Converting Cryptocurrency to Cash: How Feasible Is It?
Although the journey of cryptocurrency started with the introduction of Bitcoin in the digital market in 2009, the real surge and popularity were seen recently in 2021. That year nearly millions of investors entered the market, which resulted in a massive rise in the value of cryptocurrencies. And today, the market is worth trillion dollars.
But sadly, cryptocurrencies have their set of drawbacks which makes investment risky and pose some threats and fears to the investors. Consequently, many holders are now thinking of converting their crypto into cash. And this is what this article will talk about.
Can Cryptocurrency Be Converted To Cash?
Cryptocurrency at Rain.com is convertible. You can do it if you think you need to sell your crypto. But why do people wish to convert their coins into cash? Read the following section to know the answers.
Why Is There a Need To Convert Crypto Into Cash?
Cryptocurrencies were introduced to present an alternative to the currency. It is a digital currency introduced to offer immense value and utility for investors. However, unfortunately, they resulted in a highly volatile asset making them a riskier choice. This drawback makes a cryptocurrency an impractical asset for the holders.
Last year in November 2021, the crypto market saw a massive boom in terms of market value. The value of the crypto coins is today worth trillion dollars. As a result, it has become popular among traders as more buyers and sellers have entered the market. However, one thing that haunts every investor is the fear of losing their investment because cryptocurrency can have price fluctuations and drops.
This aspect makes many investors want to get out of the crypto space. As a result, they seek ways to convert their cryptocurrencies into cash.
Also read: Top 10 Cryptocurrency Payment Gateways
How Can We Sell Crypto?
You can trade cryptocurrencies through the digital marketplaces known as exchanges. An exchange holds the buying and selling of all cryptocurrencies. Investors who wish to sell their crypto can do it through the exchange. You can place your asset and seek buyers who will purchase the coin from you. You will receive the money in your bank accounts within a week.
However, before trading your cryptocurrency, go through different exchanges and correctly review their features, commission fees, and transaction time.
Things You Should Be Careful Of
You should examine a few points before you cash out your cryptocurrency.
Every bank will charge an exchange fee while you convert your crypto into cash.
Another risk that you should think about is taxation. An investor is liable for capital gains taxation when selling their funds. But what is capital gain? It is the funds or profits you have collected with your investments. Investors should pay them because most third-party broker exchanges are liable to register their transactions for tax purposes.
Speed is a significant aspect that goes into the account for cashing out cryptocurrency. Choose reliable and good third-party broker exchanges that do not take months to transfer the money into your bank account.
How to Cash Out Crypto into Cash?
There are usually two standard ways to convert cryptocurrency into cash and transfer it to your bank accounts. Let’s find out:
Third-Party Broker Exchanges
Brokers and exchanges offer a more effortless and secure way of converting crypto into cash. This exchange system functions similarly to converting currencies at the airport. While converting your digital asset, you will deposit your crypto to the exchange and ask for the withdrawal. Then, the broker will transfer the money to your bank account.
Things You Should Be Cautious Of
- Some money laundering laws impose restrictions on brokers, so sellers must choose the same bank account for deposits and withdrawals.
- There is a fee for every transaction. However, the cost can vary from broker to broker or state to state.
- Time is an issue. Sellers must wait until they receive their funds because funds take more time to reflect in their bank accounts.
Steps to Convert Crypto
- Choose your desired third-party broker exchange,
- Sign up on the exchange,
- Go through the brokerage’s verification process,
- Deposit your crypto into your account,
- Then convert it into cash by depositing it into your bank account or PayPal account (if there is an option).
The peer-to-peer platform is famous for the following reasons:
- This method of cashing out crypto is faster. So you will not have to wait to get your funds in your bank account.
- Also, peer-to-peer platforms do everything anonymously.
- You have to sell what you want simply.
- Sellers will get a better exchange rate than brokers with affordable exchange fees.
However, there is no guarantee of safety as with the broker method. Sellers can experience fraud and threats to their funds. Therefore, they should request proof of ID and payment before cashing out their cryptocurrency. To ensure further safety, you can choose platforms that keep the crypto coins locked until the money is transferred to the seller.
Also read: How to Choose a Cryptocurrency Exchange Platform?
Steps to Convert Crypto
- Choose a suitable peer-to-peer exchange platform by deciding what you want,
- Sign up on the platform,
- Choose the location of your selected buyer,
- Scroll through the marketplace to find buyers,
- Send them a request to initiate trading,
- Choose the escrow option if your marketplace has it. It helps you to lock your crypto until the payment is transferred to your bank accounts.
Despite the popularity of cryptocurrencies, several drawbacks can make them risky and impractical. One of them is fraud. Financial transactions can have risks, be it online or physical. As theft is common among the standard currencies, digital currencies can also experience risks of cyber threats. These threats can take the form of theft, hacking, or spamming. Therefore, there is no guarantee of the safety of your funds. However, specific steps can be taken to protect your assets.
People who own cryptocurrency must be careful of fraud attached to digital assets. Moreover, the nature of digital currencies also leads them to such dangers because cryptocurrencies are purely decentralized. It means there is an absence of a central body that can control and compensate for the loss. And these reasons push many sellers to cash out their funds.