Cryptocurrencies have become widespread across various websites and online platforms. Unlike their introduction, which was accompanied by doubts and uncertainty. Centralised finance and banks are becoming more oriented to decentralised platforms due to their prospective utilities.
The increasing popularity of cryptocurrencies led to the foundation of multiple service providers, such as crypto wallets, decentralised crypto exchanges, and payment gateways. These facilitators enable users to smoothly transfer Bitcoins to a bank account and conduct various transactions.
Paying with Bitcoin may seem challenging for new joiners or the classic user, especially with multiple digital wallets and virtual coins. Therefore, we will discuss how to transfer Bitcoin to bank account in the following.
Understanding Crypto Transactions
Firstly, let’s explain crypto transactions and how they happen. Decentralised transactions use virtual coins or tokens like Bitcoin and Ethereum to send and receive money.
When a party initiates a transaction, the sender’s wallet communicates with the blockchain and deploys smart contracts, which check if the wallet has sufficient funds and meets the transaction standards defined by the blockchain.
The smart contracts then encrypt the transferred funds using a private key, concealing and securing the transfer. Then, the transaction is chained and added as a new block to the blockchain.
However, when it comes to purchasing goods and services online on a website or platform, things work slightly differently. On the checkout page, the user selects the chosen cryptocurrency and connects their wallet to initiate the transaction.
The payment gateway in the website starts operating by communicating with the sender’s wallet and the blockchain, which triggers smart contracts and repeats the process, as mentioned earlier.
Once the transaction is registered in the blockchain, the receiver’s wallet decrypts the message using public key cryptography and releases funds into the wallet.
Crypto transactions happen instantly and provide an elevated security system to transfer funds around the world without worrying about exchange rates and bank fees.
Role of Crypto Wallets in Blockchain Transactions
One of the main components of every blockchain transaction is the crypto wallet, which is an online tool where you can store your digital assets, such as crypto coins, tokens, and NFTs.
Reliable crypto wallets are secured with seed phrases, randomly generated 12-24 words that users keep stored and use whenever they want to connect the wallet with a new platform.
Each digital wallet is designated with a unique wallet address, consisting of up to 60 characters, making memorising and guessing it challenging for security considerations.
When transferring crypto to a bank account, you can use centralised crypto wallets, which allow you to sell crypto for fiat money and withdraw them to your bank account.
How to Send Bitcoin from Crypto Wallet
Sending BTC or other cryptos requires having an account at a reliable crypto wallet. Then, you need the wallet address of the receiver, which is usually 40 characters long.
Find the send option on your wallet, insert the recipient’s wallet address, select the right network, and choose the amount and currency you want to send. Afterwards, you will have to verify the transaction and the gas fees from your wallet app to proceed with the payment.
Another option is to scan the recipient’s wallet’s QR code to insert the cryptocurrency amount and send it quickly.
How to Send Bitcoin with P2P Transfer
First, what is P2P Payment? Peer-to-peer payments are networks that facilitate direct crypto transfers between two parties without using an intermediary. This concept represents the main notion for blockchain and decentralisation, promoting direct and instant transactions.
Blockchain transactions are peer-to-peer, which means they are not processed by a central authority like banks and payment providers.
Therefore, P2P payments are faster and more convenient since they do not require documentation and other tax implications.
How to Transfer Bitcoin to Bank Account
When cryptocurrencies were first introduced, central banks and financial institutions resisted adopting them amidst fears and uncertainties regarding their potential and security risks. However, with growing developments in Web 3.0 and blockchain technology, cryptos have become widely popular on various websites and platforms.
Today, several centralised payment facilitators and providers have started adopting DeFi technologies and accepted Bitcoin transfers in one way or another. This also comes with the increasing demands of using cryptos, utilising their speed and safety.
Exchanging your crypto holdings between your digital wallet and bank account has become easier and can be done in several ways.
SWIFT vs. SEPA Transfer
One of the most common ways to exchange cryptos and traditional money is through SWIFT (Society for Worldwide Interbank Financial Telecommunications) and SEPA (Single Euro Payments Area), the most famous protocols for information communication and payment unification around different regions of the world.
Crypto exchanges adopt these two protocols to enable buying and selling crypto coins and tokens on their platforms using fiat money, such as USD or EUR.
This way, users can use USD to buy Bitcoin, for example. Also, they can sell their crypto assets to the exchange and withdraw Bitcoin to a bank account. These tools are called crypto on-ramp and off-ramp, which means the bilateral exchange of cryptos and fiat money.
Note that some crypto wallets only exchange cryptos for other crypto coins and tokens. Therefore, you cannot use fiat money to sell or buy virtual currencies.
P2P Transfer
Peer-to-peer transfer can also be used to exchange Bitcoin into your bank account. These direct transfers do not require using an intermediate service like central banks or platforms, which makes them direct and faster.
P2P transfers are also easier to deal with since they do not entail submitting documents or lengthy procedures. All you need to do is find an interested entity that wants to buy your digital assets.
Decentralised platforms offer a peer-to-peer crypto exchange for individuals who want to buy and sell cryptocurrencies using fiat money. In the P2P marketplace, you can find several participants with selected currencies they accept at a certain price.
Once you find an interested buyer, offer your holdings of Bitcoin and suggest buying BTC at a given price. Once you agree, you can send your virtual currencies and receive fiat money in return.
It is easier to Buy crypto with P2P. However, there are some risks of being a victim of a fraud scheme if the other person does not send you the promised money or faces delays in receiving your funds.
