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Crypto-to-fiat: How hard could it be?

The capitalization of the cryptocurrencies has reached an unprecedented mark of 400 billion dollars. Progressive parts of society consider blockchain-decentralization as a real step towards the future. Millions of people use various cryptocurrencies every day. Each participant of this huge market goes through a number of problems and complexities — including state regulation, scammers and even hackers. Therefore, security is one of the most important aspects while using and carrying out transactions with cryptocurrencies.

One of the key aspects, which should be accompanied by the maximum level of security and comfort, is the cryptocurrency-to-fiatmoney exchange. Every owner of a cryptocurrency wallet eventually faces this challenge. Today many services allow you to convert cryptocurrency to fiat. They can be divided into three groups:

- Cryptocurrency exchanges (trading platforms)

- Exchange services (exchangers)

- Peer-to-peer platforms

Talking about the best way to convert cryptocurrency into fiat money is often a difficult subject to broach, especially in an objective manner. The method of converting cryptocurrency depends on the specific needs of the owner of cryptocurrency. Fore example, someone wants to exchange them quickly and has to be ready to sacrifice some of the value lost through exchanging. Nevertheless, others can wait and may do such so they do not have to overpay. That is why each case is individual. However, there is no perfect method of conversion.

For example, one of the most common ways to convert crypto to fiat is cryptocurrency exchanges or trading platforms (Bitstamp, Bitfinex, Poloniex, etc.). They are popular because currencies can be exchanged to fiat money at the most favorable exchange rate. However, this rule works only in cases when the exchange rate meets seller’s and buyer’s expectations, which may not happen. In addition, the whole process of trading on the exchange (trading platform) can take from several hours to several days. Ultimately, this means you are not able to receive fiat money in a quick timely manner.

Large exchanges (trading platforms), which are popular all over the world, have a high level of security. But even they are subjected to hacker attacks. All your money could be stolen. In addition to these problems, the choice of exchange and trading are accompanied by several more difficulties:

1) The choice of the exchange (trading platform) is limited to those currency pairs you need (often only US Dollar and Euro are available)

2) The whole process of trading and converting cryptocurrency to fiat consists of a huge number of steps and consumes a lot of time

3) Input and output of funds to and from an exchange are often accompanied by a commission fee, which in some cases can be double (for input and output separately)

Exchange services or exchangers (24xbtc, CryptoGo, Coinmama, etc.) are an easier and quicker way to get fiat. They provide an opportunity of exchanging cryptocurrency to various national currencies or to another cryptocurrency. Exchange services are different from trading platforms. Specifically, exchange services have trading operations conducted directly within itself. The cryptocurrency exchange (trading platform) in turn is mainly a platform for trading. Within trading platforms private owners of cryptocurrency and fiat money sell and buy assets from each other.

An integral part of exchange services is a commission fee. It can differ significantly, but on average it is 4–5% of the transaction amount. The commission rate depends on what kind of cryptocurrency exchange is being used and which exchange service is being used, as different exchange services have varying quotations. Exchangers differ in exchange rates, commissions, speed of transactions, banks and payment systems. Accordingly, it is difficult to quickly select the appropriate exchange service, given the large number and variety. You need to find a suitable rate, a low commission and convenient output of funds, and this cannot always happen. In addition, exchange services are often attacked by hackers and scammers, so it is always necessary to clarify in advance the conditions of conversion, commission fees and security of the service (SSL-certificate, user reviews etc.).

The above stated shortcomings, as well as the additional fact that the currency reserve may end their exchange service, unfortunately means exchangers are not the most appropriate way of converting cryptocurrency to fiat.

The peer-to-peer platform (LocalBitcoins) is not an ideal method of exchange too. Although, they provide a huge range of options for exchanging (money transfer, gift certificate, cash, etc.), a minimal level of security, frequent fraud and the need for offline meetings may make you think twice before using this method of conversion.

As you can see, each of these options of crypto-to-fiat exchange has pros and cons. None of them can guarantee the maximum level of benefits, convenience and reliability. Other ways, like crypto ATMs and crypto debit cards exist. However, such methods are not yet widely distributed and are more inconvenient in practice due to a long process of registration and identification, commission for services, and so forth. E-commerce payment systems are also an option to exchange cryptocurrency, but they also have some problems. For example, PayPal actively blocks users’ accounts associated with any transactions of cryptocurrencies. The reason for blocking cryptocurrency activity is due to a refund function that a buyer of cryptocoins can always make. Even if one has in fact received cryptocoins from the seller they may use the refund function fraudulently. Therefore, “Terms of Service” of Paypal includes the right to close accounts or freeze funds when it deems it necessary to do so.

Either way, converted funds most often ultimately go to a bank account. From this moment, in addition to the above problems with exchange services, an owner of funds may have difficulties with the bank and with the state. The bank may be interested in the origin of money received from the exchange of cryptocurrency. For example, a bank may block them until it finds out all the details. On the other side, the state considers these funds an additional income of person or entity and taxes the person accordingly. In many countries legislation related to cryptocurrencies is only being developed, but right now the main trend in the laws is the positioning of cryptocurrencies as “property” or “assets”. Depending on the circumstances and the type of business entity, cryptocurrencies fall under one of the following fundamental tax categories: income tax, company tax or capital gains tax. Therefore, the legislators will plunge into the sphere of cryptocurrencies and decentralized systems more and more. Eventually, state regulations will become stronger, deeper and further reaching. Such legislation implicates additional difficulties with the cryptocurrency circulation, exchange, taxes, fees and restrictions.

Therefore, the trend of developing decentralized platforms is extremely important. Conclusively, the decentralized platforms have to combine the maximum number of advantages of all exchange services and not depend on the state or banks.

Ubcoin Market has all the potential to become an ideal platform:

- It works globally online

- It is a peer-to-peer marketplace powered by smart-contracts

- It allows you to quickly and safely purchase or sell goods and (in the future) services without the use of fiat money

UbcoinMarket is the appropriate place where you can get real goods for cryptocurrency. No more exchanges, no more commissions. UbcoinMarket will make you completely forget about fiat money.



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Ubcoin. Cryptocurrency reimagined

Ubcoin. Cryptocurrency reimagined

A unique crypto-goods exchange. A blockchain-based smart ecosystem for easily exchanging real goods for cryptocurrency and vice versa. Website — ubcoin.io