Various Methods for Converting Cryptocurrency to Cash

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BLOCK6

3 min readJul 5, 2022

Cryptocurrency is now a popular investment option for younger people, but you can’t use it to pay for your lunch or dinner. You can choose from a few limited options (as big businesses get on board), but for the most part, people still need to convert their crypto into cash.

The good news is that it is extremely simple to accomplish. However, there are several factors that a person should consider before converting their cryptocurrency into cash.

Let’s look at Bitcoin as an example of a cryptocurrency that you want to convert into cash. Remember that converting any cryptocurrency into cash will result in taxation as well as an exchange fee levied by a third-party broker based on the number of digital tokens converted. Not to mention that it may take a day or two for a third-party broker to transfer the funds to your bank account.

Let us now discuss how to convert cryptocurrency into cash. There are two approaches.

Third-Party Broker Exchanges

A cryptocurrency exchange is also known as a third-party broker. The procedure is identical to currency exchanges in a foreign country’s airport. You fund the exchange with Bitcoin. You can request a withdrawal in the currency of your choice once the exchange has received your bitcoin. The money will be deposited into your bank account.

Because brokers are prohibited by money laundering laws, you must withdraw to the same bank account where you deposited.

It’s simple, straightforward, and secure, but it’s not the quickest method.
Money usually arrives in your account within 4–6 days, but this varies by country.
Any associated fees are also determined by the country in which your bank is located.

Bitcoin ATMs and Bitcoin Debit Cards operate similarly to third-party brokers.
In both cases, you open an account through which you can sell bitcoins and withdraw cash.
The most significant disadvantages are the high transaction fees.

Peer-to-Peer Platforms

Individuals can use a peer-to-peer platform to convert their digital currency into cash by simply selling it, which is considered a faster and more anonymous method. Other benefits include a lower fee and the possibility of a better exchange rate than with a third-party brokerage. Having said that, you must be wary of con artists.

Before releasing your cryptocurrency, you should request proof of ID and payment. You can also use a peer-to-peer platform to keep your digital tokens locked until the money is credited to your bank account.

If you know what you’re doing, peer-to-peer selling is risk-free.
However, it is critical to be wary of con artists.
It may be advantageous to use a peer-to-peer platform that allows you to keep your bitcoins locked until you confirm receipt of payment from the buyer.

Considerations When Cashing Out Your Cryptos

Consider the following risks before converting all of your Bitcoin or cryptos to cash:

Taxes — If you make a profit from selling your bitcoin, you must pay taxes on that profit. Keep this in mind as you plan your tax year. For tax purposes, any reputable third-party broker exchange will report their transactions.
Fees — The majority of bitcoin-to-bank-account methods will incur exchange fees.
Speed — It may take a few days for third-party broker exchanges to transfer funds into your bank account.

Conclusion

Cryptocurrency, the blockchain-based digital currency that has piqued the interest of both investors and financial institutions, is facing a difficult problem. It can be difficult to spend this currency like regular money.
However, the approaches mentioned above may help people use bitcoin and other digital coins in more mainstream ways for their day-to-day finances.