Convert cryptocurrency to cash: How to cash out Bitcoin and Ethereum
This guide will outline how to convert cryptocurrency to cash, including wallet creation, sending tokens and how to cash out Bitcoin and Ethereum to your bank. But first, let’s start with a little bit of background.
We are at an exciting time! It took nearly 50 years to the internet to come from an idea to a concept adopted in mass.
Invest in Luckbox: Information for investors
How many years did it take for esports to come from local LAN competitions to what we are experiencing right now? As for the blockchain technology, the Bitcoin white paper came out in 2008 from an idea that was born in Stuart Haber and W. Scott Stornetta’s minds in 1991. As you may have understood, the crypto fever may have not even started yet.
However, pending a very likely mass adoption allowing anyone to pay for food and shelter in cryptocurrency, several steps are necessary to be able to spend the cryptocurrency you own.
Unless you live in a big city, there is a high chance that you still need to convert cryptocurrency to cash before spending it for your daily uses. Even so, do not expect your local London grocery store to accept cryptocurrencies as a mean of payment just yet. Or a cryptocurrency ATM at every corner.
Some cities might do like Vienna or Stockholm, but not most of them and far from that actually… for now. Uses and implications behind adoption of cryptocurrencies are still unknown to the general public and this is a great opportunity for you to be part of what is called the early adopters of an emerging technology. What an exciting time!
In order to take full advantage of the crypto-revolution, we will explain how to:
- Create a wallet.
- Receive cryptocurrency on it.
- Convert that cryptocurrency to cash it out to your bank account.
Converting crypto to cash is actually the crux of the crypto-economy pending its adoption, as it is directly referring to its in-real-life value.
Store your crypto before converting it
If you want to convert cryptocurrency to cash, you will have to create a wallet first to receive your crypto. It is generally necessary to own one single wallet per cryptocurrency but some user-friendly wallets like Exodus.io allow you to manage various assets through one single interface.
It is important to understand that the Bitcoin or Ethereum blockchains are networks, like the internet is itself. The wallets we are going to cover below are clients allowing access to these networks. As one of the consequence of this, you may access a blockchain through different points, some are more secure or user-friendly than others:
- Hot wallets
- Software wallets
- Cold wallets
The rule number one, no matter the wallet you have decided to use, is to NEVER share your private keys with anyone. They are the equivalent of the PIN number of your debit card. Anyone knowing your private keys have access to your funds without your consent.
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Receive crypto in hot wallets
The term ‘hot’ wallet refers to a cryptocurrency wallet that is connected to the internet in a way. The most common hot wallets refer to the wallets you own on cryptocurrency exchanges.
However, software wallets, that are software installed on your computer, are connected to the internet too and can be considered as hot wallets as well.
1. Your wallet on a cryptocurrency exchange
If you buy a cryptocurrency for the first time, you may have to go through a cryptocurrency exchange. You will have to create an account and verify it through a KYC. All these platforms have advantages and drawbacks, others exist but these are the most reliable at the time of this article:
All the websites above will allow you to buy cryptocurrencies with your VISA card or thanks to a bank transfer or other payment methods. These websites are the ones allowing you to convert Bitcoin to USD or to EUR as well, and to cashout the amount in USD or EUR to your bank account.
If you gave your exchange wallet address to the person sending you money, you can directly jump to the convert crypto to cash paragraph at the end of this post. Note however, that you should not make an habit of using your exchange wallet systematically for transactions. Your exchange wallet is as safe as the exchange is and in a constantly changing environment like the crypto-world is, that implies direct legal, technical and security threats for your funds. Please do consider the following storing options too.
2. Software wallets
Before downloading a wallet, it is important to know which cryptocurrency you want to receive or buy and transfer to your wallet. If you want to convert Bitcoin to USD, you will need a bitcoin wallet, if you want to convert Ethereum, you are going to need an Ethereum wallet first. Note that exchanges are providing you with several wallets (BTC, ETH, LTC, BCH etc.) on your account opening too (simpler, but again, not as safe):
- Bitcoin wallets: Electrum is one of the simplest options out there. Other options like Exodus.io allow you to see balances for various assets owned on the blockchain like Ethereum but not only. For a more comprehensive list of Bitcoin wallets, please visit the bitcoin.org website.
- Ethereum wallets: Websites like mycrypto.com and myetherwallet.com allow you to create an Ethereum wallet and access the Ethereum blockchain as such. These are the simplest and safest ‘hot’ wallets options with Metamask.io. The latter can boast a handy browser plugin for an additional easiness of use. Ethereum can be sent on these wallets as well as ERC20 tokens issued on the Ethereum blockchain.
- Other wallets: For any other crypto assets than Ethereum or Bitcoin, please refer to the appropriate documentation on the website of the project in question. Before buying any kind of crypto, it is important that you know exactly what kind of wallet is operational for the crypto asset you are buying.
‘Hot’ storage is known to be easy of use and to be a nice introduction to the blockchain technology but it should not be used to store what you consider a high amount of money on the long run. If you plan to own cryptocurrencies on the long run, you will have to buy a cold wallet.
Receive crypto on cold wallets
1. Hardware wallets
‘Cold’ wallets come under the form of USB flash drives and are the safest way to store and transfer cryptocurrencies. While they do access the blockchain online, your funds are as safe as your USB flash drive is. With the progressive adoption of blockchain and cryptocurrencies, several companies have created their cold wallets, the two main ones at the moment are:
Other names are well reputable and worth your attention too but we will consider these two as the main ones as they have been in business for years, before anyone else, which is a plus when it comes to matters like storing money.
2. Paper wallets
A paper wallet consists of a print or a hand-written note of your private keys. As such your funds are as safe as the paper your private keys are written on is. Keep in mind, however, that your private keys should not be copied and pasted for optimal safety of your funds so that this precious information does not stay in your computer’s clipboard. The same goes with printing it…
If you write your private keys directly from your screen, make sure you copy the address right (they are always very long and confusing) and that your computer is totally virus free.
As mentioned already, the most reliable way of storing cryptocurrency is through hardware cold wallets like Ledger or Trezor. If you plan to stay a while in the crypto world, it is worth the investment of less than £100. The other options can be used temporarily as an introduction to blockchain to find out if emerging technology early adoption is for you. Storing large amounts of cryptocurrencies on exchanges on the long run can turn out really risky as the Mt.Gox scandal showed in 2014.
This is why, at all times, it is paramount that you keep the control over your private keys. While you can convert crypto to cash instantly on exchanges, if you store cryptocurrency on them, they are in control of your private keys and you are not, with all the collateral risks that implies.
Cryptocurrency transfer to your wallet
Now that you have chosen the most convenient wallet for your use, you can receive cryptocurrency. Remember it is important you give a Bitcoin wallet address if you are about to receive Bitcoins or an Ethereum wallet address if you are about to be sent Ethereum or ERC20 tokens.
ERC20 token address example: 0x6991674655E51b95956dD84056dAC212e2a098CE
Bitcoin address example: 3BwGrdAeLicoHEt4Vj9bkZJsfx48BXrGo9
The same is true with any other cryptocurrencies: always check that the wallet address you are communicating is able to receive the given cryptocurrency. This is important to consider as there are more than 1,500 out there and counting. Some names can be confusing for people entering the cryptocurrency world.
Ethereum Classic is different from Ethereum, even if there is a way to recover one in case you sent it to the other’s address. Bitcoin is different from Bitcoin Cash, Bitcoin Gold, Bitcoin Diamond, Bitcoin Green etc.
While it is important to keep your private keys the safest possible, your public keys (available on opening your wallet) are used as addresses to receive cryptocurrency. No one can access or alter your wallet with your public key only. To receive cryptocurrency on a wallet, you just need to communicate your public key to the sender.
Receiving ERC20 tokens
If you contributed in an ICO like the Luckbox crowdsale that recently ended, you received ERC20 tokens. LuckCash, the official cryptocurrency of Luckbox has been emitted on the Ethereum blockchain as ERC20 tokens.
To be able to see your LuckCash balance, or any other custom tokens, you need to add a custom token to your Ethereum wallet address. This is easily done on the above mentioned Ethereum wallets thanks to their easy guides:
Convert cryptocurrency into cash in your bank account
At the time of this article, no bank will convert cryptocurrency into cash. Some projects are trying to offer similar services but some are very recent and others are still in development phase. The cheapest option is to convert your cryptocurrency on an exchange site for USD, EUR or your local currency.
For the American dollars and the euro, you can use the exchanges listed above.
For all of them, you will need to go through a verification process that will require you to send an identification document and a utility bill. In most cases, your bank account will need to be checked too by performing a test transaction from it.
Cryptocurrency deposit to the exchange: A wallet-to-wallet transfer
Once you created an account on your preferred exchange website, you will have access to several wallet addresses. The wallets on the exchange are yours too, but they are going to allow you to convert your cryptocurrency into cash and then transfer it to your bank account. Now you just need to send your cryptocurrency from your current wallet to the wallet you own on the exchange website:
- Depending on your wallet, find the way to send the cryptocurrency stored on it by pressing a ‘send’ button. Given it is one of the core feature of your wallet, it should be easy to spot no matter the wallet used.
- At this point, you will be required to enter a destination address. Great news! The destination address is the address of the wallet you own on the exchange website you opened an account on. Be careful to give the right address for the right asset. A Bitcoin address for a Bitcoin transaction, an Ethereum address for an Ethereum transaction etc.
- Paste it in the destination address field of the wallet storing your cryptocurrency currently.
- Triple check the destination address you copied and pasted in your wallet of origin is the same address displayed in your exchange account.
- Press send. The transaction should not take more than a few seconds. It can take longer sometimes but you can check the status of your transaction by checking it on the blockchain itself with your transaction ID. (Blockchain.com for Bitcoin and Etherscan.io for Ethereum and ERC20 tokens)
Convert cryptocurrency to cash
Now you should have the amount you sent to the exchange appearing in your exchange cryptocurrency account balance. Most exchanges will send you an email deposit confirmation too.
While it could merely be seen as a conversion from cryptocurrency to cash, you are now about to sell your cryptocurrency and buy cash with it as you would do at the airport cash changing desk.
If you want to convert Bitcoin to USD, you will have to find the BTC/USD market in your exchange website. If you want to convert Ethereum to EUR, you will have to find the ETH/EUR market. Same goes with LTC, BCH, ETC, DASH, XMR against GBP, HKD, CAD, AUD, JPY etc. Find the market that suits your need.
Once you are on the market page, as you do not want to trade and want to convert your cryptocurrency right away, you will sell it at market price or ‘market sell’ it. To sell the quickest possible, select the price that is situated at the top of the ‘Bid’ column (coloured green in the below example).
Bids are referring to what buyers of the cryptocurrency you are selling are ready to pay to buy it. It is usually lower than the ‘Ask’ column which represents what sellers (you in that case) are asking to get rid of it.
If you selected a bid price for the right amount of cryptocurrency you are selling (check the column ‘Amount’ on the left of the ‘Bid’ column to make sure there is enough Bitcoin buying offer at the price you are selling), your sell order should take seconds to complete.
Once this is done, a balance in the local currency you sold your cryptocurrency for will appear. You have just converted cryptocurrency into cash.
For the above mentioned currencies there will be enough liquidity but be careful in trying to sell less known currencies as there might not be buyers to fill your sell orders. If you follow this guide, you should not have this problem but this is always something to consider.
Cashout from the exchange to your bank account
If and only if your exchange account is verified and your KYC process has resulted successful, you can request a bank transfer cashout of the cash balance appearing in your exchange account to your bank account accepting the same currency (check conditions with your exchange website).
The funds should reach your account in the five following business days. If your exchange website verified your VISA card, the cash will be returned to the account linked with the verified VISA card.
Paying directly with cryptocurrencies
No need to convert cryptocurrency, if you are ready to pay higher transaction fees. Several projects out there are offering direct ways of payment and cashout through mobile, debit and credit card. In most cases, you will have to order a card or download a mobile app to use their services.
Given the relatively recent and experimental nature of the given projects, we can only advise you to do your own research before using one of these services but keep an eye on them as they are key to the further adoption of cryptocurrencies:
This environment is changing quickly and other very important names in the crypto payment sector has not been mentioned here, but if you are interested in the matter, we strongly advise you to perform your own research.
Once you have converted crypto to cash once, you will be acquainted with the process. While it can look a bit daunting at first, it is important you get familiar with these processes as it is what crypto is all about.You are now able to convert currencies yourself from as little as $20 without having to go through several slow and expensive middlemen.
You can store and transact value as well as access the currency markets without the help of third party institutions for the first time. Congratulations and welcome to crypto!
