Can crypto be converted to cash? A guide to exchanging for cash

Your digital wealth can turn into real money and you can enjoy a nice trip with your friends. Converting your cryptocurrencies into cash may seem difficult, but it is a simple process.

Currently, many cryptocurrency users are interested in knowing the methods of bringing their digital crypto assets into the real world. This article will discuss how you can convert cryptocurrency into cash, methods to exchange cryptocurrency for cash, and some things to consider before starting this exchange process.

Why should you convert cryptocurrency to cash?

Converting cryptocurrency into cash allows you to convert your digital profits into tangible funds for daily use, investments or financial security. While “HODLing” is a common strategy during market downturns, taking profits while markets are up can help secure gains and provide liquidity for future opportunities. Converting to cash also gives your crypto assets a sense of real-world value, making the benefits of your investments more tangible.

Additionally, withdrawing cash is often necessary to manage tax liabilities. Most governments view cryptocurrencies as taxable assets, and having cash on hand can help make tax payments on time and avoid penalties or surprises. Whether you’re looking to fund a personal project, make a major purchase, or prepare for the next market cycle, converting crypto to cash can provide financial flexibility and peace of mind.

Can cryptocurrency be converted into cash?

When you are in a bear market or a project is under construction, it makes sense to follow the principle of HODLing (slang for holding your crypto assets). But now that the market is green and Bitcoin has already broken its all-time high, it seems logical to take some profits.

Converting your cryptocurrency into real-world money can help you enjoy life’s luxuries and also provide you with enough liquidity to reinvest when the market presents you with another opportunity. Exchanging crypto for cash also makes your digital profits more realistic, and you avoid having to roll all your profits back to where you started.

Another reason to convert cryptocurrency to cash is to better manage your tax liabilities. At the time of this writing, the majority of governments still view cryptocurrencies as a taxable asset, and you should set aside some money to pay your taxes on time to reduce the likelihood of receiving a surprise notice from the government.

Methods to Exchange Cryptocurrency for Cash

There are many methods to convert crypto into cash. Here we will discuss the first two:

Cryptocurrency Exchanges

Cryptocurrency exchanges are the main method of converting crypto into cash. Binance, Coinbase and many other exchanges offer high liquidity and a safe environment to trade your cryptocurrencies with fiat currencies.

The security and regulation part is a big reason why many users prefer such exchanges, but these centralized crypto institutions also have their drawbacks.

Another problem that many third world countries have to face is that their local banks often do not verify their transactions. This means your crypto-to-fiat funds may be stuck for longer and you may need to contact your bank for next steps.

Bitcoin ATMs

In countries like El Salvador, where Bitcoin (BTC) is now legal tender, cryptocurrency traders have access to Bitcoin ATMs that offer a quick way to convert Bitcoin and some other cryptocurrencies into cash.

Users normally scan the QR code of their crypto wallet and enter the amount of Bitcoin they want to trade in exchange for fiat, thus receiving cash from these cool inventions. As the demand for cryptocurrencies increases, these ATMs have begun to be installed in major cities around the world, offering a convenient option for users to access digital assets that they can instantly redeem in the real world.

However, these Bitcoin ATMs also have some disadvantages. To begin with, the fee range is quite high and can range from 7% to 20%. There is also a daily transaction limit on how much cryptocurrency you can withdraw at any given time. While most of these ATMs do not require your ID, some do not allow you to make transactions without completing the identity verification process. Despite all these limitations, these ATMs are a popular and positive step in the growth of cryptocurrency in the world and are expected to get better with time.

Steps to convert cryptocurrency to cash

If you have decided to convert your cryptocurrency into cash, here are some steps you can follow:

1. Choose how you want to get paid: Decide whether you want to use a cryptocurrency exchange or a Bitcoin ATM to withdraw your money, considering speed, privacy and ease of use scenarios.

2. Register your account: In case you use a cryptocurrency exchange, you will need to enter your email and KYC documents to access crypto-to-fiat conversion. Bitcoin ATMs will require authentication depending on the machine you use.

3. Use your digital crypto wallet: Connect your digital wallet to the cryptocurrency exchange. If you are using a Bitcoin wallet, simply scan the QR code on the ATM with your phone.

4. Double-check fees and daily withdrawal limits: Each cryptocurrency exchange and Bitcoin ATM will have a different fee and withdrawal limit. Be sure to double check to avoid surprises.

5. Check the crypto market price: Check the current market price of the crypto you will withdraw. Once you’ve made your decision, don’t waste too much time because crypto markets are highly volatile and a delay of just a few hours can have a significant impact on the price.

6. Confirm your transaction: After confirming your transaction, wait for it to be processed and then check your bank account to make sure you have the necessary cash.

Considerations

While converting cryptocurrencies into cash can be profitable for you in the real world, there are some things you should consider before making this decision.

First of all, make sure that you make this withdrawal decision with faith and research. During a bull run, the prices of your crypto assets may be higher than the current price at which you sold them and converted your money into cash. However, in a volatile market, it can be a wise decision to take some profit and reinvest it later when the time is right and the market is trending.

Another factor is cost and confidentiality. As mentioned in part 2 of this article, certain withdrawal options, such as Bitcoin ATMs or P2P platforms, provide more privacy than exchanges, but they also have their drawbacks. Make sure you’re prepared to pay the price for privacy if you opt for ATMs or P2P platforms, but if it’s not worth it, then a cryptocurrency exchange may be your best option.

Finally, be mindful of tax liabilities before converting most of your crypto assets into cash. Every country has its own laws; Therefore, it is better to consult a tax professional before deciding to convert large amounts of cash in exchange for your cryptocurrency assets.