Getting to know the ways to cash Bitcoin may very well be one of the top priorities for new cryptocurrency users. Finding ways to bridge the gap between crypto and fiat money on your own can be both difficult and time consuming.
Let’s take a look at all of the different ways to convert Bitcoin to fiat before making a decision that works for you.
Before familiarizing yourself with how Bitcoin exchange works, it is important to understand the terminology. A “Bitcoin exchange“Is the sale of Bitcoin in exchange for one of the currently available fiat currencies or alternative cryptocurrencies – dubbed” altcoins “.
A “Fiat money“Is any currency without intrinsic value. Originally presented as an alternative to representative merchandise and money, these currencies are not backed by a country’s gold or silver reserves. Most currencies The world currencies currently in use – including the US dollar, the Canadian dollar and the euro – are fiat currencies that are supported by the issuing government and have value only because the parties to the exchange agree.
A “altcoin“Is the generic term for all cryptocurrencies other than Bitcoin that emerged after its original success.
To date, there are three main ways to withdraw Bitcoin:
- Via a third-party exchange platform.
- Through peer-to-peer exchange (or P2P).
- Via a Bitcoin loan.
There are, of course, several less popular and somewhat riskier withdrawal methods: via a Bitcoin ATM to cash or with a Bitcoin debit card. Neither is recommended: Bitcoin ATMs are rare at best in any country outside the United States, and non-fraudulent debit card providers are hard to find.
It is, by far, the most common way to sell cryptocurrencies. A third-party sales platform or cryptocurrency exchanges an online marketplace and an intermediary that connects sellers and buyers allowing them to exchange Bitcoins for fiat currencies or altcoins.
Here’s how it works: You will need to create an account and prove your identity by providing the required identification documents. Many platforms will ask you to transfer money from your bank account to your online account, linking the two for future cash withdrawal. Others may authorize the withdrawal of postal checks in cash, cash delivery, bank transfers or credit card transfers. US and European users of third-party sales platforms can also withdraw funds to a confirmed PayPal account.
An outgoing transfer made via a third-party exchange complies with international anti-money laundering regulations and will take between one and five working days.
A P2P exchange allows more anonymity and the possibility of personally negotiating exchange rates. In this case, the actual Bitcoin exchange also occurs online but without a central authority governing the network or a third party acting as an intermediary.
Transactions are done in private, which helps users remain anonymous but can also increase the risk of being scammed. To combat this, most platforms have introduced a rating system that allows sellers to review the reliability score of a potential buyer before completing the transaction.
If you decide that P2P trading is right for you, consider working with a platform that includes an escrow service. This will ensure that your Bitcoin will not be transferred to the buyer until the payment has been confirmed.
A more tricky solution to cash Bitcoin is through a Bitcoin loan. Some financial service providers currently allow individuals to take out cash loans and deposit Bitcoin as collateral, which is repaid when the loan is repaid in full. This can be particularly beneficial if Bitcoin exchange rates increase over the life of the loan.
With low interest rates and fluctuating between 3 and 8%, this can be an attractive solution for those who need cash and enough to keep their Bitcoin.
The three methods described above have their advantages and disadvantages. More traditional third-party trading is slow but safer for beginners, while P2P trading allows for more anonymity and higher prices, but may not be the safest way to sell.
Converting Bitcoin to money is a long process no matter which method you choose. Do not forget to do your research and gather all the documentation necessary to prove your identity when creating an account on an exchange platform. Make sure all security measures are in place and allow a time window for identity verification and actual transfer when planning Bitcoin transactions.
