There are also a few other differences between these two processes and if you have no clue about it, you are fortunately in the right place.
This article will tell you all about the differences between selling and withdrawing, or cashing out to be more precise, of crypto coins.
Both selling and withdrawing your crypto coins will need you to involve a crypto exchange but that is all where the similarities between these two processes end. The methods, the wait time, and even the purposes may differ for that matter.
Few people may suggest not selling your crypto coins off while others may point out especially the consequences of withdrawing them completely.
However, it is you who will make the final choice and that is why you should know the differences between these two approaches yourself.
7 Differences Between Crypto Selling and Withdrawing
There are a few major as well as a few seemingly insignificant differences between selling crypto and withdrawing them. Check out Differences Between Static and Dynamic Crypto Map.
By knowing these differences you can make the right decision as to whether you should sell your crypto coins or withdraw them and which of the two will be more profitable, both in the short term as well as in the long run. Here they are for you.
1. The Process
The first and probably the most significant difference between selling crypto coins and withdrawing them is in the process that you need to follow. In the case of selling your crypto coins, you simply choose an app or take the help of a crypto exchange to sell them off to another person.
On the other hand, though in the case of Bitcoin there is no option of withdrawing, you can only convert them into a fiat currency to encash and withdraw.
Therefore, if you want to withdraw, you will have to first convert them into your favored currency through an exchange you used to buy them and then sell them off to get the money worth the coins in your digital wallet. You can then transfer that money to your bank account and then withdraw the cash from there.
2. The Time Factor
The withdrawal process would take a maximum time of about one working day typically to complete, unless there are other complications in the transaction. However, in most of the cases crypto withdrawals are almost instant.
It would usually not take more than a couple of hours to get processed and transferred but then once again it all depends on the specific exchange you have chosen.
The time taken for withdrawal can be reduced further if you choose the automated withdrawal processing method provided your account satisfies the set conditions to be eligible for it.
On the other hand, selling crypto coins may take quite a long time if you cannot find buyers quickly and the terms are agreed upon amicably. Depending on the platform you choose to sell your crypto coins off the time taken to complete a process may also differ.
The time taken for a sale order to be completed may also vary depending on the location of the customer. For example, for the US customers, it may take anywhere from 1 to 5 days depending on the method, for the European customers the same may take around a couple of days, and for the customers of the United Kingdom it is quite quick provided the local currency is stored in the wallet of the crypto exchange.
Using PayPal may expedite things significantly enabling transfers to be made almost instantly but please do check the regional transaction supported as well as the limits of the payout.
3. Transaction Methods
Selling crypto coins is pretty much similar to buying them on a crypto exchange except that the methods followed are just the reverse. In order to sell your coins, you will first need them to have the coins on hand, or in your wallet that is.
Then you can follow a number of ways to sell them off apart from using an online crypto exchange such as making direct P2P transactions on-site or online, through an ATM that supports cryptocurrencies and even through face to face transactions.
A crypto withdrawal, on the other hand, is also a transaction but it usually involves moving your crypto balance off from the wallet or the platform to any external crypto wallet on which you have more control.
As it is, a crypto withdrawal is basically an ‘on chain’ transaction. This means that the crypto coins are typically transferred through the blockchain, if you do not choose a P2P transfer which is usually done off-chain.
This method of transaction only involves updating the internal ledger of the blockchain to record the transfer but there is no transaction made actually on the blockchain.
4. The Security Aspects
When it comes to selling your crypto coins off, there are some points to remember to ensure complete security, which is significantly different from the security factors to consider while withdrawing crypto coins from an exchange to an external wallet.
Since selling crypto coins is done in blockchain specifically the security factors are related to it and include vulnerabilities at the endpoints of the blockchain, scalability issues, regulatory issues, and insufficient testing.
On the other hand, in order to safeguard your crypto withdrawal venture the specific factors to remember include using a cold wallet and secure internet connection.
You will also be better off if you maintain multiple wallets as well as secure your personal device. Add to that, later on, you should also change the password on a regular basis for providing additional security, and certainly do not get allured by those malicious emails and ads.
5. The Steps
The steps to follow to withdraw crypto coins or transfer them from the exchange to an external crypto wallet include selecting the ‘withdraw’ option from the crypto section of the home screen.
You will have to type in the address of transfer manually or can even add it by using the QR code. When you click on the ‘Proceed with withdrawal’ to receive an email in your account, you will need to click on the link sent on it to confirm the withdrawal.
On the other hand, the steps involved to sell crypto coins include clicking on the funds option in the app and clicking on the specific crypto coin from the list that you want to sell and then clicking on the Buy/Sell option.
There will be a new popup and you must select the sell option on it. Feed in the number of crypto coins you want to sell and also choose the price you want for the crypto coins to sell.
Finally, place the order once you have finally decided on all your requirements. This order will be executed as and when the price selected by you as the selling price matches with the price of that particular crypto coin in the market. Once it is sold, you can withdraw the cash back to your bank account.
If you want to know the status of your sale order or withdrawal there are different things to look for and terms to know.
In the case of crypto selling, when the status is ‘Open’ it means that the order is not matched yet, ‘Partial Fill’ means a part of the order is matched and a part of it is yet to be matched or filled, and ‘Filled’ means that the order is executed fully.
