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How to Sell Bitcoin: 5 Ways to ‘Cash Out’ Your BTC Holdings

How to Sell Bitcoin: 5 Ways to ‘Cash Out’ Your BTC Holdings

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“How do you sell Bitcoin?” is one of the first questions that arise when people are interested in buying cryptocurrencies, since taking out your money is just as important as investing.

Selling Bitcoin (BTC) can be similar to buying Bitcoin, except in a somewhat reverse process. To sell BTC, you must first have BTC on hand in your wallet.

Buying Bitcoin is possible through various routes. When you’re ready to sell some or all of your Bitcoin, you can do so through a variety of avenues, including an online cryptocurrency exchange, direct peer-to-peer (P2P) transactions online or on-site, and through an ATM. Bitcoin automatic. (See more: What is Bitcoin, and how does it work?)

Cryptocurrency exchanges

Despite having several disadvantages, exchanges are a one-stop solution when it comes to trading Bitcoin. In the case of selling cryptocurrency, exchanges act as intermediaries, holding funds from sellers and buyers.

In order to use a cryptocurrency exchange, you need to set up an account with the platform of your choice. Many reputable exchanges require identity verification. It is necessary to connect a bank account to withdraw cash. However, please be aware of the exchange restrictions depending on your country. Some exchanges prohibit participation from certain regions.  

Once you have an account on an exchange and have transferred your Bitcoin to that exchange (or if you already have an account with Bitcoin on it), simply place a sell order, indicating the type of currency you want to trade, its amount, and its selling price per unit. The exchange will automatically complete the transaction once someone matches your offer. However, trading cryptocurrencies can be much more complicated than this brief overview, with multiple order types and more.

To learn more about trading, please read: How to Trade Cryptocurrencies: The Ultimate Guide for Beginners

After the funds are credited to your account, you will need to withdraw them to your connected bank account. Sometimes this can take an inordinate amount of time, especially if the exchange is experiencing issues with its banks or facing liquidity issues. Several months before its bankruptcy, the Mt. Gox exchange experienced exactly this problem. Also, some banks simply refuse to process transactions with funds obtained through cryptocurrency trading.

It is also important to consider the withdrawal fees that may come into play on the platform of your choice. Also, exchanges may have a limit on the amount of money you can withdraw within a given period. The limit may increase over time if you remain loyal to a particular platform or upload additional documentation to complete Know Your Customer (KYC) and Anti-Money Laundering (AML) verification requirements.

Finally, it is important to remember that despite offering wallet services, exchanges are by no means safe and reliable places to store your funds. They can be attacked by hackers, and there have also been cases where exchanges have been shut down due to their owners mismanaging user funds or running away with user money. 

Another potential option for selling BTC involves selling a stablecoin on an exchange and then withdrawing those holdings to a personal wallet outside of the exchange. You can also just keep those funds on the exchange, although doing so has its pros and cons. It is advisable to take full responsibility for your own funds and store any amounts not needed immediately in a secure offline wallet. Also, withdrawing to a personal off-platform wallet gives you more control over your funds.

A stablecoin is a digital asset pegged to the value of an underlying asset, usually a fiat currency, such as the US dollar. There are a number of stablecoins that you can trade your BTC for. 

Another indirect method of selling your BTC using the services provided by a cryptocurrency exchange is to spend it via one of the many crypto-focused payment cards on the market. 

There are several methods for the operation of such cards. Generally speaking, users’ assets are exchanged for cash at the point of sale, making the cards usable at places that accept traditional payment cards. Alternatively, some cards allow users to load stablecoins onto a crypto-friendly card and not be subject to the volatility associated with cryptocurrencies. 

Direct Transactions (Person to Person)

Another way to sell your Bitcoin is through a direct transaction with another entity, either online or in person. There are several ways to achieve this, either by setting up a direct meeting to sell Bitcoin in person or by making the transaction online through a specialized platform.

P2P Selling

With online P2P Bitcoin selling, there are several specialized platforms, and even products from reputable cryptocurrency exchanges, to facilitate such transactions. One way or another, these platforms essentially allow you to trade Bitcoin for cash, or vice versa, with another party online.

Generally, Bitcoin buyers post listings on these platforms, noting their desired price, preferred payment option, etc. Interested parties then find listings they like and complete the sale by following the instructions provided by the platform.

