Bitcoin is a form of digital currency that can be traded, mined, or purchased. It has been around for nearly a decade, and it's still gaining popularity! That being said, there may come a time when you want to trade your Bitcoin in for something more tangible like cash. In this blog post, we'll cover everything you need to know about how you can turn Bitcoin into cash with ease, so you never have to worry about going back into debt again.
5 Considerations Before You Cash Out Bitcoin
If you're thinking about turning your Bitcoin into cash, whether you want to use a credit card or bank account, there are a few things that you'll want to keep in mind. While it's possible to turn Bitcoin into cash with ease if you don't consider these factors, the process could be pretty time-consuming and costly.
1. Analyze Fees
The first thing you'll want to consider is the fee that comes with turning your Bitcoin into cash. There are a lot of different fees that could come along with this process, including exchange rates and withdrawal fees. In addition, because there's no centralized bank for cryptocurrency like there is for traditional currency, these types of transactions can be much more challenging.
2. Choosing the Right Exchange Option
The next thing you'll want to think about is which exchange option will be the best for your specific situation. There are a lot of different options out there, but not all of them were created equally. Some exchanges charge higher fees than others, and some may take longer depending on whether you're trying to turn your Bitcoin into cash, deposit it into your bank account, or transfer it into your Paypal account.
3. Transaction Time
The time it takes to turn your Bitcoin into cash is also something that you'll want to consider. Some exchanges take longer than others, depending on how they prioritize their transactions and how many customers are trying to sell at the same time.
4. Currency Exchange
It's essential to consider the exchange rates that apply when it comes to turning your Bitcoin into cash. Depending on where you live and the currency exchange in your location, you might lose money instead of gaining. Make sure to check your exchange rate before processing your transaction.
5. Learn Local Taxation Rules
Finally, you'll want to consider your local taxation rules. Some countries view cryptocurrency as a commodity while others classify it as a currency or even a security token. The way it affects how you're taxed will depend on which country you live in and the specific regulations for each type of transaction. Make sure to check your local governmental regulations before converting.
Cash Out Using Bitcoin ATMs
If you want to turn your Bitcoin into cash, the best and easiest way is to use a Bitcoin ATM. To get started, you'll want to start by finding a Bitcoin ATM near you and then use the machine to exchange your Bitcoin for cash. Here are the common steps you'll need to take to turn your Bitcoin into cash:
Step 1. Find a BTC ATM near you
The first step is to find a Bitcoin ATM near your location. Bitcoin ATMs are located in most major cities throughout the world, so it should be easy to find one near you. Once you find a machine that's close to your location, you'll want to head to the area listed to start your transaction.
Step 2. Select cryptocurrency you want to cash out
Once you're at the ATM, you'll need to select which cryptocurrency you want to cash out. In most cases, this will be Bitcoin, but some machines may allow for Ethereum or Litecoin as well, depending on how many people are using them and what they have available.
Step 3. Accept the terms of service
Before you can start the transaction, you'll need to accept the terms of service. This will vary depending on which machine you're using and how it's designed, but in most cases, this should be a quick process where all that needs to happen is for your mouse cursor to enter the box and click "I agree."
Step 4. Enter your phone number for Authorization Code
Once you've accepted the terms of service, you'll need to enter your phone number into the machine. This will generate an authorization code that should be 15-20 digits long and includes both letters and numbers. Make sure that you put this information incorrectly because it won't work if inputted incorrectly.
Step 5. Enter the amount and send Bitcoin (or another crypto) to the QR-code on the terminal screen
The next step is to enter the amount you want to cash out and then press "send" or "submit," which will send the amount of Bitcoin to the QR-code displayed on the terminal screen. Once your transaction has been sent, it should be confirmed within a few minutes.
Step 6. Get an SMS after a successful transaction
Once you've sent your Bitcoin to the machine, it will be confirmed within a few minutes. Once that happens, you'll get an SMS with instructions on withdrawing cash from the ATM. Because every machine is different, make sure to check for this to ensure you're receiving your money in the right way.
Step 7. Get your money
Once your withdrawal has been confirmed, you should be able to get cash from the ATM. Most machines will require that you enter a PIN before it dispenses your money, so make sure to check for this number or code when withdrawing. If you want additional help on selling Bitcoin using an ATM, check out Paydepot's step-by-step instructions containing all steps and screenshots.
