How To Quickly Convert Your Bitcoin Into Fiat Currency
So you’ve got a stash of Bitcoin; you scrimped and saved, hodled through the highs and bought the dips. But how do you turn your Bitcoin into fiat currency quickly?
There are lots of reasons why you might want to exchange your Bitcoin for fiat currency; for example, as an investment decision to profit from favorable marketplace conditions. Or you might want to enjoy more flexibility when using your cryptocurrency to pay for things.
How soon you need fiat currency could also influence your choice, too. You might need ready cash to respond to an emergency situation, in which case speed is of the essence when you’re looking to liquidate your digital assets.
Fortunately, there are a number of different methods available to you. But what are the differences between them, and what’s the best situation in which to use each method? We’ve rounded up the options for converting Bitcoin into fiat currency, and explored the benefits and pitfalls of each.
Cryptocurrency exchanges can take your Bitcoin and convert it into cash or another cryptocurrency; they’re the most widely-available method for converting your Bitcoin, which makes them a good choice for beginners who might be uncomfortable using more esoteric options.
All exchanges have crypto converter features that will tell you how much traditional currency you can get after making a sale. However, one potential downside is that it can take several business days to withdraw your fiat currency after completing the transaction. A growing number of exchanges also have know-your-customer (KYC) requirements in order to comply with local laws and regulations, as countries around the world look to bring their legislation into line with recommendations from the Financial Action Task Force (FATF).
Privacy advocates argue that these KYC requirements can be seen as compromising user privacy; in June 2020, the playfully-named KYC, Not Me website launched, listing Bitcoin exchanges that preserve privacy through verification-free or verification-lite policies.
This new project is cataloguing privacy preserving bitcoin exchanges that don't require KYC: https://t.co/VoyWq2ITyg
— Jameson Lopp (@lopp) June 12, 2020
There are a number of well-established exchanges including Coinbase, Binance, Gemini and Kraken, which emphasize user-friendliness—ideal if you're new to exchanging Bitcoins for cash. There are plenty of other options too—but it’s important to do your research ahead of time, as some exchanges are fronts for scammers and could result in you losing your Bitcoin.
Peer-to-peer exchanges are a more informal option, acting as marketplaces between buyers and sellers; each party sets their prices and tells you what kind of cryptocurrencies they want.
That means there’s a wealth of possibilities if you’re looking to sell your Bitcoin for fiat. You can browse through the people who are ready to buy and choose the most profitable option for your situation.
These exchanges are decentralized and many don’t require identity checks, maintaining users’ anonymity. However, many peer-to-peer exchanges such as LocalBitcoins and Paxful have begun introducing some KYC protocols to boost compliance with AML regulations.
Bisq is one example of an exchange that works on a peer-to-peer basis. The trading time ranges from one to eight days, depending on the selected method. LocalCoinSwap is another possibility. Although peer-to-peer exchanges offer you more choices, there are risks to be aware of, such as dishonest parties. Dispute processes are available, however.
There are a growing number of Bitcoin ATMs around the world—well over 8,000 in total, with more being added every day. As the name suggests, they work in a similar way to a conventional ATM, letting you withdraw cash immediately.
Using them is a simple process; they’ll usually display or print off a QR code, which can be scanned to send Bitcoin to the ATM; whereupon it’ll present you with a wad of notes. There may also be a verification process such as a text message, for added security.
If you need cash in a hurry, they can be a quick (and relatively anonymous) option for converting Bitcoin into fiat. However, there are drawbacks; while the number of Bitcoin ATMs worldwide is growing, they’re not available in every market yet, and it could be a while before they see widespread adoption. They also charge hefty fees, and impose withdrawal limits (unsurprisingly, since they’re limited by how much cash they can physically store).
Cryptocurrency Debit Card
If you’re looking to spend your Bitcoin quickly, a speciality debit card is the fastest crypto converter option on this list; everything happens in an instant. It works the same as a conventional debit card, but draws funds from your digital wallet rather than from a bank account.
That means you can spend your Bitcoin at any merchant that accepts the debit card's brand name. Revolut offers a Mastercard option, for example, while Wirex is one of many to offer a Visa option. Many crypto exchanges now offer a debit card in certain territories, including BitPay, Coinbase and (soon) Binance.
Once you've signed up for a card (which, of course, takes time) it’s just a case of either buying some Bitcoin through the platform you’ve chosen, or sending some of your own Bitcoin to the wallet address associated with the card.
There are some disadvantages, though. Providers typically charge transaction fees and impose spending limits. They’re also not available in all territories, and you’ll need to go through the bank or exchange’s KYC procedures in order to register for a debit card.
Choosing the right option to convert your Bitcoin into fiat
It was not always so easy for people to swap their Bitcoin for fiat currency—but that’s changed in recent years. Whichever option you go for, don’t forget to research it thoroughly and read all the fine print to avoid surprises.