If you’re looking to cash out your Bitcoin, sometimes it can be a pretty daunting experience for someone just starting.
There are many rumors in the community about how to turn Bitcoin into cash and how it’s such a complicated process.
On the contrary that cashing out the bitcoin is actually quite simple when you know the exact steps.
You’ll just need to make sure you have the right information about the platforms and tools you are going to use.
In this article, I will walk you through all of the steps necessary for turning Bitcoin into cash with ease.
In addition, I’ll also provide some tips that I’ve learned along the way that will help make this process smoother for you!
Without further ado, let’s dive into it.
- 1 What Is Bitcoin
- 2 Things to Consider When Cashing Out Bitcoin
- 3 Bitcoin Cash out Methods
- 4 How to Cashout Bitcoin using Third-Party Broker Exchange
- 5 How to Cashout Bitcoin using Peer-to-Peer Platform
- 6 How to turn Bitcoins into cash using Localbitcoins
- 7 How to Cashout Bitcoin using Kraken
- 8 Localbitcoins vs Kraken
- 9 How to turn Bitcoin into cash using ATM
- 10 Why Should You Cash out Your Bitcoin?
- 11 Conclusion
What Is Bitcoin
Bitcoin is a cryptocurrency and worldwide payment system.
It offers a fast, secure way to send money to anyone in the world with no middleman or bank fees.
Bitcoin was created by an unknown person or group of people under the name Satoshi Nakamoto and released as open-source software in 2009.
The digital currency can be converted into pieces so small that they are measured in fractions of a penny called Satoshi after the founder.
Bitcoin uses peer-to-peer technology for all transactions which means there’s no need for any intermediary such as banks, credit card companies, governments, or other financial institutions to take a square part in payments from one person to another.
All you need is your computer with internet access!
Bitcoin has a finite supply of 21M BTCs where only 19M are currently in circulation.
Things to Consider When Cashing Out Bitcoin
There are some things you’ll want to consider before selling your bitcoins, and below I’ve boiled them down into a few categories that will make the process much easier for you.
Transaction charges are pretty standard when it comes to banking dealings. Those of you who have had at least some experience of banking know exactly what transaction fees mean.
There are fees associated with cashouts, especially if you cash out through PayPal or a credit/debit card.
Cashing out bitcoin using your bank account or PayPal is more like exchanging a foreign currency for the local one.
At this point, your bank may charge you a transaction fee or exchange fee. It would be fair to check the fee in advance. It may vary by adhering to the method or the bank’s policies.
A platform like CoinBase charges about a 1% fee but there are other platforms that have lower transaction fees.
You’ll also want to consider Bitcoin taxes if you’re looking to cash out Bitcoin.
Bitcoin is a taxable event, so you will have to pay income tax on any Bitcoin gains.
The IRS has issued some guidance on Bitcoin and taxation.
If you are to turn Bitcoin into cash, make sure you plan your tax year accordingly.
Missing or defaulting your tax payments may cause serious consequences in your finances.
The other thing to keep in mind is how long it will take you to cash out Bitcoin for fiat currency. Bitcoin is transferred differently from regular currency, so it may take a while for transactions to settle.
The withdrawal times may vary depending on the platform you’re using.
In most cases, peer-to-peer transactions are faster, however, Bitcoin payments are not reversible, so you must choose a Bitcoin seller who has a good reputation.
Peer-to-peer Bitcoin transactions take only about 10 minutes to complete on average, while third-party broker exchanges can take 3-5 business days.
Third-party broker exchange is a more legit and reliable option to go with. It will take a slightly longer time, but at least you will not have to worry about the whereabouts of your funds.
Bitcoin Cash out Methods
Now let’s address different methods to turn Bitcoin into cash. There are three cashing out methods for bitcoin- third-party broker exchange, peer-to-peer, and ATM.
All three of these methods are pretty convenient and trusted. However, there are some specific differences about which I will talk further.
Third-party Broker Exchange
To some people, third-party broker exchange seems to be a more obvious and safer method for cashing out bitcoins. So, how does this method work?
