Cryptocurrency has become a popular investment option for many young and old people. The only problem is that it is not yet fully integrated into our payments system, making it difficult if you want to pay for dinner or buy goods from the supermarket. Even though big businesses are now accepting crypto payments, for the most part, you still have to convert your crypto to cash.
This article will teach you how to convert your crypto assets to real-life money easily.
How To Cash Out Crypto Funds
Cashing out your crypto funds and transferring them to your local bank is not very complicated. However, there are several factors that you might want to consider before turning your crypto assets to cash. Since digital tokens and coins are subject to extreme market volatility, price fluctuations will be your major problem. That is why you need to learn the perfect timing to cash out or else you might stand to lose money during the process.
In order to cash out your cryptocurrency, the first thing you need to do is sell your digital assets. After that, you can transfer those funds to your bank account connected to your digital wallet. Here are two ways that you can convert crypto to cash:
Through An Exchange Broker
This process is similar to currency exchange systems that you can see in airports. What you need to do is to deposit your digital currency and set it up for the exchange. You can then request to withdraw your funds, and the broker will transfer the amount to your account.
However, you should be extra careful when doing this since there are money laundering restrictions. You should ensure that you’re only withdrawing your money under the same bank account under which you made the deposit. Fund conversion can also take some time, and the transaction fees will vary from country to country.
Through A Peer-to-peer Network
This method is considered quicker and more secure since it can be done anonymously. You can use peer-to-peer platforms to convert your crypto assets to cash by selling them. This process will also require a smaller fee from you since it doesn’t need a third-party broker.
The downside of this method is that there are many frauds. That is why you should always ask for proof of ID before letting go of your crypto assets. The peer-to-peer platforms will also keep your digital tokens locked until your bank is credited with the money from the exchange.
Through Centralized Exchange
This is the easiest way to convert cryptocurrency to cash since all you need to do is click on the ‘Buy/Sell’ button on your platform. You can then select the payment option as USD. Centralized exchanges also have network and transaction fees like all other methods. Once you have confirmed a trade or a purchase of your asset, you can withdraw your money through your linked bank account.
What is cryptocurrency banking?
Crypto banking allows people to hold their funds in their digital wallet or spend it normally like traditional money. This is especially beneficial if you have a debit card since you can use your digital coins to make everyday purchases or withdraw it as cash instead of just keeping it as crypto investments.
Financial technology firms are now working in partnership with many banks worldwide to offer regulatory and logistical frameworks so that you can automatically sell your crypto and convert it to cash.
Fees and Limitations
Before converting crypto to cash, here are some things you should note:
- Taxes. You should expect a tax from your profit income if you earn from selling your crypto.
- Fees. Almost all exchanges and brokers will have transaction fees so be sure to have an extra allowance.
- Speed. Most third-party brokers will need several days to transfer your money to your bank account. If you are in a rush, then you should consider this as your source of income.
Frequently Asked Questions
Here are some FAQs about converting crypto to cash:
How long will it take to convert a cryptocurrency to cash?
The transfer will generally take 1-5 days, depending on the bank processing your transfer. You might need to pay 3-4% of your total funds as part of their payment service. Your money will be reflected instantly in your bank or by the next business day.
Do I have to pay taxes if I convert crypto to cash?
You can expect that you will be required to pay taxes in crypto, especially in the U.S. where the IRS classifies crypto as a property that you own. Like all properties you own, your transactions will be recorded when you sell or trade, and there will be taxes for these kinds of transactions.
Can I convert my crypto assets to cash anytime?
Yes, you can convert your assets to cash anytime. You can use a third-party exchange broker or a peer-to-peer network to do this. Third-party brokers include ATMs and debit cards and it will exchange your crypto for cash at any given moment.
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