This is a comprehensive guide on how to cash out Bitcoin to your local currency whether it’s the US Dollar, Euro, Japanese Yen or any other currency in the world. The article highlights the pros and cons to cashing out from Bitcoin at the moment and the various ways to convert BTC to fiat. In addition, we will look at the main factors that you should focus on before choosing your cashing out method.
The end of last year saw an influx in the number of investors who bought into Bitcoin seeing the price soar to an all-time high of $20,000 across some exchanges. The bearish run that started in February has caused a huge collapse in BTC’s price with more and more people choosing to sell the coin. In such times an investor may be struck with the thought to cash out, what are some of the pros and cons of cashing out now?
This article will offer a clear and descriptive follow-through on how to cash out bitcoin around the world through exchanges, peer to peer exchanges (P2P) and direct selling of Bitcoins.
Table of Contents
- How to Cash out your Bitcoin
- Key points to consider while cashing out Bitcoin (BTC)
- A. CRYPTOCURRENCY TO FIAT EXCHANGES
- B. PEER TO PEER EXCHANGES
- How to cash out Bitcoin using peer to peer exchanges
- The Escrow service
- C. DIRECT SELLING OF BITCOINS
How to Cash out your Bitcoin
Cashing out Bitcoin is not astronomy or rocket science. Bitcoin is actually one of the easiest assets to transform into cash at a go. However, there are key points investors need to factor in before they cash out Bitcoin.
Key points to consider while cashing out Bitcoin (BTC)
- The method of cashing out: The medium to use to exchange your BTC. Common methods discussed below include Crypto-Fiat exchanges, Peer-to-peer exchanges (P2P) and direct trade of Bitcoins.
- The cost of cashing out BTC: Different exchanges and methods offer different rates to exchange BTC to fiat.
- The amounts to cash out: Depending on the platform you are using, there are limits to how much BTC you can sell and how much fiat you can hold.
- The security of your funds: Above all else, security of your funds is paramount. The exchanges you choose must be secure enough for your funds.
- The currency you wish to exchange your Bitcoin to: Some cryptocurrency exchanges do not offer all fiat pairings on their exchanges hence the need to check your preferred currency before cashing out BTC.
Understanding the five warnings above not only allows you to effectively perform an exchange of Bitcoin to fiat, but also determine what your best option to cash out Bitcoins is.
A. CRYPTOCURRENCY TO FIAT EXCHANGES
One of the most effective ways to cash out Bitcoin is through centralized exchanges that offer users a crypto-fiat exchange features. Currently, Coinbase ranks as the biggest and most known crypto-fiat exchange in the U.S. and around the world. The process involved in cashing out Bitcoin from Coinbase is similar to other exchanges offering these services such as Kraken, Gemini, and Bithumb.
Requirements to cash out Bitcoin from Coinbase exchange
- Must be a resident of the countries supporting Coinbase.
- Send your identification documents for verification that you are a resident.
- Select a payment option which varies from the U.S, U.K, and Europe.
- Buy Bitcoins on Coinbase to cash them out.
How to cash out Bitcoin from Coinbase
Sign in page on Coinbase
2. Select the Buy/Sell option at the top of the resulting page.
Sell Bitcoins for fiat currencies
3. Select “Bitcoin” as the currency you want to withdraw.
4. Next page shows the Bitcoin and fiat pairings and the limits you can withdraw from your account. Select the amount of fiat (USD, EUR, and JPY etc.) or Bitcoin you want to withdraw.
Limits to the amount to cash out Bitcoin
5. Select “Sell Bitcoin Instantly” once you select the amount.
Complete the Coinbase BTC-fiat transaction
Once you sell your Bitcoins for fiat, the amount is sent to your Coinbase fiat wallet.
- Open your Coinbase fiat wallet and withdraw to your bank account. The amount is held for a short period to check for any irregularities then released to your bank account.
- You can withdraw the money from your bank account in the next 3-5 business days.
Fees charged on the transaction vary from 1.49% of the transaction value. Furthermore, Coinbase charges different rates for different countries. Find the full list of fees here.
Pros of using Crypto-Fiat centralized exchanges
- Cheap: Fees are a standard 1.49% for every transaction amount.
- Very Liquid: With over 10+ million traders, your Bitcoins will always have a market to Buy/Sell.
- Convenient and easy to use for the new beginners in the cryptocurrency arena.
Cons of using Crypto-Fiat centralized exchanges
- Only available in selected countries, locking out many investors in other countries from accessing the service.
- A time-consuming method as your funds will take close 3-5 business days for the cash to reflect in your bank account.
- Lack of privacy and anonymity that blockchains offer. Coinbase tracks the Bitcoins in case of any suspicious activity or illegal activity is noticed.
B. PEER TO PEER EXCHANGES
The shortage of exchanges in offering fiat-crypto services has given rise to peer-to-peer (P2P) exchanges such as Localbitcoins and Remitano. These exchanges offer a wider market range and faster services than the centralized exchanges. However, it would be crucial to note that these exchanges are much riskier.
Remitano and Localbitcoins are the largest P2P crypto exchange platforms (Remitano)
Furthermore, P2P exchanges have a wide variety of payout options on how you would like to cash out your Bitcoins. Some of these options include – PayPal, MPESA, Neteller, Venmo, Amazon gift card, Apple Gift cards, bank transfers or cash.