Turning Bitcoin into cash through a third-party broker exchange is a simple procedure.
For instance, at broker exchange, you exchange foreign currencies for the local ones.
Similarly, cryptocurrency broker exchanges let you convert your bitcoins into fiat in whichever currency you demand.
Also, it is an easier route; hence all you need to do is set up your account and make a transaction.
However, there are some cons as well. Third-party broker exchanges may charge you transaction or exchange fees on the total amount.
Also, this procedure is somewhat slow as compared to its counterpart- the peer-to-peer method.
However, you cannot deny the fact that broker exchanges are legally bound to the laws and are less likely to cause a bad user experience.
A peer-to-peer method is the second most popular way to cash out bitcoins.
There is a huge difference between third-party broker exchange and P2P exchange methods.
In most cases, people who are more experienced in Bitcoin dealings and transfers prefer the peer-to-peer method because of its faster settlement.
However, unlike third-party broker exchange, peer-to-peer can be a little risky.
With the P2P method, you deal directly with someone willing to sell/buy their bitcoins for/with fiat currency.
Therefore, there comes a matter of trust and mindfulness. If you are at all careless during the exchange, there is a chance of ending up getting scammed.
But then again, if you know how to cash out bitcoins using a peer-to-peer platform (that I explain further in this article), you can benefit from it a lot.
Another cash-out method is Bitcoin ATMs.
There are over 21,000 crypto ATMs in the world, and they allow you to cash out other coins than just Bitcoin like Ethereum or Litecoin.
This method is the easiest way among all three to turn your Bitcoin into cash without a hassle.
How to Cashout Bitcoin using Third-Party Broker Exchange
The procedure of cashing out bitcoin using third-party broker exchange is quite plain.
You need to follow the steps below.
- First, find a reputable crypocurrency third-party exchange platform online. You can choose platforms like Coinbase, Kraken or Binance.
- Then, you need to create an account on the website and fill in all the required details.
Once you have set an account, you are ready to continue.
- Now, you need to make a deposit using Bitcoin into the exchange.
- Once the exchange receives your money, you can request a Fiat currency withdrawal. For this, you can use a bank transfer or credit/debit card withdrawal.
You need to remember one thing straight- always use the same account to withdraw and deposit the money. It prevents the broker exchange from breaking the anti-money laundering policy.
As said earlier, the third-party broker exchange method can be a little time-consuming.
If you are using broker exchange to cash out bitcoin, it might take you from 1 to 5 business days (including account verification and withdrawal process).
However, this method is less complicated and contains very minimal risk if any.
If you prefer something more discreet and faster, you might want to set your hands on the peer-to-peer method.
Let’s take a look at that as well.
How to Cashout Bitcoin using Peer-to-Peer Platform
As mentioned earlier, peer-to-peer is a more anonymous and faster method.
So, how to turn Bitcoin into cash using this method? It is quite straightforward.
In most P2P platforms you will need to follow these steps:
- First, sign up on a platform like LocalBitcoins.
- Once you have set your account, select your ideal marketplace to look for buyers.
- Once you have found the buyers, you can send them the trade request.
- If they accept your request, you can talk to them directly and get the job done.
Most of these peer-to-peer platforms have escrow features.
This feature ensures the safety of your bitcoins by allowing you to not release Bitcoins unless you receive the payment.
You can exchange your Bitcoin for fiat currency using the peer-to-peer method in three ways.
Let’s discuss all these three methods one by one.
The first peer-to-peer bitcoin transfer method is cash deposit.
It is one of those old-school banking techniques where people come and deposit the cash in your bank account.
In this method, the person is supposed to deposit the cash equivalent to the Bitcoin’s price you have agreed on.
Make sure you have the ID proof of whoever is making the purchase.
Peer-to-peer is a risky market. Unlike broker exchanges, this method does not have any third-party involvement.
Hence, if the person does not deposit your money yet takes away the bitcoin, there is hardly anything you can do.
