Cashing out your Bitcoins is not as straightforward as buying them. If you decide to sell your Bitcoins online, you can either do it via an exchange, direct trade or carry out a peer-to-peer transaction.
Outside of the comfort of your own home, you can withdraw flat money using a Bitcoin ATM or sell your Bitcoins in person.
Despite having several disadvantages, exchanges are a one-stop solution when it comes to trading Bitcoins. In the case of selling the cryptocurrency, exchanges act as an intermediary that holds both seller’s and buyer’s funds.
First, you need to set up an account with an exchange of your choice. The absolute majority of reputable exchanges will require a complete identity verification and a connected bank account so that you can withdraw your funds.
Then, you just simply place a ‘sell offer,’ stating the type of currency you wish to trade, its amount and your asking price per unit. The exchange will automatically complete the transaction once someone matches your offer.
After the funds are credited to your account, you will need to withdraw them to your connected bank account. This can sometimes take an excessive amount of time, especially if the exchange is experiencing issues with its banks or facing liquidity problems. Several months before its bankruptcy, the Mt. Gox exchange was experiencing this exact problem. Moreover, some banks just outright refuse to process transactions with funds obtained via cryptocurrency trading.
It is also important to consider a fee you’ll need to pay in order to use some exchanges. For example, one of the world’s biggest cryptocurrency exchanges CEX.io charges a flat fee of $50 for withdrawal via Bank transfer, $3.80 if you’re withdrawing your funds to a Visa card and 1.2 percent of a transaction + $3.80 if you’re using MasterCard. The withdrawal fees can vary drastically depending on an exchange, but transaction fees are almost always either tiny or non-existent at all.
In addition, most exchanges will have a limit on the amount of money you’re allowed to store. The limit will increase over time if you stay loyal to a particular exchange.
Finally, it is important to remember that despite offering wallet services, exchanges are by no means a secure and reliable place to store your funds. They are very prone to hacker attacks, and there have also been instances of exchanges shutting down and running away with their users’ funds. Hence why you should take full responsibility for your own funds and store any amount that is not immediately needed in a secure offline wallet.
Another way of selling your Bitcoins is via a direct trade with another person. This service is accessible on websites usually associated with exchanges and includes an intermediary facilitating the connection.
First, you will need to register as a seller. Apart from setting up your profile, you will need to fully verify your identity. Once you’re registered, you can post an offer indicating your intention to sell some Bitcoins. When a buyer wants to trade with you, you get a notification from the service and from then on you are only interacting with the buyer. The website merely serves as a platform to complete the trade.
The process of selling Bitcoins on some of those sites can be quite involved and time-consuming. So, it is imperative to do your research before deciding on a trading platform and make sure you have the time and patience required.
Online P2P trading
Peer-to-peer trading marketplaces are a relatively new development in the Bitcoin world. There is no direct exchange of funds taking place. Instead, those websites essentially work as a platform that brings people with different, yet complementary needs together.
The service is designed for the mutual benefit of people who would like to buy Bitcoins with their credit card and those who want to spend their Bitcoins to buy goods from places that don’t accept digital currencies as a form of payment. As a result, the former get their flat currency exchanged to BTC, while the latter can buy discounted goods.
The websites facilitating the service provide users with an escrow service for the transaction, as well as a wallet to store Bitcoins.
Here’s how it works:
Bob posts his required wish list including the discount amount he wishes to receive, which normally goes up to 25 percent. Jack then accepts the trade and pays for Bob’s goods through the marketplace, stating Bob’s delivery address. Once the goods are delivered, the marketplace releases Jack’s money from escrow and transfers the funds into Jack’s wallet.
While this system allows Jack to acquire Bitcoins relatively easily using just his bank card, it also charges him quite a high fee for the service.
Some of the websites providing this service are Purse, Brawker and OpenBazaar.
All of the services mentioned above are online-based centralized platforms. In order to be able to sell Bitcoins using those services, you will usually need to fully verify your identification, which obviously voids Bitcoin trading off its anonymity. Moreover, once you’ve managed to sell your BTCs, you will need to withdraw them to your bank account or a bank card. More often than not, this process will take a very long time and will incur some fees.
Hence a lot of people are opting for offline trading.
Despite looking like traditional cash machines, Bitcoin ATMs are not ATMs in the traditional sense. Instead of connecting to the user’s bank account, they are connected to the Internet in order to be able to facilitate Bitcoin transactions.
Bitcoin ATMs can accept money in cash and exchange it to Bitcoins given as a paper receipt with a QR-code on it or by moving the funds to a wallet on a Blockchain network. They usually charge very high transaction fees – there are media reports citing fees as high as seven percent.
Moreover, they can be quite difficult to locate. Most known Bitcoin ATMs are marked on this Bitcoin ATM map.
