With cryptocurrencies like bitcoin declining in 2022, you might be wondering how you can get the most out of your investments. Despite the downturn in the crypto market, the good news is that there are several ways for traders to get US dollars for their digital money, although some organizations prohibit investors from redeeming their crypto for real money.
If you are selling a property, you will want to understand the tax implications. If you’re booking capital gains, you may have to pay a bundle, and the tax rate will depend on the holding period, among other things. Of course, if you’re selling at a loss, you may be able to claim a write-off. But if you think the crypto might rebound, it is better to hold on and wait for the downturn.
Here are five ways you can redeem your crypto or bitcoin.
1. Use the Exchange to Sell Crypto
The easiest way to cash out your cryptocurrency or bitcoin is to use a centralized exchange like Coinbase. Coinbase has an easy-to-use “Buy/Sell” button and you can choose which cryptocurrency you want to sell and the amount.
You will quickly convert cryptocurrency into cash, which you can access from your cash balance at Coinbase. From there you can transfer money to your bank account.
And while Coinbase is a popular option for selling cryptocurrency, if you do not have custody of the coins, it is most useful to go with any exchange that currently holds your coins. Some of the top exchanges include Binance, FTX, and Kraken.
2. Use Your Broker to Sell Crypto
If a broker holds your crypto coins, the easiest way is to go with that broker. For example, if you are a customer of Robinhood or Weibull, both of which allow extensive crypto trading, it will be easy for you to execute and trade just one trade on their platform.
After completing the trade, you will have cash in your account and you will be ready to trade again.
3. Go with Peer-to-Peer Trading
You can also do direct trading through another entity, selling your cryptocurrency directly to another person. The most popular method is a peer-to-peer online platform that allows sellers to find the best offers through an exchange, although one can also do this in person if needed.
With online peer-to-peer trading, you can sell cryptocurrency online for dollars. These transactions are often facilitated by an exchange, and Binance runs a well-known online peer-to-peer platform called Binance P2P. After agreeing to a trade, the platform escrows your crypto. Once you have checked the transaction record in the payment account and made sure that you have received the money from the buyer, Binance will issue crypto to the buyer on the platform.
Another popular option is the online platform Paxful. Sellers have the ability to set their own rates and can choose from over 300 payment options, such as cash, gift cards or other digital currencies. According to the platform’s website, customers can make direct sales to more than 3 million users worldwide.
4. Cash Out from Bitcoin ATMs
California bitcoin ATM company Hermes Bitcoin says cashing out at an ATM is the equivalent of selling your bitcoins. A bitcoin ATM is a way to get instant access to cash using your bitcoins. Bitcoin ATMs do not work like traditional ATMs. To withdraw cash from an ATM and sell your bitcoin, the machine provides a QR code from which you send your bitcoin. You just wait a few minutes and get your cash.
However, commissions on bitcoin ATM trades can be very high, so it is important to note how much you are paying and whether it is worth going another route.
5. Trade one crypto for another and then cash out
Some exchanges do not allow converting or selling certain crypto into dollars, so you will need to take an indirect route to get your cash. Depending on which exchange you use, you may need to transfer or convert your cryptocurrency to another popular currency, such as the stablecoin Tether, before eventually converting to dollars.
Traders have several ways to sell their cryptocurrencies. Popular crypto exchanges are always a good bet, as they are reliable and well-known, while online platforms with peer-to-peer sales can allow for the flexibility of payments. You can go the convenient route and use a bitcoin ATM to get fast access to your crypto but at a significantly higher commission.