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Ask CryptoVantage: How Do I Sell My Bitcoin?
There are a handful of common methods for selling bitcoin. In general, you can sell bitcoin in many of the same ways you can buy it. If you have purchased bitcoin in the past, the way you received it might help you decide how you choose to sell it.
In this article, we talk about some of the common methods for selling bitcoin, and explain some of the important considerations to think about before deciding whether it is the right time for you to sell.
Online Exchanges
One of the most common ways to purchase bitcoin is through an online crypto exchange because of the convenience they provide. Online exchanges are usually specific to a certain country or region, so before signing up you will need to make sure that they allow you to sell bitcoin for your local currency, and that you will be able to withdraw the funds to your bank account.
Most online exchanges that allow you to sell your bitcoin for fiat require that you prove your identity in order to allow you to use their service. This is usually a government requirement that allows the government to track who is buying and selling digital currencies. So, it is important to be aware that selling through an online exchange ties your identity to your bitcoin transaction history.
How it Works:
- You open an account on an exchange (if you do not already have one).
- The exchange creates a bitcoin address for you to send your funds to.
- You send your bitcoin to this address, and it credits the bitcoin to your exchange account.
- On the exchange, you exchange the bitcoin for fiat currency.
- You withdraw the fiat currency – typically directly to your bank account using ACH, Interac e-transfer, PayPal, wire transfer, etc.
Selling Bitcoin for Gift Cards
There are a number of businesses that sell gift cards in exchange for bitcoin. Rather than finding someone who will buy your bitcoin from you, you can trade it for gift cards for stores where you are likely to shop. Depending on the gift card business, you may or may not need to provide your personal details before you trade your bitcoin for gift cards.
How it Works:
- You browse the selection of gift cards (through their mobile app or web page) and add the gift cards you would like to purchase to your cart.
- When you go to check out, the business will generate a bitcoin address that you need to send the required amount to.
- Once the transaction is confirmed you will receive your gift card – either digitally or physically.
Bitcoin ATMs
Bitcoin ATMs can be found in most major cities around the world. Companies that own bitcoin ATMs will make agreements with other business owners in order to find public locations to put their ATMs. For example, you can sometimes find bitcoin ATMs in cafes or pizza shops.
Often, the fees associated with bitcoin ATMs are very high in comparison to other methods for selling your bitcoin. Because of this, you are likely to end up making less money if you sell your bitcoin through a bitcoin ATM instead of an online exchange.
How it Works:
- At a bitcoin ATM, you select the option to sell bitcoin and input the amount you want to sell.
- You receive a ticket with a bitcoin address that you need to send your bitcoin to.
- Once the transfer is confirmed, you can use that same ticket at a bitcoin ATM to withdraw the equivalent amount in fiat cash.
Peer-to-Peer Trading
Bitcoin was designed to be used as a peer-to-peer electronic cash that does not require the use of a third party intermediary such as a bank or online exchange.
You can sell bitcoin directly to another individual for fiat money or anything else you choose to accept for your bitcoin. There are also peer-to-peer crypto exchanges that help facilitate such transactions. When selling to a peer, one benefit is that you do not have to prove your identity, so peer-to-peer trading is a preferred way to sell bitcoin if you want to protect your privacy.
How it Works:
- Find someone who agrees to buy your bitcoin from you and agree on a price.
- The person that you are selling your bitcoin to will generate a bitcoin address for you to send to.
- You and the person you are selling your bitcoin to will decide who will transfer first, or you may decide to do it incrementally to reduce the risk. For example, you might send 50% of the bitcoin first, then they give you 100% of the fiat cash, then you send the remaining 50% of the bitcoin. This way, neither party is at risk of losing all of their money to a scam.
Other Considerations When Selling
No matter which method you choose, be careful how you sell bitcoin because there are plenty of scams that will try to get you to send your bitcoin to the wrong place. Additionally, bitcoin is considered an investment by most governments, so if you sell your bitcoin for a profit, you will need to pay taxes on your gains. Finally, bitcoin is a highly volatile currency, so before selling you should make sure that you are not panic selling.
If you decide you want to sell your bitcoin, take your time in order to avoid making a mistake, because when you make mistakes in bitcoin they can be very costly. If it is your first time selling bitcoin, consider having a more experienced friend help you through the process.
