How is Bitcoin Converted to Cash?
In under a decade, cryptocurrency has gone from a fringe technology to one of the most talked-about assets out there.
Bitcoin, the original crypto, is leading the pack and reached amazing all-time highs in 2021.
But whether you’re a long-term holder or just enjoying some recent gains on swing trades, you’ll likely want to know how to convert that Bitcoin to cash. Despite more businesses accepting Bitcoin worldwide, cash is still the preferred store of value globally.
The question is – how exactly is Bitcoin converted to cash, and what’s the best way to go about this process? There are several ways to do it, so let’s cover them all in this article, along with the pros and cons you should know about.
Bitcoin Cash Out Basics
When it comes to converting Bitcoin to your currency of choice, you’ve got options.
However, you’ve got to make some decisions upfront to find the best cash-out method for your situation and the priorities you have.
For example, some methods are faster, while others take longer to process. Some are more simple and secure, while others give you more control and fewer fees to contend with.
Keep this mind moving when cashing out Bitcoin or any other crypto: you’ll face tradeoffs no matter what method you use, so learn all your options and make an informed decision.
Now, let’s explore the main methods you can start using now to cash out Bitcoin and make the most of your valuable cryptocurrency for all situations.
Broker Exchange
If you’ve only just entered the world of crypto, your best bet will be to use a third-party broker exchange to convert Bitcoin to cash and vice versa. Here’s what you need to know.
How it Works
If your Bitcoin exists in a physical or digital wallet, broker exchanges make it easy to transfer those assets into the exchange as soon as you set up an account.
From there, you can swap that Bitcoin for another cryptocurrency or cash out with the fiat currency of your choice.
When working with big-name exchanges like Coinbase or Binance, the process is quite simple and streamlined. A wide range of payment methods is accepted and transfer direct funds straight to your bank account.
This is the recommended course of action for newcomers to swap or exchange assets for cash for newcomers to crypto.
Timing and Fees
While broker exchanges make the cash-out process relatively straightforward, these companies also take a bit longer to facilitate transactions – anywhere from 1 to 2 business days in most cases.
However, you may need to wait longer when dealing with large cash withdrawals exchanges, so plan for big orders when possible. You can lock in a price to sell your Bitcoin and get the amount of cash you want, but it could take a few more days.
Another thing to think about is fees. Plan to pay the price for a third-party exchange that handles all the technical details of your transactions and keeps your crypto safe and secure.
Fees will vary by transaction type and scope and range from 0.5% to over 4%.
More Considerations
As with all things in crypto, DYOR (do your research) is the motto to live by, and this also applies to converting Bitcoin to cash on broker exchanges.
Even these platforms tend to be more reliable and trustworthy than other cash withdrawal methods, there are still potential risks related to security and the availability of funds.
Also, keep in mind that many smaller exchanges are popping up across the industry, each with intriguing incentives to get first-time Bitcoin buyers in the door.
Rather than simply leaping at every opportunity to earn “free Bitcoin” or other promotions, stay smart about where you put your money and conduct transactions.
Finally, crypto newbies must realize the paradox of the centralized exchange when dealing with these assets. The exchange is ultimately in control of your Bitcoin, and you don’t have the private key as you would with a standard wallet.
Exchanges are a great beginning with Bitcoin, but we suggest leveling up with a wallet and adopting best practices sooner than later.
Peer-to-Peer Platforms
While you might want to start with an exchange, another great way to convert Bitcoin to cash is through a peer-to-peer platform online.
How it Works
Since Bitcoin was originally a peer-to-peer electronic cash system, it makes sense that the P2P legacy is upheld when converting Bitcoin to cash in the current era of crypto.
The idea is simple: P2P exchanges allow you to buy and sell Bitcoin anonymously with other traders without the centralized control of a third-party broker.
Every platform is different, but the process is similar for them all. You sign up for an account by confirming your identity and linking your payment methods and wallets.
You then search the platform for a buyer looking for Bitcoin at an agreed-upon price or enter negotiations with other users.
When you agree on price and quantity, the cash is exchanged for the Bitcoin with an escrow mechanism to ensure both parties get their proper payment.
There are dozens of reputable P2P exchanges available in the US and worldwide, including Paxful and LocalBitcoins.
Timing and Fees
P2P crypto exchanges can facilitate faster transactions with lower (or no) fees by eliminating the middleman.
This is a big advantage for users who want to swap Bitcoin for cash quickly and take more ownership of each transaction.
The transfer speed can vary depending on the location of the two parties and the account type linked to the exchange, and you will learn what to expect as you gain experience.
Everything from gift cards and prepaid cards to PayPal and wire transfers is accepted on most of these exchanges, so you have plenty of choices when cashing out.
Pros, Cons, and Warnings
We’ve covered the main benefits of P2P exchanges here, but additionally, this method gives you more control over your Bitcoin overall – a huge upside.
Furthermore, these decentralized exchanges are truer to the spirit of Bitcoin, keeping the power in the hands of the users rather than a broker.
Be careful, though, because P2P networks are not always user-friendly for crypto beginners, and there are fewer protections when performing transactions.
More BTC Conversion Methods
On top of these primary platforms that let us convert BTC to cash.
Bitcoin Debit Cards
More traditional financial firms are creating Bitcoin debit cards that automate conversions from BTC to cash funds for use in real-time, paying just as you would with a normal card.
Bitcoin ATMs
Thousands of Bitcoin ATMs are being added worldwide, giving you the benefit of quick cash withdrawal at the current price of BTC and other assets.
Trading, Swapping, Mining, and More
Many crypto users choose to trade and swap cryptos to maximize their profits and withdraw cash at the proper time. Crypto mining operations also earn Bitcoin directly from the blockchain network by contributing to its security and development.
Make the Most of Every Bitcoin
There may be a day when you need not convert Bitcoin to cash. But until then, use these techniques to get cash for your Bitcoin as it reaches new highs all the time.
Visit Gryphon Digital Mining to learn more about making the most of your Bitcoin.
Sources:
How to Turn Bitcoin into Cash | Stilt