How To Cash In Your Cryptocurrency: Best Ways To Exchange Bitcoin For Fiat Currencies
Cryptocurrencies have grown extremely popular in the last two years, and the crypto space is experiencing a constant rise in the number of new investors. However, the crypto world is complex, and it can be quite overwhelming. Because of this, it is important to explain every aspect of the trading process, and the cryptocurrency culture, in general.
One of the common questions regarding crypto includes different methods of cashing them out. While investors are still interested in working with digital currencies, the truth is that they still don't have a lot of practical uses. There are some businesses that have started accepting them, but the vast majority of them are still hesitant to make this move.
Because of that, use cases of crypto are still quite low in number, and limited. If you are an investor that needs to make money out of digital currencies, you need a way to actually get to it. So far, there are several different methods of achieving this, which is what we will be discussing today.
How To Cash In Your Cryptocurrency For Fiat
Before we delve into different methods of exchanging crypto for fiat, we should first explain what fiat currencies are. Simply put, they are the traditional money. This is the money issued by the government, and it is not backed by any type of physical asset. Its value is mostly determined by supply and demand forces, as well as by the faith in the value of the money.
Fiat currencies often see only one danger, which is inflation risk, which happens when the government prints out more money than it is needed. As a result, the value of currency starts to drop.
Best Ways To Exchange Bitcoin For Fiat Currencies
Now that this is out of the way, let's talk about cashing out cryptos, and different methods of doing it.
Crypto exchanges are the obvious first choice, and one of the most popular methods of cashing out crypto. While there are a lot of exchanges that only deal in crypto, and offer only trading pairs that allow users to exchange one cryptocurrency for another one, there are also those that allow users to exchange specific cryptos for USD, EUR, GBP, and alike.
Using exchanges is easy, as their interface is often quite user-friendly, and all you need to do to get to your money is choose the amount you wish to withdraw and a method of doing it. If you own coins that do not have their own crypto/fiat trading pair, you can likely sell them for another crypto that can be exchanged for fiat currencies.
P2P (peer-to-peer) services and marketplaces have become quite popular in recent years. They allow anyone to sell BTC without having to employ any kind of third party. Finally, services like these allow people to remain anonymous, while most exchanges require users to prove their identity in order to trade.
Most P2P services have an escrow system employed in order to guarantee security. Their fees are transparent, and while they can be higher than what exchanges require, most of their users find them to be worth it.
When these services originally emerged, they required two individuals to meet in person in order to complete the process. These days, however, this is no longer necessary. Gift cards, bank transfers, and even PayPal payments have become a norm in this field. There are many other options as well, which is very efficient and practical. The only problem with this method is the higher cost, but if you find that acceptable, the rest of it definitely makes this method worth it.
Prepaid Cards For Bitcoin
Debit cards for BTC have been around for a while now, although there were often issues regarding the banking laws or different compliance's. At first, many of them ended up being shut down, but a new wave of them returned, this time with compliance problems being addressed, and usually resolved.
Since it made a comeback, this method of exchanging Bitcoin has been a favorite for a lot of traders. It is simple, and all that you need to do is load your coins on your card. After that, the card can be used the same way as Visa. It allows paying for goods and services, withdrawing money from ATMs, and everything else that a regular card allows.
It takes a few weeks to receive the card, and verifying the identity of the holder is necessary in most cases, but that is really all that you need to do to get one. The largest companies that offer such cards are Spectrocoin and Bitpay.
One issue with this card is that it may come with a spending/withdrawal limit, which might not allow you to spend more than $10,000. However, limits are increased over time, which is a good news. While this won't be a large problem for most users, it is still something to keep in mind.
In recent years, there have been a lot of cases of people having Bitcoin, not wanting to give it up, but still being in need of fiat money. Whether this is for some type of expenses, financing, investing, or anything else, such needs of crypto holders sparked the creation of crypto loans.
Crypto loans are provided by companies that allow users to withdraw fiat currencies while they use their cryptos as collateral. Simply put, a smart contract is created that states that the company will give you a loan in fiat, while you leave your coins in their custody. Once you pay them back, they will return your coins. That way, you don't have to actually sell or spend cryptocurrency, but you can still make use of the coins in your possession.
Beware Of Crypto Taxes
In most countries that are crypto-friendly enough that allow users to use digital currencies or easily exchange them for fiat, there are tax laws that include crypto. Each country has its own set of taxes regarding digital currencies, and there is no universal solution.
Information regarding tax-ability of cryptos has been released all around the internet. However, due to the possibility of being misinformed, the best course of action would be to contact an accountant and determine what amount you need to pay to cover your tax bills.