What are the things to know before moving Bitcoin to a bank account? The use and demand of Bitcoin is now greater than before and it has allowed people to make a lot of money.
If you hold some Bitcoin you can sell them at a high price to make profits. However, it is even better to transfer the money earned in Bitcoin value to your own bank account.
You can do it in a number of ways. This conversion of Bicoin into cash will then allow you to buy goods and services.
If you are wondering how exactly you can transfer Bitcoin value to your bank account, this is the right place you are in.
This article will let you know everything that you need to know before you move your crypto asset into your bank account.
7 Things to Know Before Moving Bitcoin to a Bank Account
You should know the reasons to transfer Bitcoin into your bank account in the first place. Check out Best Ways to Short Sell Bitcoin.
Ideally, the main reason behind it is that Bitcoin may replace traditional currencies and allow people to buy goods and services with it.
As of now, there are several individuals and establishments that accept Bitcoin as a mode of payment but all do not favor it. This is another strong reason to convert Bitcoin into cash.
However, the most significant reason of all to move Bitcoin into your bank account is that people anticipate a decline in its value in the future.
They want to prevent them from incurring any losses by holding the coins and hoping that it will rise in value someday, which may or may not happen.
1. The process:
Moving Bitcoin to your bank account is not rocket science.
In fact, it is pretty much similar to the process in which you convert a currency at the airport into the local currency when you travel to a new county.
Ideally, this process involves selling your Bitcoins for a particular amount of money and buying the same value in dollars, or any other currency you prefer.
However, the amount of money you will get by selling your Bitcoin will depend on how many people are willing to buy them and at what cost.
2. The fees:
This transaction process involves some fees which may vary because it is not determined or controlled by the central bank or the government of the country.
In fact, the rate of transaction fees depends on the demand for Bitcoin.
Such currency exchange typically is private and is not arbitrated by the economic structures of the world.
3. The considerations:
When you transfer Bitcoin into your bank account, you should consider some factors and pitfalls before it so that you do not face any issues later on, both financial and legal, especially when you are using a third party broker.
- Fees – The first thing to consider is the fees you need to pay to make such a transfer. As said earlier, the exchange fees will vary from one country to another as well as from one exchange to the other. Therefore, research well.
- Taxes – You must keep the tax consequences when you sell your Bitcoins at a profit. This is considered as a taxable income and therefore it is necessary that the third-party broker exchange reports their transactions.
- Speed – You must also consider the speed that a third party broker makes such transactions. There may be a few exchanges that may take several days to do so while a few may transfer the money to your bank account quickly.
You should always choose a third party broker according to your needs and after a thorough research.
4. The methods:
Typically, you will first need to convert your Bitcoin into cash and then move it to your bank account.
Ideally, there are two specific ways in which you can convert Bitcoin to cash.
- You can do it through a third-party broker exchange or debit cards and Bitcoin ATMs. They will charge a specific rate for it. This is the simplest and perhaps the most secure way to convert Bitcoin into cash.
- You may also make a P2P transaction to sell the Bitcoins. This is however a much faster way to sell your assets to another person and remain anonymous as well at the same time.
You should however know a few more things before you choose one of the two avenues to convert Bitcoin to cash.
5. Third party broker exchanges:
These are actually the crypto exchanges as you may know. They follow the same process as all currency exchanges.
You simply deposit your Bitcoin into the exchange and when they receive it you can place a withdrawal order in the currency you prefer.
The money, equal to the value of Bitcoin, will be paid to your bank account.
The process is very simple and secure but not the fastest. Depending on the particular country, it may take anywhere between 2 to 6 days to complete a transfer.
Moreover, the exchanges are regulated by the money laundering laws. This means that you cannot deposit from one bank and withdraw in another.
And, the transaction fees may also vary according to the country of your bank.
When you use Bitcoin debit cards or Bitcoin ATMs, the method followed is just the same as that followed by the third-party brokers.
You will have to create an account to sell bitcoins and withdraw cash. However, the transaction fees can be quite high.
The steps to follow are:
- Choose a reliable third-party broker exchange from the available options, mentioned later
- Sign up
- Complete the verification process
- Deposit your coin and
- Cash out into your bank account.
6. P2P platforms:
If you want a faster method, you can use the peer-to-peer platforms to sell Bitcoin for cash anonymously.
In this method, you can choose a particular payment system for the buyers while selling the coins to them.
You can ask them to use PayPal, or send the money through wire transfer, and even deposit the money into your bank account in person.
However, make sure that you get both, an Id proof as well as a proof of payment before you give away your coins.
This method is less costlier and you may even get a much better exchange rate than that offered by a third-party broker when you sell your coins to an individual buyer.
P2P platforms are quite safe but there are fraudsters. Therefore, you should choose a reliable platform like LocalBitcoins and know what you are entering into.
Ideally, you will be better off if you choose a P2P platform that will allow you to lock your coins in an escrow account until you receive the payment confirmation from the buyer.
The steps to follow are:
- Choose a good P2P exchange platform
- Sign up
- Choose the buyer location
- Find an ideal buyer from the marketplace and
- Send a request for trade.
Depending on the particular P2P platform you choose, they may let you create an ad for sale at extra cost, or have a rating system to leave a feedback, or use a VPN for a secure connection.
7. The time:
There is a specific time to sell your Bitcoin, and if you do not know and ask about it, it will be a million dollar question.
Well, to be very honest, no one can tell about it for sure. However, this does not simplify things and therefore, there are a few other things that you should keep in your mind to know about the right time to sell your Bitcoins.
You can use a market sentiment indicator to know about the right time. There are a few reputed exchanges that offer such an indicator which is also used by hedge funds.
These are free tools and therefore will be a prudent move to be sure at no extra cost.
The market sentiment indicator will look into several available data from a wide range of sources.
It will then analyze and determine the sentiments of the market regarding a specific crypto asset at a particular time.
All details will be displayed on your dashboard when you log in.
If you use this tool beforehand, you will be pretty close in judging the right time to sell your Bitcoins.
You can convert Bitcoin into cash to pay your daily bills or purchase any goods or services.
There are lots of convenient ways to do so but it pays to be knowledgeable about it before moving them. Hope, this article has done just that.