The demand for Bitcoin has increased exponentially in recent years, with high trading volumes reported on leading crypto exchange platforms. Unlike other crypto investment options, Bitcoin trading enables you to generate small profits daily.
While you can still use the earned Bitcoin to make purchases online, most people usually prefer trading their funds for cash. The growing Bitcoin demand creates lucrative opportunities for traders to make money buying and selling crypto.
Here’s what you should know about trading Bitcoin for cash.
Moving Bitcoin to Your Bank Account
Moving Bitcoin to your bank account is like converting foreign currencies into local currencies at the airport upon arrival in a different country. It means selling your Bitcoin in exchange for their equal value in dollars or any other preferred fiat currency. However, Bitcoin’s exchange rate is not subject to any government or regulatory authority.
Instead, the Bitcoin exchange rate mainly depends on its demand. The number of people willing to buy Bitcoin now and the amount of money they want to pay will determine what you get for your Bitcoin. Nevertheless, Bitcoin money transfers occur on a distributed network without intermediary or external oversight.
How to Trade Bitcoin for Cash
Two main ways exist to convert Bitcoin to cash and move it to your bank account. They include third-party broker exchange and peer-to-peer platforms.
Third-Party Broker Exchange
A third-party broker exchange is a crypto exchange platform that allows you to sell Bitcoin for cash. The process is usually relatively straightforward. The first step is depositing your Bitcoin into the exchange and awaiting confirmation. Then, you can ask the crypto exchange to transfer the funds into your bank account in the desired currency.
Thus, they usually stipulate you must withdraw the funds to the same bank account used for the deposit. While the process is secure and easy, the average time taken for the money to hit your bank account may vary by country. If you are interested in bitcoin trading, check traditional trading versus modern crypto trading to know the difference.
Peer-to-Peer Platforms
Peer-to-peer platforms can also enable you to trade Bitcoin for cash quickly and anonymously. The platforms allow you to choose the preferred payment method for your buyers. That usually impacts faster transaction processing and relatively lower costs. Peer-to-peer platforms can also provide better exchange rates than third-party broker exchanges.
The first step is to ask the buyer to deposit cash into your bank account or make a bank transfer and provide proof of the transaction. Then, you can send the Bitcoin to the given address. You should use reputable peer-to-peer platforms that allow you to keep your Bitcoin locked until you receive confirmation of payment from the buyer.
Things to Consider When Trading Bitcoin for Cash
A few factors to consider before converting your Bitcoin into cash include taxes, transaction fees, and duration. Several countries classify Bitcoin as property with tax implications. Thus, you will be required to pay taxes if you are making profits from the sale of Bitcoin. The IRS expects Bitcoin users to record all the transactions and declare them when filing taxes.
You should also consider the transaction fees since moving the funds to your bank account will attract minimal exchange costs. The charges mainly depend on the transaction volume.
Bitcoin facilitates prompt money transfers, but moving the funds to your bank account in fiat currency could take longer. Third-party broker exchanges usually take a few days to transfer the funds into your bank account.
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