Also, there can be other statuses such as ‘Cancelled,’ ‘Rejected,’ ‘Pending or Stop,’ and ‘Expired’, that indicate their respective literal meanings.
On the other hand, the statuses for crypto withdrawal are ‘Initiated,’ which means a request for withdrawal has been made and internal checks are being made, ‘Pending,’ which means the withdrawal transaction internal checks are completed and is sent to the payment gateway for further processing, and ‘Sending’ which means the withdrawal transaction is broadcasted to different digital assets network and blockchain confirmation for it is awaited.
The ‘Success’ status indicates that the withdrawal request has got one confirmation on a particular digital asset network. If the status says ‘On Hold,’ it means there may be some issues with the request and needs to be checked manually.
You may be asked to contact support or they may contact you as well. And lastly, ‘Failure’ status means that your withdrawal request has failed and turned down. You may check the reasons for it in the ‘Reason’ field with your withdrawal ID.
7. Best Time
Whether you want to sell your crypto coins off or to withdraw them, you should do either of the two at the best time to maximize your gains. Researchers have found that the best time to sell crypto coins is on a Monday or on a Tuesday.
However, you should consider the time zone overlap because traders all over the world may be active at a different time than yours if you stay in a completely different time zone.
Therefore, more than the day or time, you should consider the signs that will indicate it is high time that you sell off your crypto coins. These signs include the current price of the particular asset is much more than the price you bought it for and it has successfully helped you to meet your investment goals and profits.
Or, you can also sell them off if you are anxious about your investment and the price of the coins you hold may fall or you want to have some other coins than what you already have but do not have the funds to make a purchase. Moreover, if the coins you hold are not providing any more benefits, it is a good time to sell them off.
In comparison, when it comes to withdrawing your crypto coins, there is no specific date or time to do it and it may vary from one person to another. Therefore, there is no rule of thumb as such. You can withdraw the crypto coins when the prices of the major coins go up significantly.
However, remember that you will need to pay taxes on the withdrawal of crypto coins as well. The best time to go for a withdrawal of crypto coins can also be the time when you feel comfortable to go ahead with it and will have no regrets or questions about your actions later on.
You may also go ahead with your withdrawal venture when you feel that the particular crypto coin has reached its peak, though there is no specific way or formula to say it for sure.
Which is Better – Crypto Selling or Withdrawing?
The simple answer to this question is: it all depends on how a particular crypto player looks into it.
There are also several other factors that will influence the crypto holders in deciding whether they want to sell their coins off or withdraw them.
One of the most significant factors is the volatility of the crypto market and assets.
This is the specific factor that results in a significant rise in the value of the crypto assets and therefore people may want to hold their crypto coins for long and sell them off at a higher price to make more profits.
As you can see from the differences above, it is quite impossible to say which among the two is the winner because both these options come with their characteristic pros and cons. Therefore, it is best left for the users themselves to decide.
However, if you want to know which is preferred more, then it can be said that withdrawing crypto coins has a slight edge over selling crypto coins.
The most significant reason for that preference is that people do not want to lose their ownership of a particular crypto coin completely by selling them off, more so if it is a major one with a high market cap and value, in anticipation of a further rise in the price of it.
Therefore, withdrawing crypto coins is quite a common practice among the crypto players. The funds received in the process are usually moved to a bank account.
On the other hand, if the coin holder wants to buy crypto coins of another type with it, they can withdraw them to an external cold storage from the wallet of the exchange.
Typically, when the fund is withdrawn, it is usually done through wire transfer or Automated Clearing House transfer after you sell your coins on a crypto exchange.
You can also transfer the money through SEPA or Single Euro Payments Area, if you want payments in the Euro.
However, such transfers can take a long time depending on the amount of money to be transferred as well as the country it is being transferred to and from.
And, these systems will also call for additional charges and these charges can be either fixed or variable. This variance in the fee will depend primarily on how fast you want the money to be transferred.
At this point, you should also keep in mind that there may be a few banks that may not favor or facilitate any transfer of funds that are related to cryptocurrencies or cryptocurrency companies.
Therefore, if you want to open a bank account simply to withdraw the money you have earned through crypto sales, do some research to know the requirements of the bank and choose one that will serve your purpose and suit your needs in the best way possible.
Another thing that you should remember regarding crypto withdrawal is that when it comes to the deposits of the users, as you may know, all of it is stored in a cold storage for security purposes.
However, when it comes to the withdrawals requests, these are actually automated for all crypto coins.
However, there is one particular thing that you should remember, as always. Once you make a crypto withdrawal it will not be reversed because everything happens on the blockchain.
And, just like all other transactions made on the blockchain, crypto withdrawals will also come with a fee.
The tax implications may also influence your choice between crypto selling and withdrawing.
Any profit made on the crypto transaction, especially selling, will have tax implications because cryptocurrencies are considered to be a property by the IRS or the Internal Revenue Service.
If these coins are traded frequently and if there are any capital gains then the income will be considered as taxable and tax amount will be calculated as per the slab rate applicable.
Also, do your own research on the price and prospects of the particular crypto coin that you want to sell off or withdraw.
It is entirely a personal choice and preference when it comes to choosing between selling off crypto coins and withdrawing them. However, knowing the differences between the two approaches will help a lot in making the right decision.