Five Ways to Convert Crypto Into Cash
Converting your crypto into cash is a fantastic way to reap the rewards of your investments. If you’ve profited from your cryptocurrency trades, then why not cash out a fraction of it to enjoy as fiat currency?
Thankfully, converting crypto into cash is a straightforward and often fairly swift process. Traders have several options for doing this, with each method having its own advantages and disadvantages. Some methods are faster and more flexible, whilst others are more cost-effective.
Through this article, you’ll discover the five best ways to convert your cryptocurrency into cash. We’ll also cover the main consequences of cashing out crypto so you don’t encounter any surprises. So without further ado, let’s look at the main ways of converting crypto into cash!
Should I Cash Out My Crypto?
You may want to cash out Bitcoin and other crypto for numerous reasons. For a start, cashing out your crypto allows you to enjoy any gains you’ve made. In fact, the best time to cash out your crypto is when you have made optimal gains in your trading portfolio. This is typically the main reason traders convert their cryptocurrency assets into fiat currency or another digital currency.
However, if this is the case for you, then time will be your biggest issue. Since the crypto market is extremely unpredictable and each crypto coin is highly volatile, it’s important to cash out as fast as possible. Otherwise, those gains you’ve made may just vanish before your eyes!
Remember, you don’t have to cash out all your crypto at once. We actually advise against doing so if possible, as crypto coins always have a chance of rising in value, and you don’t want to deny yourself future gains. Your best option is cashing out fractions of your crypto portfolio. Trading experts recommend periodically cashing out 30-40% of your total profit. That is unless you're in a situation where you need as much cash as possible.
The Five Best Ways to Convert Crypto Into Cash
Here are the five best ways to convert cryptocurrency into cash! The most suitable option for you will depend on how fast you want to cash out your crypto, your experience level, and how much fees you’re willing to pay.
Make a Peer-to-Peer Exchange
Pros:
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Highly cost-effective
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Most private option
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Able to negotiate fees
Cons:
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Very time-consuming
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Inexperienced traders may struggle
Peer-to-peer selling is a terrific option for more experienced traders who are looking for a private and cost-effective way to sell crypto and convert it into cash. Through a decentralised peer-to-peer (P2P) exchange, you can exchange your crypto assets for cash or other digital assets with another trader. Both parties can negotiate a price that suits them both, and there is no need for a third party’s involvement.
This method is a viable option for anyone looking for reduced fees when cashing out crypto and those who don’t want to pass various identification checks. But this option is most suited to those who already have experience with P2P platforms, as others may feel overwhelmed. Making a P2P trade can also be quite time-consuming, which may not be optimal for you if you’re looking for a quick cash-out option.
Sign-up for a Centralised Exchange
Pros:
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User-friendly
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Secure
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Plenty of crypto asset options
Cons:
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Higher crypto cash-out fees
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Identification checks needed
If you want a more regulated option, you can cash out your crypto through a centralised crypto exchange. A centralised exchange acts as an intermediary between buyers and sellers, as well as offering various other services. Crypto exchanges are one of the safest options on our list, but they require several identification checks that some traders may want to avoid.
However, if you want a wide range of options for cashing out your crypto, then this is your best bet. Most crypto exchanges, such as Kraken, support a wide range of cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), Dogecoin (DOGE), XRP (XRP), Tether (USDT), Cardano (ADA), and Litecoin (LTC). These exchanges are also very reliable and user-friendly, which makes them an appealing option for many traders.
Use a Crypto Broker
Pros:
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Highly suitable for beginners
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Plenty of flexibility
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Access to other trading-related services
Cons:
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Can be time-consuming
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Not the most convenient option
Crypto brokers assist traders as they learn to navigate the crypto market, refine their trading skills, and build up their trading portfolios. With a crypto broker, you can trade multiple digital currencies after connecting your bank account or using another payment method to make a deposit.
Furthermore, using a crypto broker is an excellent option for anyone who wants to cash out Bitcoin and other cryptocurrencies in a safe environment. If you’re new to the crypto world, this may be the most suitable method for you since brokers are experienced in offering assistance.
If you decide to opt for a broker, you can connect with one by registering on crypto platforms like https://coin-gpt.io/. You can swiftly sign up and get paired with a suitable broker based on your trading goals and individual preferences without wasting any unnecessary time.
Withdraw Funds From a Bitcoin ATM
Pros:
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Highly convenient
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Safe for traders
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Allows fast withdrawals
Cons:
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High transaction fees
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Limited availability
Using a Bitcoin ATM can be a fast and convenient way to withdraw cash using your crypto assets. There are already thousands of Bitcoin ATMs worldwide (around 34,000), and many more are expected to appear as countries continue to open their arms to the crypto sector.
