits tend to be high if you have already verified your account
- You need to exchange your Bitcoin to your local currency before you can withdraw
- When you click on Sell Bitcoin Instantly, your funds will now be in your fiat currency wallet
- Click on your fiat currency wallet, for instance, EUR/USD/YEN, and click on “Withdraw.” Your bank account details will already be saved from when you set it up earlier.
Kraken is one popular exchange that allows fiat currency deposits and withdrawals. Since its inception in 2011, it has been processing the most Bitcoin-to-Euro transactions.
Although, they also support other significant currencies like USD, CAD, JPY. Kraken currently supports 33 cryptocurrencies and 131 crypto-crypto and crypto-fiat pairs, which is not the most versatile but still a good variety of cryptocurrency exchanges.
Pros Of Kraken
1. High-security measures, with two-factor authentication on the account login.
2. Reasonable fees on deposit/withdrawal.
3. Proof of reserves audit.
4. Popular with adept traders with excellent services.
Cons Of Kraken
1. Not really beginner-friendly.
2. A slow verification process for intermediate and pro-level accounts.
3. No credit/debit card deposits.
Methods Of Withdraw
To turn your Bitcoin to cash using Kraken, you can withdraw to your local bank account.
Withdrawal fees at Kraken are considerably low. For instance, a SEPA cash out is just €0.09. Selling Bitcoin for USD with a local US bank requires only $5.00.
For Kraken withdrawals, it takes between 1-5 working days for the fund to reach your bank account.
How To Cash Out Bitcoin With A P2P Exchange
It is no doubt that cryptocurrency exchanges are generally a reliable and secure way of converting Bitcoin and other cryptocurrencies into fiat, but users lack anonymity. Also, price control is not within your reach, neither can the transactions be negotiated.
Knowing more about peer-to-peer exchanges is the best study process to cash out Bitcoin through an anonymous approach with more control over your funds.
Most of these platforms are secure, even without a central authority governing the network. But, sometimes, transactions can be time-consuming and complicated to close.
Notable of the most popular P2P exchanges are LocalBitcoins and Paxful. Transactions take place between users privately, with no intermediary. This can add more anonymity to the transaction, but it also increases the risk of scams.
Users can choose from a wide range of payment methods, including bank transfers, cash deposits, gift vouchers, Skrill, Payoneer, Western Union, Neteller, and sometimes PayPal. Each method has its transaction fees and waiting times.
NOTE: Some payment methods allow you to sell Bitcoin at a higher price, depending on how reliable the process is. Hence, experimenting with different tools and apps is a good step to maximize your profits.
You have to open an account with any of these exchange platforms, verify your identity, find a buyer, and make a transaction.
Most P2P exchanges have a rating system in place, which enhances your choice of buyers based on their reputation online.
As a rule of thumb, you should be peeking out for P2P exchange platforms that include an escrow service. This way, you will have your Bitcoin locked until you confirm that the buyer has made payment.
Created in 2012, LocalBitcoins supports almost every country in the world. So, irrespective of where you are from, you should find buyers to sell your Bitcoin. Examples of the different payment methods available on LocalBitcoins are PayPal, Skrill, local bank transfer, International bank wire, Payoneer, Western Union, web money, gift vouchers, and Neteller.
Sellers who know how to cash out Bitcoin can also choose the price they would like to sell their Bitcoin. This can be achieved by creating an advertisement, which will charge you 1% of the total sale. But, if you sell to a buyer that has listed the price they want to pay, there are no fees.
Also, there is a rating system like eBay, where they can leave feedback for the buyer or seller. This idea helps you to remain safe when choosing a buyer. For a beginner, it is advisable to sell to buyers with 100% positive feedback.
Local Bitcoins allow you to stay anonymous (when choosing such payment methods as web money or gift vouchers), primarily if you use a reliable and safe VPN to secure your connection. In some instances, sellers decide to ask new buyers (those who have no feedback) to supply means of identification.
Pros Of LocalBitcoin
1. Buy/sell volumes have no limits.
2. No fees for buyers.
3. Wide range of payment options.
4. Simple fee structure.
5. Wide geographical coverage
Cons Of LocalBitcoin
1. Scam traders are prevalent.
2. Tendency to get prices higher than the market value of Bitcoin.
3. KYC requirements compromise anonymity.
4. Dependence on the seller to confirm the payment.
How To Cash Out Bitcoin With LocalBitcoins
1. You need to open an account with Local Bitcoins.
2. Choose a username and strong password. Entering and confirming your email address will also be required.
3. Once you are logged in, click on “Sell Bitcoins” at the top of the page.
4. You will be required to choose the country where your ideal buyers are located. It is highly recommended to use your own country. For instance, if you select the UK, you also need to enter the amount of Bitcoin you wish to sell.
5. Confirm the amount of Bitcoin you want to sell and enter your PayPal email address. Then click on “Send Trade Request.”
6. Your buyer will receive a notification to inform them that you would like to sell your Bitcoins to them. Once they accept, you will send your Bitcoins to the LocalBitcoins escrow. Meanwhile, the buyer will not receive your Bitcoins until they have paid you and you confirm they have done so.
7. The buyer should contact you to notify you that the funds have been sent. Check that the funds have arrived in your PayPal, then click on “Payment Received.”