Pros and Cons of Using Bitcoin ATMs
Pros of using a Bitcoin ATM include:
- Easy to use
- A fast and reliable method
- Avoid high currency exchange rates
Cons of using a Bitcoin ATM include:
- High transaction fee
- May not have an ATM located near you
- Lack of customer support
Transfer Bitcoin Using a Cryptocurrency Exchange
Another easy way to convert your Bitcoin into cash is by using a cryptocurrency exchange. Instead of having to show up to a physical location to transfer your Bitcoin into cash, you'll be able to do it all online and avoid the long lines. This is a popular method for those who need a reliable, online process for trading and selling Bitcoin for cash. Here are four of the top exchanges on the market:
Coinbase
Coinbase is one of the most popular exchanges for people looking to sell their Bitcoins. Their interface is easy to use and allows you to easily convert your Bitcoin into cash, making it one of the best options for those serious about selling their cryptocurrency.
Crypto.com
Crypto.com is a modern cryptocurrency exchange that allows you to sell your Bitcoin very quickly. They provide a simple, easy-to-use interface, even offering additional resources, including Visa cards and cashback options, making them unique in the cryptocurrency exchange market.
Cash App
Cash App is the best way to send money between friends, family or even make purchases. You can quickly sell your Bitcoin for cash using this method, making it a great option if you're looking to get the most out of your cryptocurrency investment. However, Cash App does have a weekly limit, making it less reliable if you need to cash out large sums of money.
Binance
Binance is a cryptocurrency exchange that focuses on customer service and fast processing. They have a low transaction fee, making it one of the best options for those who want to acquire cash from their Bitcoin investment quickly.
Pros and Cons of Using Cryptocurrency Exchanges
Pros of using a Cryptocurrency Exchange include:
- Easily accessible
- Reliable
- Safe transactions
Cons of using a Cryptocurrency Exchange include:
- Potential for downtime
- Can take a while to process transactions
- High transaction fees
Cash Your Bitcoin Using Person-To-Person (P2P) Trades
One of the most private ways to convert your Bitcoin into cash is through a person-to-person trade. This method is the least popular for those looking to sell their Bitcoins, but it can be a good option if you're looking to avoid the high transaction fees and long wait times associated with transferring your Bitcoin online.
Online P2P
Online P2P trading is one of the two P2P methods you can choose to sell their Bitcoin. You'll be able to connect directly with buyers on sites like Paxful or LocalBitcoins, making it quick and easy to find a reasonable price for your investment. Just remember that these transactions are entirely anonymous, so it's important to remember to use a reliable online resource to ensure that your transaction is secured.
Pros and Cons of Online P2P Trading
Pros of using Online P2P Trading include:
- Quick and easy to use
- High reputation on the site can ensure you receive payment quickly and safely
Cons of using Online P2P Trading include:
- Very little protection against scammers or fraudulent sellers
- Can be very risky if you’re using an unknown site
Face-To-Face (Meet In-person)
If you don't want to participate in person-to-person online trading, you could also look into doing a face-to-face transaction with someone you know. Since this is an in-person trade, it's essential to ensure that the other party does not scam you by sending fake cash or money orders after receiving your Bitcoins. However, since you'll be able to verify who the person is and have more information on the seller, it makes it easier to report if there are any issues.
Pros and Cons of Meeting In Person
Pros of using In-Person Trading include:
- Ability to meet in person with your seller
- Negotiable rates and trades
- No transaction fees
Cons of using In-Person Trading include:
- Very little protection against scammers or fraudulent sellers
- Can be very risky
Withdraw Bitcoin Using Debit Cards
Did you know you can withdraw Bitcoin using your debit card? In order to do this, you'll need to use a platform that will allow you to choose how much cash you would like in exchange for your Bitcoin. This is one of the most convenient options because it will enable users to use their debit cards, but it can be costly depending on what type of card you have and the transaction fees that you may incur.
Pros and Cons of Using Debit Cards
Pros of using Debit Cards include:
- Easy access to your money
- More convenient than some other methods
- No special sign-ups or platforms needed
Cons of using Debit Cards include:
- High transaction fees associated with each transaction
- Transaction time can take a while to process due to the amount of money you're exchanging.