So, keep the ID proof and do not release the Bitcoins unless you get the money deposited into your account.
This one is pretty self-explanatory.
It is similar to the old form of buying goods. You meet the buyer and sell him your item.
So, after meeting on the peer-to-peer platform, you can ask the buyer to meet you in person.
When you meet the person, they pay you the cash and you release the BTC to the buyer.
Obviously, in-person payments are possible when both of you live locally or can meet each other.
LocalBitcoins gives you an option to look for buyers within your area.
Keep in mind that some buyers might not be okay with meeting in person or revealing their identity.
This method is pretty much the same as the cash deposit, except that the buyer here sends you money directly into your bank account from their bank account.
Bank transfer is a secure form of selling Bitcoin since you get a real-time update.
However, here also you need to be careful enough. Make sure to keep ID proof of the person buying your Bitcoins.
Also, don’t release your Bitcoins until you get the entire payment for them.
How to turn Bitcoins into cash using Localbitcoins
What is Localbitcoins?
LocalBitcoins is one of the most popular P2P Bitcoin trading platforms.
The platform was established in 2012 and has grown to be more popular than ever. Due to its enormous popularity and wide acceptability, the platform is present in almost every country.
LocalBitcoins is a marketplace for buying and selling Bitcoins locally to individuals who choose this method of payment because it offers much better privacy than other cash-out methods.
The platform takes extra precautions to prevent fraud and money laundering activities.
So, let’s see how to cash out cryptocurrency using LocalBitcoins.
Steps to Cashing out Bitcoin using LocalBitcoins
- First, you need to open an account on LocalBitcoins. For that, you would need to provide your email, user name, and password.
- Once you have successfully created an account with the LocalBitcoins, add the necessary details asked on the platform to verify your account.
- Now, you can locate the “Sell Bitcoins” on the top of the page.
- At last, select the country where you want to trade. I always recommend choosing the home country in that case. You would be more aware of the local rules and regulations regarding Bitcoin dealing in your country.
How to choose a Bitcoin buyer on Localbitcoins
LocalBitcoins let you see the previous record of a buyer. You can see the rating on the platform.
For example, suppose you see a person having a 100% rating. It means whichever trader he has been into was a legit one.
Highly likely, that’s the buyer you want to be dealing with.
How to cash out Bitcoins into your PayPal account
- Validate the cost of your Bitcoins and send a buyer the details along with your PayPal email address.
- Hit the “Send trade request” button, and the request will be sent.
Once you get a suitable buyer, you can send them a trade request, mentioning the amount of Bitcoin you would like to sell.
If the person accepts the request, they are open to the trade.
Instead of receiving the money into your bank account, the buyer will send the funds to your Paypal account.
It’s all about the negotiation.
What is LocalBitcoins’ Escrow feature
Suppose Ben is a seller and is trading 1 Bitcoin for USD 39,000. While John is Ben’s buyer.
So, Ben finds John on LocalBitcoins and sends him the trading request, which John accepts. After some dealings, Ben and John agree to trade.
Now Ben follows all the steps mentioned above and credits his Bitcoins on LocalBitcoins. The amount of Bitcoin will actually be credited into escrow first.
This feature holds the payment until John sends Ben the money first.
Once Ben receives the agreed sum, he confirms it, and LocalBitcoins release the payment of Bitcoin to John.
Thus, Escrow is a valuable feature that ensures the security of your Bitcoins.
Never rely fully on the system. Take all the necessary precautions from your side for the trade to be desirably successful.
How to Cashout Bitcoin using Kraken
What is Kraken
Kraken is one of the most popular third-party broker exchanges based in the US with its headquarters located in San Francisco, California.
The platform was founded just two years after the invention of Bitcoin.
Because of its outstanding security, ease of use, and low exchange fees Kraken easily became one of the most established cryptocurrency exchanges.
In addition to that Kraken has almost 60 different cryptocurrencies available on the platform for trading.
