Cryptocurrency has emerged as a new revolution in the contemporary world in terms of the medium of exchange. But the question arises: Can you use those crypto coins to pay your dinner date bill or make payment while travelling. Yes, you can, possibly, in the future. However, there are still few businesses or individuals that take payment in bitcoin. At present, to make the payment, you need to convert your crypto coins into traditional cash. Now let us take the example of Bitcoin as an example to understand this in detail.
If you want to cash out Bitcoins, you must know that digital coins are volatile, and their values change significantly every moment. In such a case, your timing of conversion plays a vital role. If your timing is unsuitable, you potentially stand to lose money and vice versa. Two Methods to Convert Bitcoin into Cash
Two Methods to Convert Bitcoin into Cash
Method 1: By Exchange or Broker
The first method to convert the bitcoin into cash is by exchange or broker, which is quite similar to the currency exchange system at airports. With this method, after deposition of digital currency to exchange and demand withdrawal, the broker will transfer your money to the same bank account you used to buy the coins. Deposit in the same bank account is due to restrictions on account of the country’s money-laundering laws.
This method is considered safe and secure, but at the same time, takes a lot of time for conversion. On an average, the time for money to reach your account is about 4-6 days. The exchange also charges a fee for the transaction, and it differs from broker to broker and nation to nation.
Also, Bitcoin ATMs and Bitcoin Debit Cards run in the same way as third-party brokers. In both instances, you create an account that enables you to sell bitcoins and withdraw physical cash. The biggest disadvantages are the high transaction fees. This service, however, is not available in India.
Choose a third-party broker exchange that you want to use. Sign up and complete the brokerage’s verification process—deposit (or buy) bitcoin into your account. Finally, cash out your bitcoin by depositing it into your bank account.
Method 2: Peer-to-Peer Platforms
You may go with the peer-to-peer platforms method to sell bitcoin for cash if you are in a hurry. In this method, you can also decide which payment method you want the buyers to use while selling bitcoins.
Moreover, this often provides faster transactions with fewer fees. You can also frequently get a more favourable exchange rates with an individual buyer than a third-party brokerage.
But at the same time, while using the peer-to-peer selling method, it is crucial to be aware of fraudsters. Also, it may be beneficial to use a peer-to-peer platform that lets you keep your bitcoins locked until you verify the payment has been obtained from the buyer.
Select which peer-to-peer exchange platform you want to use. Sign up and choose the location of your ideal buyer. Then, use the marketplace to find buyers and send a trade request. Most peer-to-peer platforms have an escrow option where your bitcoins are not released to the buyer until you have confirmed you have received payment.
Notably, peer-to-peer platforms also enable you to stay anonymous. You may also use a VPN (a virtual private network) to secure your connection and choose payment methods such as web money or gift vouchers.
Although cryptocurrencies are not mentioned in the Indian Income Tax Act, and no rules have been laid out, you have to pay taxes on your income if you profit from bitcoins. Each reputable third-party broker exchange will report its transactions for tax purposes. Also, most bitcoin-to-bank-account methods will involve exchange fees.