Crypto Banks
Central and investment banks started adopting cryptocurrencies and Web 3.0 tools amidst the advanced technologies in this space and the rising demands to transfer money using BTC, ETH, and other virtual coins.
Famous investment banks like Morgan Stanley and centralised payment processors like PayPal started accepting cryptos as payment methods and trading instruments. This comes after around a decade of abandoning these payment options and distrusting their potential and use cases.
Morgan Stanley established a crypto dealing desk for users to buy and sell multiple digital currencies and store them, allowing their clients to manage their fiat and crypto holdings in one account and boosting the use of digital money.
PayPal has also added major cryptocurrencies to its payment methods, enabling users in some markets to send and receive BTC, ETH, LTE, BCH, and their native token, PYUSD.
Moreover, dedicated digital banks, like Revolut, were established to focus on online payment and virtual money, enabling users to cross-transfer cryptocurrencies and conventional money.
Top Crypto-Friendly Banks
The rapid developments of cryptos and increasing demands to pay and trade with Bitcoin encourage traditional banks to adapt to up-to-date changes, which are called crypto-friendly banks.
- FV Bank: FV Bank offers crypto bank accounts for individuals and corporations, incorporating seamless BTC payment using crypto debit cards.
- JPMorgan Chase: in 2019, JPMorgan Chase adopted crypto services, allowing account holders to exchange crypto and fiat money besides trading various digital assets.
- BankProv: Provident Bank is a financial institution focusing on crypto services, such as digital assets and funds management, and a quick off/on-ramp exchange between virtual and fiat money for businesses and individuals.
Steps to Withdraw Bitcoin to Bank Account
There are various ways to transfer crypto to your bank account, but using an exchange to sell your crypto assets is the most common and easiest way. You only need a crypto wallet and digital funds to do the following.
1. Find a Reliable Crypto Exchange Platform
The first step is to research the market to select the most suitable crypto platform that supports the cryptocurrency you have in your wallet and the fiat currency you want to exchange it for.
Check out the exchange reviews to find out that it is a legitimate website and that your funds will be safe. Also, check out the security measures of the platform, ensure there are no hidden fees, and find out how long does a crypto transfer take.
Register your account at the chosen exchange, follow the suggested steps, such as KYC and AML procedures, and submit additional documents to verify your account.
2. Send BTC to the Exchange
The goal here is to transfer crypto from your wallet to the exchange and sell it for fiat money that you can withdraw to traditional bank accounts.
Once the verification process is complete and your account is ready, you need to find the option to deposit or transfer, which allows you to send virtual coins from your wallet to your account in the exchange. Find the exchange’s wallet address designated for your account and send Bitcoin to your new account.
Alternatively, if you do not have any crypto funds in your wallet, you can buy them directly from the exchange platform. Find the option to add or buy Bitcoin, and check the offered payment methods, such as credit/debit cards. Select the amount of Bitcoin you want to transfer/purchase, and it will appear in your newly created account.
3. Sell Your Crypto Funds
Once you have crypto money in your account, you need to sell it to the market in exchange for USD, EUR, or any other currency you want.
Find the option to sell or trade your digital holdings to sell the BTC you have. Ensure the exchange supports the trading pair(s) you are looking for, such as BTC/USD or BTC/EUR, and check out the offered exchange rate.
Execute the sell order, and shortly, you will have the money in your account.
4. Withdraw to Your Bank Account
The last step is to withdraw the money from your account on the exchange to your bank account/card. This step requires you to add your banking details, such as your IBAN number or SWIFT/BIC code, depending on whether you are using SEPA or SWIFT transfers.
If you have more than one bank account, check out which one supports faster withdrawal times and lower withdrawal fees.
Find the options to withdraw your fiat money from the exchange platform and select your newly added bank details, and your money will be transferred to your bank account. The processing time and exchange fees vary between platforms and the chosen payment option.
Best Security Practices in Crypto Exchanges
Sending cryptocurrencies to your bank account is a seamless transfer process. However, there is some risk associated with having the execution conducted online, especially in light of the various cyber threats and crypto hacks every year, drying out billions of dollars from users’ wallets.
Here are some security best practices that you must follow to ensure the safety of your crypto assets.
- Choose a secure wallet: Crypto wallets are one of the top targets of hackers, who track transactions and try to breach private key cryptography to re-route the transaction to them. Ensure the wallet provider utilises the most secure protocols, such as batch processing and zero-knowledge proofs.
- Safeguard your private keys: the private keys give access to your wallet and transactions. If you use a hardware or paper wallet, ensure no one has access to them and keep them in a highly secure area. If you are using online wallets, ensure your seed phrases are not compromised and apply additional security measures like 2-factor authentication and fingerprints.
- Do not underestimate the power of strong passwords: Hackers use sophisticated algorithms and probabilities to guess passwords. So, make sure you use a strong password that does not include your personal information and change it occasionally.
Conclusion
Exchanging Bitcoin to fiat has never been easier; with more platforms and websites adopting cryptocurrencies and virtual tokens, the process has become more seamless.
Unlike previous times, when transactions and web DeFi platforms were limited, now even newbies who do not know how to transfer Bitcoin to a bank account can do so with simplified processes and easy-to-use tools.
Crypto holders can use exchange platforms to transfer and withdraw BTC to a bank account using SEPA and SWIFT transactions or use peer-to-peer networks and find interested parties to exchange crypto for fiat.
However, such transfers must be carried out with caution because of the increasing cybersecurity risks in decentralisation. Therefore, use the most suitable and secure crypto wallets, safeguard your funds using strong passwords, and keep your private keys and data out of reach.
