Having a cryptocurrency serves as a valuable alternative currency system. In the event that traditional cash depreciates in value, cryptocurrency acts as a reliable backup.
Furthermore, cryptocurrency offers an avenue for investment. The remarkable success stories of individuals who achieved overnight millionaire status through Bitcoin have captivated our attention.
While the rapid growth of Bitcoin and other cryptocurrencies might not be as pronounced as before, they have gained recognition as an accepted form of currency in numerous jurisdictions.
The trend of investing in cryptocurrency is on the rise. However, a question that often arises is: How does one go about cashing out cryptocurrency?
Cashing out cryptocurrency brings forth several advantages. It enables the accumulation of fiat capital by converting cryptocurrency into traditional currencies.
Additionally, it provides a means of payment for establishments that do not yet embrace digital currencies.
A Guide on How to Cash Out Cryptocurrency
Cashing out your cryptocurrency is a great way to build your capital. It can also make things easier when filing your taxes.
If you do need to file tax returns and claim your cryptocurrency, you should create a pay stub to help calculate your wages.
Here’s how you can cash out your cryptocurrency:
1. Crypto Wallets
To begin, it’s crucial to guarantee the secure storage of your cryptocurrency within a wallet.
Numerous online wallets are available, enabling you to store and oversee multiple cryptocurrencies through a unified interface.
Additionally, you have the choice of employing either hot wallets or cold wallets for your cryptocurrency storage.
Hot wallets operate on the internet, while cold wallets are physical hardware devices designed to safeguard your digital assets.
Alternatively, you can opt to record your public and private keys on paper, ensuring they are securely maintained.
Once your cryptocurrency is securely stored, you can initiate the process of liquidating your investment portfolio.
Also read: How To Use Crypto.com
2. Use a Crypto Exchange
One straightforward method, and the initial choice, involves utilizing a cryptocurrency exchange for converting your digital assets into cash.
Platforms such as Coinbase, among various alternatives, facilitate the reception of your cryptocurrency.
For instance, if you possess 10 Bitcoins and intend to liquidate 2 Bitcoins, you would transfer these 2 Bitcoins from your existing wallet to your Coinbase wallet.
Upon the successful transfer to your Coinbase wallet, you can seamlessly convert your cryptocurrency into cash and subsequently transfer the funds to your bank account.
3. Making Payments
In instances where a retailer doesn’t accept cryptocurrency, you’ll need an alternative payment method.
Crypterium offers a convenient solution: an app that facilitates the transfer of cryptocurrency to your bank card.
Compatible with any MasterCard, Crypterium ensures a swift conversion of your cryptocurrency to cash, ready for immediate use. The process incurs only a nominal commission from Crypterium.
To get started, simply install the Crypterium app on your mobile device and set up an account.
Once your account is active, transfer your Bitcoin or other supported cryptocurrencies to your Crypterium account.
Upon arrival in your Crypterium account, input the card number of your MasterCard.
Choose the desired amount for transfer, and within moments, the commission is deducted, and the funds are seamlessly transferred to your card.
4. Peer to Peer Exchange
Consider using a Peer-to-Peer (P2P) exchange for quick cryptocurrency-to-cash conversion. Unlike broker exchanges that may take up to 3 days, P2P exchanges enable direct trades with peers.
Options include a cash deposit, where your peer deposits cash to your bank account in exchange for cryptocurrency. Ensure you verify their ID and proof of payment before transferring.
Alternatively, opt for a bank transfer where your peer digitally transfers money to your account, and you reciprocate with cryptocurrency. Request proof of ID for security.
Meeting your peer in person is another option, allowing direct cash exchange or check payment. However, for added security, it’s recommended to use a P2P exchange with an escrow service.
5. Receiving Cryptocurrency as Cash
Explore the option of receiving cryptocurrency as cash through services like Bitwage.
With this, you can automatically convert your cryptocurrency into various fiat currencies, such as US Dollars, British Pounds Sterling, or Malaysian Ringgit, before having the funds transferred to your bank account.
6. Paying Taxes
As a final note, you may be required to pay taxes on your cryptocurrency earnings. If your jurisdiction requires this, it is imperative that you keep a record of the cash value of what you have earned.
You will have to keep a record of cryptocurrency earned as well as any payments (to staff) you make with cryptocurrency.
We suggest speaking to a tax consultant on how much you are likely to pay from your cryptocurrency earnings.
Based on the tax consultants’ suggestions, you may wish to periodically withdraw the amount from cryptocurrency to fiat currency so that when tax season comes, you have the money set aside to pay your taxes.