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How to sell your Bitcoins

What to watch out for when selling Bitcoin

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LearnBitcoinHow to Sell Bitcoin: 5 Ways to Cash Out on Your Cryptocurrencies

How to Sell Bitcoin: 5 Ways to Cash Out on Your Cryptocurrencies

Jun 21, 2022

·

5 min read

There are many ways to sell and use Bitcoin, and each has its pros and cons. Before selling, spending, or transferring Bitcoin, consider the costs and risks.

Knowing how to buy and sell Bitcoin can be important for casual and professional investors alike. Whether it’s time to cut one’s losses, recognize big gains, or take money out of Bitcoin to invest elsewhere, there are several ways to sell Bitcoin.

How to sell your Bitcoins

As Bitcoin’s popularity increases, the options for selling and using Bitcoin have also expanded. Bitcoin holders can now easily convert their Bitcoin into dollars, exchange their Bitcoin for other cryptocurrencies, or use their Bitcoin to buy products and services. Here are five ways to sell Bitcoin: 

  1. On a cryptocurrency exchange

Cryptocurrency exchanges

are platforms that investors can use to buy, sell, and trade cryptos. Popular exchanges–including Coinbase, Crypto.com, and Gemini–support Bitcoin and let investors transfer money from the platform to a linked bank account.

Investors who bought and keep their Bitcoin with an exchange account may be able to easily sell the crypto on the same platform. Additionally, crypto exchanges are an option for Bitcoin holders who buy and keep their coins elsewhere. 

But before they can sell their Bitcoin on an exchange, investors need to create an account and transfer the Bitcoin from their crypto wallet to the exchange account. To sell the Bitcoin for a fiat currency such as dollars, investors need to link a bank account, and request a withdrawal. 

  1. Using peer-to-peer marketplaces

Rather than selling the Bitcoin on an exchange, investors may be able to sell their Bitcoin directly to another individual using a peer-to-peer (P2P) crypto platforms like Bisq, HodlHodl, or Paxful. 

Investors can list their Bitcoin and the desired sale price and then wait for a buyer. Or, they can review buyers’ listings to see if there’s a trade they’re willing to accept. 

The platforms may support different types of payment, including dollars, other types of crypto, and gift cards. Additionally, users may be able to specify a payment method—such as PayPal or Zelle—with their listing. 

Unlike crypto exchanges, some of these platforms don’t require users to create an account or go through an identity verification process. However, they may use an escrow service that allows sellers to verify that they’ve received a payment before releasing the Bitcoin to the buyer. 

  1. By withdrawing cash from a Bitcoin ATM

Bitcoin holders who want to quickly exchange their Bitcoin for cash could look for a nearby Bitcoin ATM. These look like bank ATMs, but aren’t linked to a bank. Instead, they let people buy Bitcoin and other cryptos, and some of the machines (but not all) also let people exchange Bitcoin for cash.

The process can depend on the type of Bitcoin ATM, but the ATM will generally print out or show a QR code with a Bitcoin address. Sellers send the Bitcoin to the address, wait for the transaction to be completed (which may take up to an hour), and then receive the cash from the ATM. 

  1. Use a bridge and exchange Bitcoin for other crypto

Crypto exchanges let users easily swap between supported cryptocurrencies. But swapping Bitcoin isn’t as simple for someone who keeps coins in their own Bitcoin wallet instead of an exchange’s custodial wallet. 

That’s because each crypto blockchain (the underlying database or system) is isolated, meaning, for example, the Bitcoin blockchain is separate from the Ethereum blockchain. A blockchain bridge connects two or more blockchains to let users transfer their digital assets between blockchains. And it works by locking up the Bitcoin and releasing a new type of coin or token on a different blockchain. 

After bridging Bitcoin, you can use a decentralized exchange to swap the new Bitcoin for other types of cryptos. Additionally, transferring Bitcoin to other blockchains opens up new investment opportunities such as lending crypto and earning interest. 

  1. Pay for goods and services with Bitcoin

Rather than selling Bitcoin for dollars that will be spent elsewhere, investors can turn to merchants that accept Bitcoin as a payment method. 

For example, some popular websites—including discounter Overstock.com, electronics retailer Newegg, and video streaming service Twitch—let shoppers pay with Bitcoin. It’s even possible to add funds to the Starbucks app with Bitcoin using a linked service from Bakkt. 

Investors can also use Bitcoin to fund debit cards, such as the BitPay and Wirex cards, which can be used at thousands of shops around the world. The former converts the Bitcoin to dollars when the funds are loaded, while the latter converts the Bitcoin to dollars when the card is used. 

What to watch out for when selling Bitcoin

No matter the method, a few things are worth considering before selling Bitcoin: 

  • Transaction fees.

    There may be fees to sell or trade Bitcoin and to withdraw dollars from a crypto exchange account. The amount can vary depending on the platform and method. For example, some crypto exchanges offer free withdrawals but charge a fee for a wire transfer. Banks might also charge a fee to receive a wire transfer.

  • Exchange rates.

    Services may make money by giving users less favorable exchange rates and pocketing the difference. For instance, some Bitcoin ATMs charge fees of 5% or more of the amount sold, plus a transaction fee. While the price for Bitcoin can be hard to determine, sites like CoinMarketCap can be helpful for estimating current prices. 

  • Safety measures.

    Be mindful of the risks involved with different platforms. For example, there might not be any way to get Bitcoin back from a scammer on a P2P platform. Blockchain bridges can also be risky because hackers target the bridges knowing that they may be holding millions of dollars worth of locked crypto.

  • Tax implications.

    Whether someone sells Bitcoin for cash, uses it to buy a product or service, or exchanges it for a different type of crypto, the transaction could be a taxable event. Investors may then need to pay capital gains taxes if the price of their Bitcoin has increased since it was acquired, or potentially claim a loss if the price has decreased. 

The bottom line

There are many ways to sell and use Bitcoin, and each has its pros and cons. Before selling, spending, or transferring Bitcoin, consider the costs and risks.

At Titan, we are value investors: we aim to manage our portfolios with a steady focus on fundamentals and an eye on massive long-term growth potential. Investing with Titan is easy, transparent, and effective.

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