The Most Popular Methods to Cash Out Crypto

How to Cash Out Crypto: Ultimate Guide

Reading time

Today, over 15,000 businesses worldwide accept crypto, but cash still remains crucial in daily life, meaning that crypto holders need methods to convert their digital assets into fiat money. 

In this article, we will discuss some of the most popular means to cash out crypto and find out what you should consider before starting this process.

Key Takeaways

  1. The crypto cash-out process in crypto means exchanging digital assets for traditional money.
  2. Users can cash out crypto via crypt ATMs, CEXs, P2P crypto exchanges, etc.
  3. You should consider security, taxes and market conditions before withdrawing cash.

Why Would You Want to Cash Out Crypto?

Bitcoin was created in 2009 and became the world’s first virtual and decentralised currency. Today, cryptocurrencies are often used for various purposes, including managing daily life, covering taxes, diversifying investment portfolios, and so on. 

“Cashing out” in the crypto world involves exchanging digital assets for traditional fiat currency like US dollars, allowing investors to realise their investments’ value and use funds for daily expenses or further investments. 

People would want to convert their crypto savings into fiat for many reasons. Therefore, cashing out BTC allows for diversifying investment portfolios and reducing risk. Cryptocurrencies have high returns but are highly volatile. Cashing out crypto earnings provides peace of mind, reducing exposure to risks associated with working and investing in crypto.

Moreover, crypto assets are often converted to fiat to pay taxes, as they are treated as property for tax purposes in many countries, including the United States. This means gains on virtual investments are subject to capital gains tax, and earnings are subject to income tax. Crypto workers use various strategies to save or plan for taxes, often converting crypto to cash.

Lastly, people often convert crypto to fiat to buy a new car, go on vacation, or make some other big purchase. Despite the growing global acceptance, not all companies accept crypto payments, and cashing out your virtual savings might be a good option to purchase something you need.

Most Popular Ways to Convert Crypto Into Cash

There are several common methods to exchange Bitcoin and other crypto assets.

Ways to cash out crypto

Bitcoin ATM

Bitcoin ATMs are machines where users can buy and sell cryptocurrencies using regular money.  There are now around 40,000 Bitcoin ATMs worldwide. They are typically in busy areas like convenience stores, gas stations, cafes, and supermarkets. Most ATMs handle Bitcoin, but some also handle other cryptocurrencies like Litecoin, Ether, Tether, and USDC. These machines are a popular method for converting virtual coins into cash.

Bitcoin ATM growth

To cash out funds, find an ATM that accepts crypto, select sell or withdraw money options, enter the desired amount, generate QR codes or wallet addresses, transfer the funds to your wallet, wait for the transaction to finish, and dispense cash. Converting BTC into cash via ATMs typically takes up to 10 minutes to process and confirm the transaction.

Bitcoin ATMs offer convenience, accessibility, and a wide range of cryptocurrencies, but they also come with withdrawal limits and high fees, including conversion, ATM operator, miner, network, and out-of-network fees. They might also include security risks, limited regulation, limited availability, anonymity limitations, and scams.

P2P Exchange

Peer-to-peer (P2P) exchanges enable buying and selling Bitcoin directly from buyers and sellers, bypassing intermediaries. This is the fastest way to turn crypto into cash. They provide more privacy than traditional online transactions and facilitate trading of various cryptocurrencies with different payment methods. P2P exchanges are useful for trading less common or high-value assets while minimising additional fees.

To cash out crypto with P2P, log in to your chosen P2P platform, deposit or transfer digital tokens to your crypto wallet, browse through traders interested in buying these tokens, initiate a trade by selecting a buyer’s offer, communicate with the buyer via chat or mobile number, provide your details for receiving cash, and follow the platform’s instructions to complete the transaction.

Using P2P exchanges includes lower fees, strong security measures, global trading, and a diversity of payment methods. Transactions on P2P exchanges can be instant or take 1-3 days, depending on payment method, platform efficiency, and user interaction.

Fees associated with converting BTC to cash via P2P exchanges include maker/taker fees, transaction, payment method, and escrow fees.

P2P cryptocurrency exchanges offer lower fees and decentralised trading, but they also carry counterparty risk, escrow issues, limited liquidity, regulatory uncertainty, and security concerns. Users directly deal with other users, potentially exposing them to fraudulent sellers. Escrow services may delay or complicate fund release, and less liquidity may restrict trading options. P2P platforms also operate in an evolving regulatory landscape, causing uncertainty about future operations.