Only a few specific Bitcoin ATMs offer bi-directional functionality meaning that users can both buy and sell Bitcoins using them. Among such machines are Robocoin, Genesis1 and Satoshi2 from Genesis Coin, BitAccess and BATMThree model from General Bytes. However, some operators might disable sell operations.
Sometimes, Bitcoin ATM providers require users to have an existing account to conduct selling operations and the registration process often involves a lot of time, energy and effort. For example, new users of Robocoin ATM need to a telephone number for activation and notifications, government issued ID, palm scan and a current photo taken by the ATM’s webcam. The identification process varies depending on the machine and even on different operators running similar ATMs, but some sort of identity verification will always be required if you want to sell.
After your identity is verified, you are given a QR code with a wallet address to which you need to send your Bitcoins. Depending on the machine you’re using, you will either get cash out of the machine immediately or you will receive a redeem code and need to wait for the transaction confirmation. Usually, one confirmation is enough, but sometimes up to six confirmations are required before the user can withdraw cash.
So, despite the ever-growing number of Bitcoin ATMs worldwide, they are still primarily used to buy Bitcoins. Moreover, BTC ATM operators need to adjust the setting on their machines in accordance with anti-money laundering and know your customer standards applicable in the jurisdiction where their ATMs are placed. In some countries, this requires a money transmitter license, while current regulations in other countries prevent any Bitcoin ATMs from being installed.
Selling Bitcoin in person
In many ways, trading digital currency in person is about as easy as it gets. All you need to do to sell your Bitcoins is scan a QR-code on someone’s phone and receive cash on the spot. If you’re selling to friends or relatives, you only need to set them up with a Bitcoin wallet, send them the necessary amount and collect your cash.
However, if you are dealing with a random person, you will most likely go through lengthy rounds of negotiations discussing the price, place of meeting and other relevant conditions. Moreover, you need to take a few things into consideration to ensure your safety and the safety of your funds.
How to negotiate the price
There are numerous websites and forums in existence that help traders arrange one-on-one meeting to buy and sell Bitcoin, with LocalBitcoins being the most widely used platform. One of its main advantages is the rating system, which means you can assess the trustworthiness of people you wish to trade with.
As Bitcoin’s value constantly fluctuates, the final exchange rate is normally agreed upon during the meeting. Most traders use rates from prominent exchanges. Alternatively, services like Bitcoin Price Index can be used. Sometimes, sellers will charge a fee on top of Bitcoin’s current exchange rate for convenience, anonymity and to cover their costs. Choosing the amount of said fee is entirely up to you, but normally it is set at around five to 10 percent.
Moreover, it is important to be aware of local fluctuations in Bitcoin’s price. The exchange rate can be different depending on a country. This is associated with difficulties in obtaining Bitcoin with the local national currency.
Alternatively, instead of setting up a one-on-one meeting in advance, you could visit your local Bitcoin meet-up. The are numerous such meet-ups around the world, during which the attendees are happy to buy and sell Bitcoin and other digital currencies. It is probably the safest environment to conduct person-to-person trades. Of course, when selling at a meet-up, you need to be prepared to negotiate the price on the spot. You can find information about your local Bitcoin meet-up using services such as meetup.com.
Pieces of advice for staying safe
Selling Bitcoin person-to-person is the perfect option of trading for those who value anonymity and convenience. However, security considerations, especially when trading with a complete stranger from the Internet, are of utmost importance.
First of all, you should carefully choose a place for the meeting. It has to be a public place with active Internet access, as both of you will need to be able to access your online wallets. Bringing a friend along to the meeting is also quite common in person-to-person trading, but it is important to notify the buyer prior to the meeting.
Essentially, take the same precautions you would when carrying a big amount of cash. Be alert, avoid public transport and never meet in private homes.
If you’re selling Bitcoins online, you will inevitably face the problem of withdrawing funds. The most common way to move money is international wire transfer and most prominent exchanges support this method of transferral. Recently, however, some exchanges began to accept credit and debit card withdrawals.
Alternatively, money can be transferred via SEPA, which stands for Single European Payments Area. It is a system designed to make international transfers between members of the European Union more efficient. Some European cryptocurrency exchanges accept this way of transferal.
However, both of these systems are far from perfect. Transfers usually take a very long time, depending on the country and the amount of money being transferred they can take up to four days to be processed. Moreover, both these systems incur additional charges. For example, Barclays bank charges £25 to £40, depending on how quickly you want the transfer to be done, for a SEPA payment. In contrast, HSBC only charges £4 for a SEPA payment made via online banking, but HSBC is notorious for refusing to work with Bitcoin and any other digital currency-related funds.
So, if you’re opening a bank account specifically for withdrawing money made on Bitcoin sales, you need to do your research and chose the bank that best suits your needs.
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