How to Transfer Bitcoin to a Bank Account
If you're looking to transfer your Bitcoin into a bank account, it can feel like a hassle. While there is no direct way to transfer Bitcoin into your bank account, there are steps you can take to sell your Bitcoin and then transfer the currency into your bank account.
First, you'll want to choose the platform that will allow you to sell your Bitcoin easily and quickly. Whether you want to cash out using Bitcoin ATMs, using a cryptocurrency exchange, debit cards, using in-person trades, or online person-to-person trades, you'll have to decide which method works the best for your needs. You'll then need to follow the individual steps listed with each selling method in order to turn your Bitcoin into your local currency.
From there, you'll want to withdraw it and deposit it into your bank account. Depending on the method you choose, this may mean you need to take out cash and deposit it into your account, transfer it from third-party software like Paypal into your bank account, or you may be able to move the sold funds into your bank account directly.
3 Things to Consider When Cashing Out Bitcoin
While we've provided a ton of information on how you can cash out your Bitcoin, there are still some precautions you'll want to consider before changing your Bitcoin to cash. We list the three major things to think about below:
#1 Beware of Cash Out Scams
Cash Out Scams are one of the biggest concerns for people trying to cash out their Bitcoin. Because there is no universal way to exchange your cryptocurrency into real currency, it can be hard to find a reliable method that works best for you.
Because of this, it's essential that when choosing how you want to cash out your Bitcoins, make sure you do so with trusted sources in order to avoid fraudulent offers and scams, such as claiming that they won't charge any fees or that you can get your cash in five minutes. If it sounds too good to be true, it probably is. This will ensure safety and peace of mind while using one of the popular methods above to sell your Bitcoin quickly and easily.
Unfortunately, though, if something does happen or you feel like someone has scammed you from selling your Bitcoins directly without any sort of middlemen involved, there isn't much legal recourse you can take.
#2 Tax Implications
Next, you'll want to think about the tax implications of selling your Bitcoin. Depending on where you live, you might need to claim the sale of your Bitcoin to your government during tax season.
- Cryptocurrency Taxation in the U.S.: Since cryptocurrency is considered property to the federal government, it will count on your federal income tax sheet. In 2022, the capital gains tax rate ranges from 10-37% for short-term capital gains. If you have long-term capital gains, it's between 0-20%.
- Outside the U.S.: If you're not in the United States, you will still have to pay taxes on the sale of your cryptocurrency, depending on what country you are located in. It's essential to check your government's laws to see how they tax the transaction.
#3 Transaction Fees
Last but not least, you'll want to consider the transaction fees. While it may be convenient for you to cash out your Bitcoin immediately, there are often high transaction costs that go along with this convenience.
For example, if you use a cryptocurrency exchange or third-party software like PayPal to sell your Bitcoin quickly, there will likely be some flat fees involved on top of their percentage fee. This can make cashing out your Bitcoins more expensive than keeping them long-term and waiting until they are worth much more money before selling them off at once later down the road. So, make sure to compare each method to find the best selling rate for you.
Summary: Converting Your Bitcoin to Cash
To summarize, there are several different ways you can cash out your cryptocurrency to turn it into your local currency. Of course, you'll want to consider the transaction fees involved with each method in order for this process to be both safe and cheap. If you're looking for third-party software or services to make it easy to turn your Bitcoin into cash, you'll want to consider using Paydepot's services to sell directly online or use one of our Bitcoin ATMs.
FAQ - How to Turn Bitcoin into Cash
What is the fastest way to turn Bitcoin into cash?
There is no universal way of turning Bitcoin into cash quickly, but there are several different methods you can use to do so. Depending on your specific needs and how much time you have will determine which approach would be best for you. Most will opt for a Bitcoin ATM due to its convenience, reliability, and security.
What is the most anonymous way to convert Bitcoin to cash?
If you are looking for the most anonymous way to convert Bitcoin into cash, purchasing it through an ATM service will be your best bet. This is because you can conduct the transaction using your private wallet or mobile device without disclosing any of your personal information.
What is the most secure and reliable way?
When it comes to converting your Bitcoin into cash, you'll want to use a service that is reliable in the cryptocurrency market. This means only using reputable companies with a solid track record of success and security to avoid losing any money during this process, as listed in our methods above.