So you have some bitcoin or cryptocurrency in your wallet and you are ready to sell your digital assets for cash.
This is a common step in many people’s crypto investment journey. But it doesn’t matter if you cash in your crypto for an astronomical return or to free up capital; you need to know what options you have so that you can cash out safely and not pay too much.
Fortunately, there are several safe ways to convert your crypto into cash if you need regular fiat quickly.
Best ways to cash out your crypto or bitcoin
Choosing how to cash out your crypto largely depends on where you currently hold it.
For example, if you currently hold cryptocurrencies like Bitcoin and Solana in your Coinbase wallet, your easiest option is to sell your crypto off the exchange. Likewise, many crypto wallets like Ledger let you sell crypto for cash directly from their wallets.
That said, there are countless ways to sell your Bitcoin and other popular cryptocurrencies for cash.
Use a central exchange
One of the easiest ways to convert crypto into cash is to sell it through an exchange.
Leading crypto exchanges such as Coinbase and Gemini allow you to convert your cryptocurrency into cash. For example, on Coinbase, you just need to use the Buy/Sell tab, choose the asset you’re selling, and then select USD as the payment type.
Coinbase displays a quote, including any transaction fees. Once you confirm the transaction, deposit cash into your Coinbase money wallet. From there, you can withdraw the funds to your linked bank account.
Centralized exchanges charge network fees and transaction fees, but if you already keep your crypto in an exchange’s wallet, this is the fastest way to cash out your crypto.
Peer-to-peer crypto exchange
Another method of exchanging crypto for cash is to sell through decentralized, peer-to-peer (P2P) exchanges.
A P2P exchange provides a way for two people to exchange assets at an agreed price. For example, you can exchange your Bitcoin for cash with another buyer, or exchange your Bitcoin for Cardano if you find a buyer.
There are also several advantages to using a P2P exchange over centralized crypto exchanges like Coinbase.
First, P2P exchanges typically charge lower trading fees. And you can negotiate with buyers to get the best possible price for your crypto. In addition, many P2P networks are decentralized, meaning you don’t need to verify your identity to use the platform. And you can transact in virtually any currency you want, provided you find the right buyer.
Several popular P2P cryptocurrency exchanges include:
If you want the best of both worlds, you can use exchanges like Binance and KuCoin which have their own P2P marketplaces as well as centralized trading.
Keep in mind that the downside of cashing in crypto with P2P trades is that it takes more time than selling through a centralized exchange. This is because you need to place your bid, find a buyer, and possibly negotiate before making a sale.
Sell from your wallet
If you currently hold your cryptocurrency in a hardware wallet, there is a chance that you can sell crypto for fiat directly from your wallet.
For example, the popular hardware wallet Ledger allows you to sell bitcoin for cash through Ledger Live. Ledger partners with Coinify to let you sell your BTC for cash, and you complete the whole process through the Ledger interface.
Likewise, hardware wallet Trezor has its own Trezor Suite that allows you to exchange crypto or sell your asset for fiat.
Admittedly, most hardware wallets don’t support many cryptocurrency transactions, and options like Ledger currently only support the sale of bitcoin for cash. But if you’re not dealing with a lot of altcoins, this option may suffice.
Money transfer apps
Today, popular money transfer apps like Cash App and PayPal are joining the crypto campaign. So if you have digital currencies with these apps, you can also use them to sell your crypto for cash.
Currently, Cash App only supports buying and selling bitcoin. PayPal, on the other hand, supports four different cryptos:
But both platforms make it incredibly easy to cash out your crypto. You pay a sales fee that depends on how much crypto you sell and network speeds, but both Cash App and PayPal will display the transaction costs and the final value of your sale before you confirm the sale.
Crypto debit cards
If you prefer to spend your crypto gradually rather than sell it all at once, you can always explore different crypto debit cards that come on the market.
For example, Crypto.com, a popular cryptocurrency exchange, has its own Crypto.com Visa Card. This prepaid card does not charge an annual fee and allows you to top up your balance with fiat or various cryptocurrencies. And depending on how many CRO tokens you own and wager, which is the platform’s native token, you can earn up to 8% cash back in CRO tokens.
The Crypto.com card also offers benefits such as free cash withdrawals and cash back on spending at merchants such as Amazon Prime, Netflix, and Shopify.
Coinbase also has its own Visa debit card that allows you to spend your crypto to earn crypto cashback rewards.
If you live in a major city, chances are you can find a Bitcoin ATM near you. And some Bitcoin ATMs allow you to convert BTC from your wallet into cash. All you need to do is scan your wallet QR code and then enter the amount of BTC you are selling and the ATM will display how much cash you can get.
However, not every Bitcoin ATM supports the sale of BTC for cash. And many also require verifying your identity or creating an account with the ATM company. In that sense, it’s not as seamless as just going to an ATM and cashing out your crypto in minutes.
Ultimately, using a Bitcoin ATM should probably be your last resort to convert BTC into cash. This is because options such as centralized exchanges are much simpler, and using P2P crypto exchanges will help you cut costs.
What to consider before cashing out your cryptocurrency?
Fortunately, there are plenty of options for crypto investors to cash out their coins when needed. However, before you pull the trigger, there are several implications to consider.
When you realize gains or losses on your cryptocurrency holdings, you create a taxable event. And according to the IRS, you must report the sale of virtual currency or the use of virtual currency to pay for goods and services on your tax return.
This should not stop you from selling your cryptocurrency for cash. However, you must have good crypto accounting. This is because you have to report any capital gains on your sale. And if you sell your cryptocurrency at a loss, you may be able to use that loss to offset other capital gains from alternative investments or investments such as stocks and ETFs.
Crypto tax software is your best friend here. Software like TaxBit and ZenLedger do a great job of consolidating all your crypto transactions for a given year and breaking down all your taxable events. This software can even support NFT transactions, so it is a comprehensive way to track and report on all your crypto and NFT activities.
Another factor to consider when selling your crypto for cash is possible trading fees.
Different exchanges and money transfer apps charge different fees depending on the crypto you’re selling, network congestion, and how much you’re selling. If fees take away a large portion of your crypto sales, sticking to P2P exchanges is the best way to reduce selling costs.
When you sell your crypto, you lock in that exit price. This could be excellent news if you have driven Dogecoin or Shiba Inu to the moon. However, every investment sale has an opportunity cost.
But unlike stocks or more traditional securities, selling your crypto closes a lot more doors.
For example, there are many lucrative crypto savings accounts like Celsius and Hodlnaut that allow you to deposit your crypto to earn passive income. Depending on the cryptocurrency and the rate, you can usually earn 5% to 15% APY or more with your cryptocurrency.
When you compare this interest to a regular high-yield savings account, you’re giving up a lot of passive income potential when you sell your crypto.
Likewise, people use crypto to earn income through methods such as staking. And you can even take out crypto-backed loans from companies like Celsius and BlockFi, giving you access to capital where a traditional personal loan provider might turn you down.
The bottom line is that cryptocurrency is an exciting space with many opportunities. If you need cash, there is nothing wrong with selling your coins. But think about the opportunity cost of every transaction you make.
At the end of the day, buying, selling and trading cryptocurrency doesn’t have to be overly complicated. Between centralized exchanges like Coinbase, P2P exchanges and other options, it is quite easy to sell your crypto when you need to.
Remember to carefully consider each transaction. In addition, make sure to do your due diligence and only go through trusted crypto exchanges.
If anyone ever asks for your private wallet key or sends cryptocurrency in exchange for payment first, that’s a scam. As long as you stick to legit crypto exchanges and money transfer apps, you should have no problems selling your bitcoin or other cryptocurrencies.
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