How to Turn Bitcoin into Cash

Updated on January 6, 2024
At a Glance:
  • Converting Bitcoin to cash and transferring it to a bank account can be done through third-party broker exchanges or peer-to-peer platforms.

  • Broker exchanges like Coinbase or Kraken require signing up, depositing Bitcoin, and requesting a withdrawal to your bank account.

  • Peer-to-peer platforms like LocalBitcoins allow for faster transactions with individual buyers, who can deposit cash or make bank transfers.

  • Considerations include taxes on profits, exchange fees, and the time it takes for the money to reach your account.
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    Demand for Bitcoin has increased dramatically. If you’ve owned Bitcoin for a while now you may be able to make a profit if you ‘sell’ your Bitcoin and transfer the equal value to your bank account. Or you may need to convert your Bitcoin to cash to be able to buy actual things. Whatever you need it for, you’re probably wondering how to turn Bitcoin into cash.

    5 Easy Ways to Cash Out Bitcoin

    it’s essential to understand the most efficient ways to convert your cryptocurrency to cash. Here’s a quick overview:

    Infographic describing the 5 ways to turn Bitcoin into cash.

    Below, you will find a concise guide detailing theses popular methods, each with its pros and cons.

    1. Crypto Debit Cards: A Quick Cash Out Option

    Crypto debit cards can be used to withdraw cash from a crypto account.

    Crypto debit cards, such as the BitPay Card, function much like traditional debit cards but draw from a cryptocurrency balance. BitPay Card supports multiple cryptocurrencies and offers an effortless way to transform your crypto into USD. After a quick application process, you can start using your crypto like traditional cash.

    Pros:

    • Swift and straightforward.
    • Can be used at ATMs, online, and in-store.
    • No need for a bank account.

    Cons:

    • Mostly for U.S. residents.
    • Usual ATM fees applicable.

    2. Centralized Exchanges: Direct Sales for Cash

    Platforms like Coinbase, Binance, and Kraken let you convert Bitcoin to cash seamlessly.

    Platforms like Coinbase, Binance, and Kraken let you convert Bitcoin to cash seamlessly. While it’s convenient, especially if you already have an account, the fees can add up. A bank account is also necessary to retrieve your cash.

    Pros:

    • Simple for those with an existing custodial wallet.
    • Many exchanges to pick from.
    • Faster than P2P transactions.

    Cons:

    • Fees for services rendered.
    • Bank account is required.

    3. P2P Exchanges: Direct Transactions Between Users

    Crypto can be converted to cash trough peer-to-peer platforms.

    Unlike centralized exchanges, P2P platforms enable direct transactions between individual buyers and sellers. Though potentially offering better rates, the process can be more involved and time-consuming.

    Pros:

    • Generally, lower fees than centralized exchanges.
    • Ability to negotiate rates.

    Cons:

    • Might be slower than centralized exchanges.
    • A bank account is typically required.

    4. Bitcoin ATMs: Cash Out Anytime, Anywhere

    Bitcoin ATMs offer the option to instantly cash out for a fee.

    Bitcoin ATMs are specialized machines allowing for both purchase and sale of crypto. While they offer instant cash-outs, fees can be higher than other methods.

    Pros:

    • Machines located worldwide.
    • No bank account required.

    Cons:

    • Fees can be high.
    • Availability can be sparse in rural areas.
    • Cash limits based on ATM reserves.

    5. Convert to Gift Cards

    Crypto can be converted into cash in the form of gifts.

    If you don’t necessarily need cash, platforms like BitPay let you buy gift cards using Bitcoin and other cryptocurrencies. These gift cards can be used in various popular stores.

    Considerations When Cashing Out Bitcoin

    Before you convert all your bitcoin to cash, consider the following pitfalls:

    • Taxes – If you are making a profit on selling your bitcoin, you will have to pay taxes on your profit income. Keep this in mind while planning your tax year. Any reputable third-party broker exchanges will report their transactions for tax purposes.
    • Fees – Most bitcoin-to-bank-account methods will entail exchange fees.
    • Speed – Third-party broker exchanges may take a couple of days to transfer the money into your bank account.

