How to Cash Out Your Cryptocurrency or Bitcoin

With cryptocurrencies like Bitcoin plummeting in 2022, you might be wondering how you can get out of your investment. Despite the slump in the cryptocurrency market, the good news is that traders have multiple ways to get dollars for their digital currencies, although some organizations prevent investors from cashing out their cryptocurrencies for real money.

If you are selling any assets then you need to understand the tax implications. If you book capital gains, you may owe a lot of money, the tax rate will depend on the holding period etc. Of course, if you sell at a loss, you can apply for a write-off. However, if you think cryptocurrencies might bounce back, it’s better to hold on and wait for the downturn to end.

Here are five ways to cash out your cryptocurrency or bitcoin.

1. Use an exchange to sell cryptocurrencies

One of the easiest ways to cash out cryptocurrencies or Bitcoin is to use a centralized exchange like Coinbase. Coinbase has an easy-to-use “buy/sell” button where you can choose the cryptocurrency and amount you want to sell.

You’ll quickly convert cryptocurrencies into cash, which you can get from your cash balance in Coinbase. From there you can transfer money to your bank account if you wish.

While Coinbase is a popular option for selling cryptocurrencies, if you don’t have custody of your tokens yourself, it may be most useful to use with whatever exchange currently holds your tokens. Some of the top exchanges include Binance, FTX, and Kraken.

2. Use your broker to sell cryptocurrencies

If a broker holds your cryptocurrency, the easiest way is to work with that broker. For example, if you are a customer of Robinhood or Webull, both of which allow extensive crypto trading, it is easiest for you to execute and complete trades on their platforms.

After completing the transaction, you will have cash in your account and be ready to trade again.

3. Conduct peer-to-peer transactions

You can also do a direct transaction, selling your cryptocurrency directly to another person through another entity. The most popular way is through peer-to-peer online platforms that allow sellers to find the best offers through exchanges, but even in person if desired.

With online peer-to-peer transactions, you can sell cryptocurrencies online in exchange for U.S. dollars. These transactions are usually facilitated by exchanges, and Binance runs a well-known online peer-to-peer platform called Binance P2P. After agreeing to the transaction, the platform escrows your cryptocurrency. After you review the transaction history in your payment account and confirm that you have received the buyer’s payment, Binance will release the cryptocurrency to the buyer on the platform.

Another popular option is the online platform Paxful. Sellers can set their own rates and choose from more than 300 payment methods, such as cash, gift cards or other digital currencies. According to the platform’s website, customers can sell directly to more than 3 million users worldwide.

4. Withdraw at Bitcoin ATM

Cashing out at an ATM is the equivalent of selling your bitcoins, says Hermes Bitcoin, a California-based bitcoin ATM company. A Bitcoin ATM is a way to instantly get cash using Bitcoin. Bitcoin ATMs work differently than traditional ATMs. In order to withdraw cash from the ATM and sell your bitcoins, the machine provides a QR code to which you can send your bitcoins. You only need to wait a few minutes to receive your cash.

However, commissions for Bitcoin ATM transactions can be very high, so it’s important to pay attention to how much you’re paying and whether it’s worth going the other way.

5. Exchange one cryptocurrency for another and cash out

Some exchanges do not allow converting or selling certain cryptocurrencies into USD, so you need to take an indirect route to get cash. Depending on the exchange you use, you may need to transfer or convert your cryptocurrency to another popular currency, such as the stablecoin Tether, before eventually converting to USD.

bottom line

There are multiple ways for traders to sell their cryptocurrencies. Popular cryptocurrency exchanges are always a good choice as they are reliable and well known, while online platforms with peer-to-peer sales may allow flexibility in payments. You can take the easy route and use a Bitcoin ATM to quickly access your cryptocurrencies, but the commissions are much higher.

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