Despite the popularity of Bitcoin, turning it into dollars (or another fiat currency) may be a hassle. Not every user can expect to do everything on one platform. Follow our guide to exchange your money safely. Here are three proven ways recommended by experts.
Online Exchange Services
The most popular method has been implemented on Coinbase. The system allows you to find a buyer, and it charges a fee for facilitation. As a seller, you need to find a bank or another financial service provider, create and validate your account. This involves ID verification.
Next, you post the coins for sale and wait for the buyer to be identified. The transaction is launched, and the counterparty has to send the fiat amount. Only then are your Bitcoins released into their wallet. Until then, they may be frozen for security reasons.
There is no way to avoid paying a fee. Hence, the amount you get will always be less than the exchange rate. For instance, on Coinbase, clients are charged $1.49 for $100 sold. On the upside, the process is quick and convenient. Exchange requires a few clicks, and you can also cash out via their mobile app.
To avoid the transaction fees, you could sell directly to buyers. This is possible in peer2peer systems. The parties connect without an intermediary. For instance, LocalBitcoins.com shows available offers in your area based on geolocation. To begin, you need to register an account and get a secure e-wallet in the system, which works offline.
Then, transfer your Bitcoin to the wallet. Specify the desired amount in US dollars, along with the payment method you prefer. The Quick Sell feature will help you find a match faster. We do not recommend looking for buyers on BitcoinTalk or Reddit, as this is highly risky.
Exchange Via Trading Platforms
Some platforms combine crypto and Forex. You have to register with government-recognized details — e.g., date of birth. After verification, fund the account with your Bitcoins. Specify the desired price and currency of the sell order. It is executed once a match is found.
Security is the biggest drawback. As these systems are centralized, they are more vulnerable to hacking. Most large-scale losses involving Bitcoin occurred on such combined exchanges. For instance, YouBit went under in 2017 as a result of a cyber-attack.
Currently, the most reliable alternative is Kraken. Account registration involves verification, and the logic is similar. Sellers include the bank account where the fiat amount is transferred within 5 days. When withdrawing to a US bank, a charge of $5 applies.
In some countries, users need a combination of systems to trade Bitcoin. Unfortunately, some organizations are reluctant to link virtual and conventional currencies, which causes problems for individuals. Despite the changing regulations, the status of BTC is still vague. Find out about your local restrictions before delving into trading.