It’s one thing to know you want to convert your bitcoin to cash, but it’s another to know how to cash out bitcoin. Sure, there are several cashout methods, but depending on your situation, each one’s structure, fees, and cashout timeframes might be either a burden or a boon.
Below, we’ll walk you through each bitcoin cash out method so you can decide which one is right for you.
Crypto cashout methods
Among the most popular ways to cash out bitcoin and other cryptocurrencies are:
1. Online exchanges
You can sell your bitcoin directly on online exchanges, which facilitates the transaction between you and the cryptocurrency market. To use an online exchange, register for the service that most appeals to you, connect a bank account, and then wait for your information to be verified. Then, before selling, you can transfer any bitcoin you currently own to your exchange account via a bitcoin wallet address.
Once you’re ready to convert your bitcoin to dollars (or your local currency), the exchange should let you quickly do so. You can then send the cash equivalent of your bitcoin to your bank account. You might need to wait several days for the money to reach your account, but it will eventually arrive.
2. Peer-to-peer exchanges
Through peer-to-peer exchanges (also known as P2P exchanges), you can transact directly with other people.
To use a P2P exchange, create an account with your platform of choice, then find ideal buyers and request trades. Once a buyer approves your request, the platform will keep your bitcoins locked until you confirm that you’ve received the buyer’s cash, like an escrow function. This setup makes peer-to-peer platforms especially worthwhile if you’re concerned about scams or fraud while interacting with someone over the internet.
After your P2P transaction is complete, you should leave feedback for the buyer. This way, the exchange’s rating system can show other sellers which potential buyers are to be trusted (or not) during future transactions.
One of the advantages of peer-to-peer exchanges is that they help utilize one of the core benefits of crypto. While exchanging P2P, the people involved in the transaction can be far apart and not know each other, yet still conduct a financial transaction without the need for an intermediary such as a bank or payment provider. This kind of internet-scale financial functionality opens up a tremendous opportunity for equal access and the ability to move money in parts of the world that are prone to strict controls and oversight.
3. Bitcoin debit cards
Although bitcoin debit cards don’t exactly convert bitcoin to cash, they come close enough to land on this list. You can use them exactly how you’d use regular debit cards, as long as the point of sale accepts Visa or Mastercard, which so far are the two major payment card providers offering crypto support.
During a sale, your bitcoin debit card will convert your bitcoin to the required amount of local fiat currency for your transaction. In some cases, you can also withdraw paper cash in the local currency at regular ATMs that take Visa or Mastercard. This convenience is a major part of bitcoin debit cards’ appeal, but it also comes with a fee.
At supported bitcoin ATMs, you can instantly convert your bitcoin into cash, the key word here is instantly! To do so, you’ll need to verify your identity and enter the amount you want to withdraw. The ATM should then show you a QR code you’ll scan to send bitcoin to the ATM. Once you do so, the ATM will issue the fiat currency equivalent.
Similar to bitcoin ATMs, Coinme powers thousands of locations through which you can sell your bitcoin for cash in an instant. The main difference is that Coinme locations tend to be more widespread and accessible, with lower fees than bitcoin ATMs. Bitcoin kiosks and tellers, powered by Coinme, are a great example, as they’re mostly located in the entrances of major supermarket chain locations. Most crypto-to-cash fees are reasonable, plus they let you conduct transactions worth thousands of dollars.
Current bitcoin price
Key considerations when cashing out crypto
To choose the crypto cashout method that’s best for you, weigh the below considerations:
- Transaction fees. Pretty much every platform for cashing out crypto keeps a share of your profits from the transaction. Broker exchanges and P2P exchanges typically have lower fees than bitcoin debit cards and ATMs. Additionally, bitcoin kiosks offer most of the same services as bitcoin ATMs with much lower fees.
- Transaction speed. As mentioned earlier, the time between making a broker exchange transaction and actually getting your fiat currency in hand can span several days. If you need cash ASAP, you’re better off going to a bitcoin ATM or a Coinme location. In both cases, though, your fees may be significantly higher than if you just waited a bit. A savvy cost-benefit analysis will be helpful here.
- Tax reporting and payments. Whenever you profit off any type of asset, you must include those profits in your tax returns. This logic holds true with the profits you make from bitcoin and other cryptocurrency sales.
The pros and cons of cashing out bitcoin
Some reasons to cash out your bitcoin include:
- Profits. The obvious reason to cash out your bitcoin — and the one you’re probably already thinking about — is that selling your bitcoin gives you cash. If you sell your bitcoin at a time when its cash value is higher than when you first purchased it, you’ll make a profit.
- Always liquid. One of the great things about bitcoin and cryptocurrencies is that the market is always open and so the assets are always liquid. This is different from traditional assets like stocks, or traditional financial products available at banks that have set hours.
Alternatively, there are plenty of reasons you might want to wait to cash out, including:
- Potential for losses or greater future profits. Bitcoin’s value changes every day. Its price today may be vastly different than just a few days from now. If you sell your bitcoin now, you might miss out on greater profits in the near future. If you see bitcoin’s value tumbling, you might feel the urge to sell to cut your losses, but if the value resurges later, you’ve netted a loss when you could’ve just waited.
- Fees and taxes. All forms of cashing out your bitcoin come with fees that chip away at your profits. So too do the taxes you pay on your profits. The effect of these fees on your profits decreases as your sale revenue increases. Poorly timed selling decisions can incur what are effectively greater costs.
- Giving up decentralization. Among the most exciting aspects of bitcoin is that it’s decentralized. As such, its value can be more stable than that of fiat currencies over time, and that’s why many users love it. When you convert your bitcoin to cash, you lose this benefit. For more information on bitcoin’s advantages over cash, read the Coinme guide to how bitcoin can create financial equality.
Coinme tips and help
Coinme is in the business of making it easier for more people to buy and sell bitcoin and cryptocurrencies, whenever they want, and increasingly, wherever they want.
The road to financial equality will be paved by easy-to-use and secure access, and that’s what drives Coinme’s mission.
Be sure to visit the Coinme blog to learn more about bitcoin fundamentals, bitcoin transactions, and using a bitcoin wallet. And the next time you’re looking to convert bitcoin to cash or vice versa, find a Coinme location near you for a supremely user-friendly, low-fee experience.