How to cash out Bitcoin using peer to peer exchanges
To cash out on P2P exchanges, users will need to open accounts on the respective exchange they wish to use. Once the account is active, deposit your BTC into your account and you are ready to sell off. The process of selling is enabled amongst various countries and fiat currencies.
However, there lies a bigger issue of trust between the peers trading, will I send BTC and not receive payment? Will I send the money and not receive the BTC? The issue of trust is universal in any business but cryptocurrency P2P exchanges have a bigger duty to protect their consumers.
The Escrow service
P2P exchanges use escrows to ensure trust is maintained amongst traders on the platform. They eliminate the risk of a seller (you) not releasing the BTC or the buyer not sending their payment making the process simpler.
Illustration: How escrows work
If Person A is a seller looking to sell his BTC to Person B who is willing to buy, Person A will send the Bitcoin to an “escrow” instead of directly sending it to Person B’s account. Once sent, Person B will need to make the payment to Person A. The BTC will then be released to Person B’s account only after both parties agree that the terms of the trade have been reached. In case of any disputes, the BTC is kept in the escrow until the dispute is solved.
This is the most crucial feature of P2P exchanges.
How to cash out Bitcoin (BTC) using Localbitcoins.com
The process to exchange your BTC for fiat on Localbitcoins.com offers a similar blueprint with other crypto P2P exchanges. Remember, you can only cash out Bitcoins you have on the exchange (minus the 0.00001 BTC) and you must be registered on the site.
- Go to the official Localbitcoins.com
- Log in to your account and go to the homepage. Sign up if you do not have an account.
- Once on the homepage, select the “Sell Bitcoins” or “Quick sell” option at the top of the page.
Step 3: Select the “Sell option”
4. The next step is to select your currency of choice (ex. GBP, JPY, KES) and the country you would wish to trade in. The best option is to select your local currency and current location to find the best offers with your local fiat. It also offers more options for getting paid than foreign countries.
Step 4: Select your country and currency of choice
5. Select the mode of payment from the drop-down menu shown below and click ‘Search’.
Step 5: Select the payment method from the drop-down menu
6. From the resulting list, select a trader with a favorable rate, a high rating (possibly 100%) and open the trade by clicking “Sell” beside the trader’s details.
Step 6: Select a favorable trader
7. Depending on the mode of payment selected, you will have different payment details to fill out e.g. PayPal users will need to fill out their PayPal email address, MPESA users can fill out their phone numbers etc.
Step 7: Fill in your payment details correctly
8. Once you confirm the payment details are correct, select “Send Trade Request”. The buyer will receive a notification on email or SMS. Your BTC will be stored in an escrow until you release the Bitcoins.
You should NOT release the Bitcoins from the escrow before receiving the full amount from the buyer. Releasing your Bitcoins before payment may see you lose your assets and not get paid. In case the buyer does not respond, the BTC in the escrow will be refunded back to your account in an hour.
- Once you confirm payment has been done, and the buyer confirms the payment has been made, click the “release Bitcoins” button.
- Rate the quality of the trade and you are done!
Advantages of using peer to peer exchanges
- Fast payments
P2P exchanges offer one of the fastest ways of payment while turning your Bitcoin to cash. As seen with the process above, registration on Localbitcoins.com takes less than 5 minutes. The fast registration is also matched with the peer service which mostly takes less than an hour to complete. The speed of the process is dependent on the buyer’s responsiveness. At times the Bitcoin to fiat process takes a couple of minutes.
A mobile-money service in Kenya, MPESA allows citizens in the country and around other locations in the world to send money through their phones. This makes the process of cashing out BTC really efficient and super- fast in minutes.
- Ready Market to trade Bitcoins
In most countries, there are always ready buyers of Bitcoin. Furthermore, the multitude of traders makes its easy to trade large amounts of Bitcoin. The inclusion of almost every country in the world (over 200 countries) also serves those investors that cannot access platforms such as Coinbase and Kraken.
- Cheap fees for selling Bitcoin
As mentioned before, Localbitcoins.com, Remitano, and other P2P exchanges only charge around 0.00001 BTC to trade on the platform.
Disadvantages of using peer to peer exchanges
- Lower prices than the centralized exchanges
Most of the buyers on P2P exchanges tend to price their buying price low to cater for the risk involved in trading on the platform.
C. DIRECT SELLING OF BITCOINS
The final method to cash out Bitcoins is directly selling the BTC to a person like you would sell other goods. The process involves holding your Bitcoins in your hardware wallet e.g. Trezor or Ledger Nano then selling the hardware wallet.
The process is, however, costly, inefficient and requires you to have a ready buyer on hand to accept your Bitcoins.
The processes above explain how to turn your Bitcoin to cash in moments. Furthermore, investors have an option among various ways to cash out Bitcoin depending on their preferable costs, time and risk they are willing to take.
It is, however, crucial to note that cashing out Bitcoin is risky hence the need to be very careful when writing wallet addresses to avoid losing your investment.
Want to know more about it, join us on our Discord and Telegram channels and get into the discussion, or join our 8000 member community on our ICO DOG Investment Platform: