Selling Your Bitcoin
Selling your Bitcoins is not as easy as buying them. If you want to sell your Bitcoin online, there are three ways to do it: via an exchange, direct trade or a peer-to-peer transaction.
If you want to cash it out otherwise, you can withdraw money using a Bitcoin ATM or sell your Bitcoins in person.
Crypto Exchanges Getting More Popular
Although there are disadvantages in the exchange method, it is a one-stop solution as exchanges act as an intermediary that holds both seller’s and buyer’s funds.
When you want to sell your cryptocurrency via exchange method, first of all, you have to set up an account with an exchange of your choice. This requires a complete identity verification and a connected bank account (from which you withdraw your funds).
After that, you place a ‘sell offer,’ and state the type of currency you wish to trade. Also, you need to enter its amount and your asking price per unit. The exchange happens automatically after someone meets your offer.
When the funds are credited to your account, you withdraw them to your connected bank account. As sometimes the exchange can have liquidity issues, this process may take time. The Mt. Gox exchange was experiencing this problem several months before its bankruptcy. Also, some banks may refuse directly to process transactions with funds obtained via cryptocurrency trading.
You also need to pay some fee to use some exchanges. For example, CEX.io – one of the world’s biggest cryptocurrency exchanges- charges a flat fee of $50 for withdrawal via Bank transfer. It charges $3.80 if you’re withdrawing your funds to a Visa card and 1.2 percent of a transaction + $3.80 if you’re using MasterCard. Although withdrawal fees can vary depending on an exchange, transaction fees are hardly ever taken or not taken at all.
What’s more, most exchanges put a limit on the amount of money to be stored. However, this limit increases over time if you always use the same exchange.
Lastly, we have to warn you that exchanges are not secure and reliable places for your funds although they offer wallet services, because they are open to hacker attacks. Even there were cases where some exchanges shut down and run away with the funds of their users. That’s why, you should take full responsibility for your own funds. We advise you to store the amount that is not immediately needed in a secure offline wallet.
This is another way of selling your Bitcoins. You trade your Bitcoin with another person. This is a service which is provided by websites associated with exchanges. It also includes an intermediary which facilitates the connection.
First of all, you register as a seller. As it is with the exchanges, after you set up a profile, you have to verify your identity. After you register, you can post an offer to sell Bitcoins. When a buyer wants to trade with you, you get a notification from the service. Then, you only interact with the buyer; the website merely serves as a platform.
This process can be quite time consuming. That’s why it is better if you make a research before deciding on a trading platform. You also need to be patient.
Online P2P trading
Peer-to-peer trading is a relatively new concept. Funds are not exchanged directly. So, the websites are merely a platform which bring people with various needs together.
The service is designed for the mutual benefit of people with various needs. For example, people who would like to buy Bitcoins with their credit card and those who want to spend their Bitcoins to buy goods from places that don’t accept digital currencies. Thus, people who like to buy cryptocurrency can get their flat currency exchanged to BTC, and people who want to spend their BTC can buy discounted goods.
These websites provide users with an escrow service for the transaction and a wallet to store Bitcoins.
Let’s see how it works:
Person A posts his/her wish list including the discount amount he wishes to receive. The discount amount may go up to 25 percent. Then, person B accepts the trade. He/she pays for person A’s goods through the marketplace and states that person’s delivery address. After the goods are delivered, the marketplace releases person B’s money from escrow and transfers the funds into his/her wallet.
This system allows person B to acquire Bitcoins relatively easily using just his/her bank card. However, it also charges him/her a high fee for the service.
The services mentioned above are online-based centralized platforms. It is seen that you need to open an account and verify your identification for these accounts to function. However, this eliminates the anonymity that is offered by the cryptocurrencies. Also, once you sell your BTCs, you will need to withdraw them to your bank account or a bank card. This process is tedious because it takes a great deal of time and will cost you some fees.
That’s why a lot of people are trading offline.
Bitcoin ATMs look like traditional ATMs but they are not actually ATMs. They do not connect to a bank account but to internet in order to realize transactions.
Bitcoin ATMs accept money in cash. This cash is exchanged into BTC. The receipt is given with a QR-code on it. Also the funds can be moved to a wallet on a Blockchain network. Bitcoin ATMs charge very high fees – as high as seven percent.
The hard part about ATMs is that it is hard to locate. Most Bitcoin ATMs are marked on this Bitcoin ATM map.
One of the downsides is that only a few specific Bitcoin ATMs offer bi-directional functionality. It means users can realize transactions in both directions (buying and selling). These machines are Robocoin, Genesis1 and Satoshi2 from Genesis Coin, BitAccess and BATMThree model from General Bytes. What’s more, some operators might disable sell operations.
You need to have an existing account to sell Bitcoin via some ATM providers. However, the registration process involves a lot of time, energy and effort. For example, Robocoin ATM require a telephone number (for activation and notifications), government issued ID, palm scan and a current photo taken by the ATM’s webcam in order to open an account. No matter which machine you use, some sort of identity verification will always be required if you want to sell.
After the verification process, you are given a QR code with a wallet address. You need to send your Bitcoins to this wallet address. It depends on the machine whether you get cash from the ATM or a redeem code. After the code, you need to wait for the confirmation of the transaction. Although, one confirmation is enough, it may take up to six confirmations before the user can withdraw cash.
You see that despite the growing number of Bitcoin ATMs throughout the world, they are used to buy Bitcoins primarily. As hard as it is to use these ATMs, it is also hard for ATM operators to adjust their machines. They have to adjust in accordance with the anti-money laundering laws as well as customer standards applicable in the jurisdiction where their ATMs are placed. In some countries, this requires a money transmitter license. However, current regulations some countries prevent any Bitcoin ATMs even from being installed.
Selling Bitcoin in person
It seems that it is rather easy to trade digital currency in person. All it takes to sell your Bitcoins is scan a QR-code on someone’s phone and receive cash on the spot. If you are close (friends or relatives) to the person you’re selling, you only need to send the amount to his/her wallet and the cash can be collected.
However, if you are dealing with a random person, it will take time set a price, a meeting place and etc. Moreover, you need to ensure your safety and the safety of your funds.
How to set a price
Many websites and forums help traders arrange one-on-one meeting for buying and selling Bitcoin. LocalBitcoins is the most widely used platform among them. The website has a rating system which differentiates it from the others. The rating system allows you to observe the trustworthiness of people you wish to trade with.
During the negotiations the final exchange rate is agreed upon during the negotiations because Bitcoin’s value constantly fluctuates. Prominent exchanges are taken as an example by most traders. Also, services like Bitcoin Price Index can be used. Besides the current exchange rate of Bitcoin, sellers charge a fee on top of Bitcoin’s current exchange rate. It is for convenience, anonymity and to cover the costs. It is up to you to choose the amount of the fee, but often it is set at around five to 10 percent.
Also, it is important that you keep track of local fluctuations in Bitcoin’s price as the exchange rate can be different in each country. This is important when obtaining Bitcoin with the local national currency.
Alternatively, if there is a Bitcoin meet-up in your country, you can visit it instead of setting up a one-on-one meeting in advance. The are numerous such meet-ups around the world. During these meet-ups the attendees buy and sell Bitcoin and other digital currencies. It may be the safest environment to conduct person-to-person trades. Be ready to negotiate the price on the spot when selling at a meet-up. You can find information about your local Bitcoin meet-up using services such as meetup.com.
Advices for staying safe
If anonymity and convenience is important for you, selling Bitcoin person-to-person is the perfect option of trading. Security considerations are of utmost importance, especially when you are trading with a complete stranger whom you find online.
First of all, you should choose a place for the meeting carefully. It has to have an internet access because both of you will need to access your online wallets, and it must be public. It is quite common to bring a friend to a meeting during a person-to-person trading. Do not forget to mention that you are going to bring a friend to the meeting.
Think that you are carrying a huge amount of cash. Be alert, avoid public transport and never meet in private places.
If you’re selling Bitcoins online, the inevitable problem you will face is withdrawing funds. International wire transfer is the most common way to move money. Most prominent exchanges support this method of transferral. However, some exchanges began to accept credit and debit card withdrawals.
Also, money can be transferred via SEPA (Single European Payments Area). It is a system more efficient in EU because it is designed to make international transfers between members of the European Union. This way of transferal is accepted in some European cryptocurrency exchanges.
However, both of these systems are not perfect. Transfers usually take a very long time. Depending on the country and the amount of money being transferred, they can take up to four days to be processed. What’s more, both these systems get additional fees. For example, Barclays bank charges £25 for £40 -depending on how quickly you want the transfer to be done- for a SEPA payment. HSBC only charges £4 for a SEPA payment made via online banking. However, HSBC is known to refuse working with Bitcoin and any other digital currency-related funds.
Thus, if you’re opening a bank account for withdrawing money from Bitcoin sales, you need to research meticulously and chose the bank that best suits you.