Around 46 million Americans now own Bitcoin. While many online platforms allow for transactions using cryptocurrency, there are times when cashing out makes sense. Cashing out can also be an important move if you are expecting the price of bitcoin to drop.
So how does cashing out bitcoin work? It’s easier than you might think. Read on to learn how.
Converting Bitcoin to Cash
Most Bitcoin users cash out cryptocurrency using a third-party broker, third-party trading platform, or an over-the-counter trading option. You can also trade bitcoin for cash using a Byte Federal ATM.
If you use a third-party option you will need to start by signing up for the brokerage service. There are usually several steps involved in completing the verification process.
Common online broker services include:
Once you are set up, you can deposit bitcoin into your new account. From there, you can use the online service platform to directly transfer cash into your PayPal or bank account.
Beyond bitcoin ATMs and online broker services, some sellers of bitcoin prefer direct face-to-face transactions, known as P2P. You might find some online platforms that allow for P2P transactions.
Some traders handle the transactions directly. A crypto wallet is required on both ends of the exchange. Since Bitcoin’s value is always fluctuating, it is important that buyers and sellers understand the current market value of bitcoin at the time of the trade.
Other Factors to Consider
There are often limits on how much cash third-party platforms can disburse. Check each online broker for individual policies. A maximum cashout of $200,000 a year may not be a restriction if you are purchasing and trading smaller amounts of cryptocurrency.
Capital Gains Reporting
In countries that tax capital gains, cashing out may lead to a need to report taxes. This may not be the case if you are working with small trades or negligible sums of crypto purchases.
Larger investors may face issues when cashing out large amounts of bitcoin and other cryptocurrencies. If you see yourself trading and cashing out significant amounts of bitcoin, you may want to hire a professional broker to advise you on when and how to cash out your crypto.
Certain online platforms may charge a fee for the service of converting crypto to cash. Not all online brokers charge fees, so take time to shop around.
When you are ready to begin converting bitcoin to hard currency, consider the benefits of transferring to bank accounts versus an online money transfer service like PayPal. Once you choose a trusted online third-party platform and system for converting crypto to cash, you can rely on those methods as cashing bitcoin becomes more and more common.
Learn More About Cashing Out Bitcoin
Once you’ve done it the first tie, cashing out bitcoin becomes fairly easy and straightforward. As millions of Americans begin buying and trading bitcoin each year, exchanging crypto for cash is quickly becoming as common as stopping by the bank or withdrawing cash from an ATM.
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