The main traded pair on Kraken is Bitcoin to Euro. However, you can also deal in other big currencies, such as JPY, USD, and CAD.
Kraken has a very simple interface, and withdrawal is very easy as well.
Let’s see how you can turn Bitcoin into cash using Kraken.
Steps to Cashout Bitcoin using Kraken
Withdrawing cash from your Kraken Bitcoin account is simple.
- First, you need to create an account on the platform by filling in all the necessary details.
- Then choose the type of cryptocurrency you would like to trade.
- The platform will show you the current value of Bitcoin in your local currency or whichever currency you prefer.
- Afterwards, the platform will make a detailed calculation regarding the exchange fee and the final amount you would receive.
- Upon confirmation, you will be able to submit the trade and get your cash in the available withdrawal options.
Exchange Fees: The exchange fee of Kraken is comparatively low than most third-party exchange platforms. Suppose you want to sell your Bitcoins and cash out USD using your local bank. The platform would only charge you $5 for the transaction. On the other hand, for the SEPA transfer, the fee is as low as 0.09 Euros.
Transaction Time: Like any other third-party broker exchange, Kraken takes around 1-5 business days to transfer money to your bank account. The period depends on many factors, such as the type of currency and the amount.
Localbitcoins vs Kraken
Both LocalBitcoins and Kraken are two of the most popular platforms for cryptocurrency enthusiasts.
However, Localbitcoins is a peer-to-peer platform which means you don’t have to register your name or identity, making it perfect if you want to remain anonymous (the rules do require for you to provide ID scans of both sides of your government ID though).
Kraken has information about its clients stored online in their databases, but LocalBitcoins doesn’t keep any client info on file.
So LocalBitcoins is also ideal if you’re looking for a more local seller, since other competitors may not allow trading with someone who lives far away from where you live.
LocalBitcoins could be described as “the middleman” or go-between that puts local sellers and buyers together.
How to turn Bitcoin into cash using ATM
You can cash out Bitcoin using an ATM cash machine. This is probably the easiest cash-out method for beginners.
Just act according to these steps:
- Go the the nearest Bitcoin ATM machine.
- Select the cryptocurrency you want to cash out (In this case Bitcoin).
- Scan the QR code on the machine and send Bitcoin to the given address.
- After the transaction is confirmed on the blockchain the ATM will hand you the cash.
However, keep in mind that crypto ATMs charge fees on average from 10 to 20%, but can go as high as 25% and as low as 7%.
Why Should You Cash out Your Bitcoin?
There are several reasons why you might choose to cash out your bitcoins:
- You want to buy a car, or a plane ticket and you need fiat currency for that purchase.
- You plan on using the money to help grow your startup venture: why not cash out some of your Bitcoin and use it for that?
- Your monthly expenses exceed what you can get from mining, buying, or trading bitcoins, so you prefer cashing out instead of being a full-time cryptocurrency trader/miner.
- Government regulations prompt you to withdraw Bitcoins and convert them into fiat currency before they decide to shut down digital currency exchanges altogether.
Statistically speaking, many people cash out their Bitcoins because they want to prevent the losses after the price of Bitcoin price drops significantly compared to their local fiat currency due to some news or strict regulations – like the case in India when they banned Bitcoin earlier this year.
I suggest selling 5-10% of your total holdings/portfolio.
Yes, it seems scary at first but remember why you bought Bitcoin in the first place: it was because you believed it had real value both (potentially) in terms of price appreciation and also due to its intrinsic utility.
To sum it all up:
– Kraken is a great platform that looks professional, but it does require the user to provide sensitive personal information.
– Localbitcoins acts as an escrow service between buyers and sellers who don’t know how to trust each other. Their website also includes forums where users can discuss how transactions went, their ratings, etc.
– Always keep in mind that there are other platforms like Bitcoin exchanges or cryptocurrency ATMs – some of which don’t need any ID checks at all if you’re just looking to cash out a small amount of money.
If this article helped you learn how to turn your bitcoins into fiat currency then share it with other cryptocurrency lovers.