    Next, we look at the different options for how to turn Bitcoin into cash in a few simple steps.

    Transferring Bitcoin to Your Bank Account: A Simple Guide

    Bitcoin can be cashed out through a simple bank transfer.

    Transferring your Bitcoin holdings into your bank account might sound intricate, but with the right steps, it’s quite straightforward. As the popularity of Bitcoin has grown, so have the methods to liquidate it into traditional currencies. Here’s a step-by-step guide on how to smoothly move Bitcoin into your bank account:

    1. Choose a Conversion Service: Research platforms like Coinbase, Kraken, or Binance and be mindful of varying fees.
    2. Verify Your Identity– Undertake the necessary KYC procedures on your chosen platform and prioritize data encryption and privacy.
    3. Sell Your Bitcoin – Navigate to the sell section, input the amount, and select your desired payout method.
    4. Confirm the Exchange Rate – Check for current rates and be aware of all potential fees.
    5. Initiate the Transfer – Confirm your sale and await transaction confirmation.
    6. Receive Funds in Your Bank Account – Be patient for the transfer duration and always keep transaction records for reference.

    Why Transfer Bitcoin To Your Bank Account?

    The ultimate idea is that bitcoin will replace traditional currencies. People are currently investing in bitcoin because they view it as a commodity that will grow in value over time. If you have bitcoin, you may want to hold on to it for that reason. But, since demand has increased recently, you may be able to make a profit if you ‘sell’ your bitcoin now and transfer the equal value to your bank account.

    In theory, you will one day be able to use bitcoin for any type of sale. For now, there are still few businesses or individuals that accept payment in bitcoin. That is one reason you may want to convert your bitcoin to cash — to use the value of your bitcoin to buy actual things.

    Read More

    Sources

    • https://support.bitcoin.com/en/
    • https://www.cnet.com/personal-finance/credit-cards/how-to-use-a-crypto-debit-card-to-make-purchases/
    • https://en.wikipedia.org/wiki/Bitcoin_ATM

    Turning Bitcoin into Cash FAQs

    How can I convert Bitcoin into cash?

    There are several methods to convert Bitcoin into cash. The most common options include using cryptocurrency exchanges, peer-to-peer platforms, Bitcoin ATMs, or selling Bitcoin directly to individuals or businesses who are willing to buy it for cash.

    What is a cryptocurrency exchange, and how does it work?

    A cryptocurrency exchange is an online platform that allows you to trade or sell your Bitcoin for fiat currency, such as U.S. dollars or other traditional currencies. You create an account on the exchange, deposit your Bitcoin, set up a sell order, and once it’s filled, you can withdraw the cash to your bank account.

    Can I sell Bitcoin in person to someone for cash?

    Yes, you can sell Bitcoin in person for cash. Peer-to-peer platforms or local Bitcoin meetups can connect you with potential buyers who are willing to purchase Bitcoin in exchange for cash. It’s important to take appropriate safety precautions and conduct transactions in secure environments.

    Are there any fees involved in converting Bitcoin to cash?

    Yes, fees are typically involved when converting Bitcoin to cash. Cryptocurrency exchanges may charge transaction fees, withdrawal fees, or currency conversion fees. Peer-to-peer transactions may involve negotiation and may not always have explicit fees, but be aware of potential hidden costs or price discrepancies.

    Are there any tax implications when converting Bitcoin to cash?

    Yes, converting Bitcoin to cash may have tax implications depending on your jurisdiction. In many countries, including the United States, the sale of Bitcoin is subject to capital gains tax. It’s recommended to consult with a tax professional or accountant who is knowledgeable about cryptocurrency taxation to understand your specific obligations and reporting requirements.

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    Frank Gogol

    I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.