A Bitcoin ATM will look just like a regular ATM you use to withdraw money from your bank account, but you’ll notice a few key differences. For example, unlike traditional ATMs, you cannot view your cash balance or manage your account funds. Instead, you’re limited to using the Bitcoin ATM to sell Bitcoin and withdraw your earnings as cash.
Most of these ATMs also allow users to withdraw other types of crypto, not just Bitcoin. Popular coins you can typically withdraw from a Bitcoin ATM include Bitcoin Cash, Litecoin, Dash, and Ethereum. Although, this method may not be viable for many since Bitcoin ATMs are generally limited to larger cities.
Get a Crypto Debit Card
Pros:
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The fastest way to cash out crypto
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Additional privacy
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Favourable exchange rates
Cons:
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Limited options
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Only select cryptocurrencies supported
Traders can use a crypto debit card similar to how they use their usual bank account debit card. With these cards, you can withdraw cash using your crypto funds. You can also use them to make various online transactions without needing to spend time converting your crypto to cash first.
This is a fast and reasonably cheap method that is suitable for both beginner and experienced traders. Even if you have limited knowledge of trading and crypto withdrawal, you should have no trouble using a crypto debit card. The most popular crypto debit card provider is BitPay. With BitPay, you can withdraw cash using multiple crypto coins, including Bitcoin, Ethereum, Bitcoin Cash, and Litecoin.
Additionally, many of these providers offer various rewards and cash bank options for users who withdraw fiat money using their crypto, making it a highly affordable and interesting option.
The Consequences of Converting Crypto Into Cash
Hold up! Before you begin cashing out your crypto using one of the methods we’ve listed above, there are a few things you need to be aware of. As with everything, cashing out your crypto results in several consequences. Although these consequences aren’t too serious, it’s still important that you understand them.
Tax Implications
Tax implications are the main consequences of cashing out your crypto holdings. In most countries, all traders must report any profit they’ve made on their crypto trades and pay capital gains tax. You may also have the opportunity to offset capital gains from alternate investments if you sell your crypto assets at a loss.
The amount of tax you have to pay and the process to do so will vary depending on which country you’re located in. It’s important to do adequate research and ensure you complete all necessary steps so that you don’t incur fines or other repercussions. You can refer to your country’s tax revenue service for more information about paying taxes for your crypto holdings.
If you’re struggling to calculate your capital gains tax, we strongly advise using crypto tax software such as Koinly. This software will help you record crypto transactions, preview capital gains, and generate tax reports.
Withdrawal Fees
You will likely encounter withdrawal and transaction fees when cashing out your crypto. This will vary depending on which method you opt for and which provider you choose.
For example, Bitcoin ATMs usually charge a transaction fee of up to 15% of the total amount. Centralised exchanges also have much higher withdrawal fees, which is one of their main disadvantages compared to using a broker or decentralised exchange.
If you want to save as much money as possible when converting your crypto into cash, then it’s best to choose a method with lower fees. Crypto debit cards and P2P exchanges are typically the most cost-effective way to cash out your crypto regarding these fees.
Additionally, other factors can affect how high your withdrawal and transaction fees will be. For instance, the type of bank account you own, the crypto coins you're holding, and how much you want to withdraw at once will influence the fees you'll need to pay. One way to reduce these fees is to make as few withdrawals as possible. This is because many providers calculate fees as a percentage of the transaction’s total value.
Scams
Another possible consequence of converting your crypto assets into cash is falling for a crypto scam. The cryptocurrency industry is ripe with scammers, each refining new ways to lure in and deceive victims. But don’t worry! It’s not as bad as it seems. These scams won’t be an issue for you if you’re aware of them and understand how to avoid them.
Most importantly, you should do extensive research before signing up for any platform or service. Your research should include reviewing user testimonials, thoroughly reading the company’s privacy policy, and using a scam-checking tool. Call us paranoid, but if you don’t want to risk losing all your assets, you should do this with any website or app before providing any of your financial information.
Summary
To summarise, there are five main ways to convert crypto into cash. The best method for you will depend on several factors, so it’s important to consider all your options before proceeding.
For instance, if you want to cash out your crypto as fast as possible, then your best option will be to use a Bitcoin ATM (if you have one nearby) or use a crypto debit card. On the other hand, if you want to avoid paying substantial transaction fees, then you’re better off converting your crypto into cash through a broker or making a trade through a P2P exchange.
It’s also crucial to make sure you’re aware of the tax implications and other consequences of converting your crypto assets into cash before doing so. Remember, if you do thorough research on each platform before providing sensitive information, then you’re much less likely to fall victim to a scam.