Cryptocurrency is being viewed as a new revolution in the world of finance. But the question of whether these crypto coins can be used to make payments in daily lives or pay for travel tickets is still unanswered to many. Yes, you may do so in the future, but as of now, you may need to convert your Bitcoin to cash to make payments.
Cryptocurrency prices are increasing every day, and the cryptocurrency markets are seeing a boom. The rise in the cryptocurrency value has led to an increase in the demand for Bitcoin. Of course, you may sell the Bitcoin and transfer the profits to your bank account. But you must be wondering how to convert these Bitcoin into cash?
Understanding the Bitcoin
Bitcoin is a digital cryptocurrency that is like digital data stored using blockchain technology. This means Bitcoin has no government control over its valuation and is secured using this new-age technology. Bitcoin’s source code has stipulated that only 21 million bitcoins will be produced.
The value of Bitcoin has grown tremendously owing to the limited supply. A Bitcoin can be exchanged for any service or money. It has become a valuable commodity, just like metals.
Need to transfer Bitcoin to a Bank Account
The main focus of any cryptocurrency is to replace the traditional currencies. The cryptocurrency markets lure the people to invest in Bitcoin as they value it as a commodity whose value will increase over time.
As the cryptocurrency value increases, you may wish to sell it to book your profits. In the future, you may be able to trade directly using Bitcoin, but as of now, you will need to your Bitcoin to cash to buy actual things.
Moving Bitcoin to bank account
Converting Bitcoin and crediting the value to a bank account is the same as converting currencies when you visit a new country. You sell your Bitcoin and purchase equal value of the currency you deal in.
A central bank does not control the exchange rate involved in this transaction. The Bitcoin exchange rate is completely based on demand. Therefore, it depends on the number of deals happening in the market. Since there is no government involvement in the exchange process, it takes place privately.
Methods to convert Bitcoin to cash
There are two methods to convert Bitcoin to cash. The first method uses a third-party exchange broker, and the other uses Peer-to-Peer exchange platforms.
1. Third-Party Exchange Broker
A third-party exchange broker is a cryptocurrency exchange. They follow the same process followed while exchanging currency in a foreign country. First, the Bitcoin needs to be deposited in the exchange. After the process is complete, you can withdraw them in the form of currency of your choice.
The amount gets credited to your bank account. The money transactions will be carried in the registered bank only. It’s quite an easy, simple, and secure way to convert your Bitcoin.
But it may take up to 6 days for the money to be credited. The exchange may charge some fees to do so. Bitcoin ATMs and Debit Cards also act as a third-party brokers. Here you open an account to sell bitcoins and then withdraw physical cash. This will involve high transaction fees.
2. Peer-to-Peer Platforms
Peer-to-Peer Platforms offer a quicker platform to convert Bitcoin to cash. Here you sell the bitcoins to other people and can decide the payment method to be used. This method is faster and involves less cost. You get a better exchange rate as compared to a third-party broker.
The buyer may transfer the funds online or deposit cash in your bank account. The process is safe if you check all the necessary KYC documents. However, look for a peer-to-peer platform that lets you keep the bitcoins till you receive the payments. Peer-to-peer platforms do not disclose your identity. A VPN is used to secure your connection, and you may even opt for payment methods like gift vouchers or online gift cards.
Conversion of Bitcoin into cash can be done using the methods mentioned above. Still, you must always take into consideration the factors like taxation involved, fees, and the days it will take to credit the payment. You need to pay tax on the profit earned, and most banks will also charge you an exchange fee. So always evaluate these points before you make the conversions.