Crypto Exchange

A centralised crypto exchange (CEX) is a platform where users can buy and sell digital assets using crypto or fiat money. CEXs function like traditional equity markets, offering various features such as margin trading, crypto derivatives trading, or staking. They provide more flexibility, higher liquidity, and support for trading digital assets with fiat currency. CEXs also comply with financial regulations to enhance users’ trust and legitimacy.

To cash out BTC via exchange, you should first sign up and verify your identity. Then, deposit Bitcoin into your wallet, select the fiat currency and amount and sell Bitcoin. After selling, withdraw funds to transfer cash to your linked bank account.

However, CEXs also have some risks. Thus, security risks involve hackers holding large user funds, while regulatory risks limit features and trading options on CEXs. Limited control may restrict trading activities or daily withdrawals, affecting strategies and fund access.

To minimise these risks, users should prioritise security by choosing reputable platforms with strong cybersecurity measures, understanding the exchange’s fee structure, adhering to compliance requirements set by the exchange, and evaluating its features.

OTC Trading

OTC trading is a method for buying and selling cryptocurrency outside exchange platforms facilitated by an arbitrator or broker. OTC trading is ideal for high-volume crypto holders since it is typically used for large transactions, with some exchanges requiring at least $50,000 worth of trade. 

To cash out Bitcoin, users log in to the platform, connect with traders or brokers, and negotiate trade terms, including quantity, price, and conditions. The buyer pays in fiat currency, and the seller transfers crypto to the buyer’s wallet.

The benefits of OTC trading include avoiding significant price slippages and fees and offering various payment methods, such as bank transfers, cash, and online payment platforms like PayPal.

However, this type of cashing out has high withdrawal minimums, making it unsuitable for smaller investors. 

Crypto Debit Cards

Crypto debit cards enable users to spend digital coins like regular money. To cash out crypto to a debit card, create an account with a cryptocurrency exchange or digital wallet, verify your identity, deposit crypto, and apply for a virtual or physical card. Use the card like a regular card at stores, online shops, ATMs, and Apple or Google Pay for contactless payments.

Converting Bitcoin to cash via crypto debit cards is fast and easy. Crypto cards offer convenience, cashback, and safe digital asset storage. However, users may face fees, capital gains tax, and geographic restrictions, meaning these cards may not be accepted in certain locations. 

There are also security risks, including loss or theft, fraudulent charges, and exchange hacks. Regulation uncertainty may impact the future regulation of crypto debit cards, potentially affecting their functionality and fees. 

To avoid possible issues with crypto debit cards, you should prioritise cards with solid security features like encryption and two-factor authentication and be aware of top-up, ATM withdrawal, and foreign transaction fees, as they can significantly impact your overall costs. Also, look for cards with a solid reputation and positive reviews to ensure reliability and trustworthiness.

Factors to Consider Before Cashing Out Bitcoin

Before cashing out Bitcoin, consider the following factors:

factors to consider before cashing out

Market Conditions

Crypto prices fluctuate, so it is crucial to know when to cash out since it can influence your profit. Determine whether you’re in the long term or short term, and consider whether to keep BTC for future success or sell to avoid losses in bad markets.

Strategically timing your withdrawal based on price trends, volatility, and cryptocurrency market sentiment can maximise returns or minimise losses.

Pricing and Taxes

Compare fees to choose the cheapest way to cash out crypto and understand tax rules and cryptocurrency regulations to avoid surprises. Understanding local tax regulations and seeking guidance from authorities is crucial for preventing unexpected tax obligations arising from crypto transactions.

Security

Choose a reputable platform with favourable transaction speed for secure withdrawals. Also, enable 2FA, use strong passwords, and be cautious of phishing attempts and fraudulent activities.

Final Takeaways

In today’s crypto landscape, users can choose from many methods to cash out crypto. These include CEXs, crypto debit cards, P2Ps, ATMs, and more. Each method has pros and cons, and users have to conduct thorough research and seek recommendations on how to turn crypto into cash to opt for the most secure and reliable method that correlates with their goals. It is also crucial to consider potential tax liabilities when selling crypto to avoid unexpected tax obligations in the future.

Recent articles

Best DEXs on Solana in 2024
Top 10 Solana DEX Platforms in 2024
Education 21.06.2024
what does the ETH ETF approval mean
What Does ETH Spot ETF Approval Mean for The Crypto Market? 
Education 20.06.2024
BTC Accelerator
What is BTC Accelerator, And Why You Might Need It?
Education 19.06.2024
Is Crypto mining farm Beneficial in 2024?
Can You Still Profit from The Crypto Mining Farm Business in 2024?
Education 18.06.2024