These platforms typically involve escrow features to provide a level of security for both parties and help secure the transfer of assets. Depending on the payment option, the Bitcoin seller can receive a transfer directly to their bank account or card, a bank transfer, or an agreement to receive funds on some of the popular traditional payment platforms.

Face-to-Face Transactions

Selling Bitcoin P2P at an in-person location is also a possible method. Some online platforms make it easy to sell BTC in person for cash, while parties can also simply choose to get together with friends or family on their own and sell Bitcoin for cash. Selling Bitcoin in person requires you to understand how to send Bitcoin and work with a crypto wallet, or the platform you hold your funds on (such as holding your funds on an exchange, for example). 

The value of Bitcoin fluctuates constantly, so it is important to know its price at the time of an in-person sale. Most of the merchants use fees from featured exchanges. Alternatively, services such as Cointelegraph’s Bitcoin Price Index can be used to identify the most recent price of the crypto asset. 

In some parts of the world, there are also physical locations or shops where participants can go to exchange Bitcoin for physical currency or exchange physical currency for Bitcoin. 

However, it is important to note that Bitcoin can trade at different prices on exchanges and at different prices in various regions of the world. This discrepancy is called the “premium”. Essentially, a Bitcoin price premium is an amount at which an asset trades above or below the rest of the market or the price of an underlying asset (when referring to other types of trading, such as futures).

Bitcoin commonly trades at comparatively higher prices in South Korea, a state of the market that has been labeled the “Kimchi premium.” Crypto exchange Coinbase Pro is also known to have a price premium over Bitcoin.

If you’re setting up an in-person Bitcoin sale with a stranger, whether through a platform or otherwise, it’s important to be careful. There are potential dangers when exchanging Bitcoin in person with strangers, similar to the risks that come with other in-person financial transactions.

Bitcoin

Despite looking like traditional ATMs, Bitcoin ATMs are not ATMs in the traditional sense. Instead of connecting to the user’s bank account, they connect to the Internet to facilitate Bitcoin transactions.

In its simplest form, Bitcoin ATMs allow you to scan a wallet QR code and then sell BTC for cash. Bitcoin ATMs are found all over the world and their locations can be easily found on the internet. However, they generally charge high transaction fees compared to other methods. Also, not all Bitcoin ATMs offer buy and sell features, which is important to keep in mind when looking for a Bitcoin ATM to sell BTC at.

Bitcoin ATM providers sometimes require users to have an existing account in order to trade, and the registration process often takes a lot of time, energy, and effort. For example, new users may be required to provide a phone number for activation and notifications, a government-issued ID, a palm scan, and a current photo taken by the ATM camera. The identification process varies depending on the machine and the operator running it, but some form of identity verification will always be required if you want to sell Bitcoin.

Additionally, BTC ATM operators must adjust their machine settings in accordance with applicable AML and KYC requirements in the jurisdiction where their ATMs are located. In some countries, this requires a money transmitter license, while current regulations in other countries prevent the installation of Bitcoin ATMs.

Once your identity is verified, you are provided with a QR code with a wallet address to send your Bitcoin to. Depending on the machine you are using, you will either get cash from the machine immediately or you will receive a redemption code and have to wait for the transaction to be confirmed on the Bitcoin blockchain. Usually, one confirmation is enough, but sometimes up to six confirmations are required before cash can be withdrawn.

Read more: How To Mine Bitcoin

Withdrawing Funds

A common way to convert Bitcoin to cash is to withdraw the cash to a bank account via wire transfer or Automated Clearing House (ACH) transfer after selling your BTC on a crypto exchange. 

Alternatively, the money can be transferred through the Single Euro Payments Area, or SEPA, which manages transfers in euros. It is a system designed to make international transfers between members of the European Union more efficient. Some European cryptocurrency exchanges accept this form of transfer.

However, both systems are far from perfect. Transfers can take a long time, depending on the country and the amount of money being transferred, and processing can take days. Additionally, these systems may incur additional charges. 

For example, some banks may charge a flat fee for a SEPA payment, which could increase depending on how quickly you want the transfer to go through. It is also worth noting that some banks may look unfavorably at facilitating transfers to and from accounts associated with crypto companies.

Therefore, if you are opening a bank account specifically to withdraw the money earned from Bitcoin sales, you should do your research and choose the bank that best suits your needs.

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