In the ever-evolving landscape of digital finance, understanding how to securely and efficiently cash out your cryptocurrency investments is crucial. This guide aims to help newcomers to the world of crypto, navigate through the multifaceted process of converting your digital assets into fiat currency.
Nothing in this article is intended as financial advice.
Do your own research when it comes to picking tools you trust and need.
Use this Crypto Glossary to look up words and terms that are new to you.
You would do well to remember:
- Your money, your rules. You don’t have to be in crypto if you don’t want to.
- Your money, your rules. You don’t have to suffer your tyrannical government and trade back into FIAT if you don’t want to.
- State and Finance should be separated. But as long as they aren’t you will need to pay tax.
- Never let anyone shame you for selling. The only skill that matters in Crypto is taking profits.
- Never let anyone shake you out of your holdings with their shit advice. Educate yourself and make your own calls.
- If people do not respect that Crypto is your passion, they do not need to be in your life.
- Do not allow yourself to be coaxed or coerced out of your positions.
- Your risk-tolerance is your own, others do not get a say in this.
- Never invest with money you need to pay for your rent/mortgage, food, clothes, child support, or bills.
The Basics of how to Cash out Crypto
Determine your startingpoint.
When you cash out your crypto, you need to realize that your starting point will determine the approach you need to take to turn your magic internet money back into Fiat. (Fiat are government-backed shitcoins such as the Yuan, the Yen, the Euro and the US Dollar). Is your Crypto staked? Is your Crypto on a DeFi app (Decentralized App or DAPP)? Is your Crypto in a DeFi Wallet?
Is your Crypto pending in a trade on a Decentralized Exchange? Is your Crypto on a centralized exchange?
Determine where to start.
How did you acquire your crypto?
Did you get it through an Airdrop? If so, trade your shitcoin into ETH, LTC, USDT/USDC/BUSD, or another widely accepted crypto/stablecoin. You don’t have to. But it will make life easier.
Did you get it through trading? If so, try and retrace your steps. Look at your ledger to see what trading pair got you into this coin. and if you can’t find that, try and trade it back to ETH, LTC, or USDT/USDC/BUSD or another widely accepted crypto/stablecoin.
It’s recommended to try and make the trade on the DEX or CEX you’ve gotten the coin from in the first place.
If you were airdropped the coin, it’s always useful to jump on CoinGecko, to look for the specific coin, and try and find out on what exchange these shit tokens are traded on.
Where does your Money need to go?
Does the money need to go to your bank account? to your Paypal? To your Findom? To your Creditcard?
If you are using a Decentralized Wallet send it back to your centralized exchange first. find out how to receive funds on your favorite CEX (Coinbase, Binance, Bitvavo, KuCoin, Kraken, etc). Make sure you copy the correct wallet address that matches the crypto you want to send from your decentralized wallet. (if you want to send ETH, send it to your CEX ETH wallet). Be careful to choose the correct protocol or L2 to send your coins over.
When in doubt send a very small amount first and once you have confirmed that the first transaction has worked, commit to sending the rest in the EXACT SAME WAY. Once the money is on your CEX, go to the trading section of your CEX and but a FIAT you need. If you cant directly trade into your Fiat, trade into Euro or USD first.
Most other Fiat Shitcoins have a pair with Euro or USD.
Once the conversion into the Fiat of your choice is completed, choose the withdraw feature on your CEX.
And select from the withdrawal options whichone has your liking. (Paypal, IBAN, Visa, Amex, MasterCard, Venmo, Cashapp etc)
Withdraw a portion of your money to see if it arrives. Once you are happy repeat with the remaining funds.
So those are the basics. Let’s explore all of the options a little bit further, just to build up your knowledge and confidence a bit more.
Your Options when trying to Cash out your Crypto
Cashing out your cryptocurrency can be accomplished through several methods, each with its own set of considerations, including bank transfers, PayPal accounts, peer-to-peer exchanges, cryptocurrency ATMs, and crypto-friendly payment apps. Additionally, it’s essential to be mindful of the tax implications, regulatory requirements, and security measures specific to your jurisdiction.
DeFi to CeFi: Bridging the Gap
Directly cashing out from decentralized finance (DeFi) wallets like Metamask isn’t straightforward due to their detachment from centralized financial systems. The process typically involves transferring your crypto to a centralized finance (CeFi) wallet. This step requires careful selection of a CeFi platform that supports your specific token. For instance, transferring Fantom (FTM) from Metamask necessitates ensuring the receiving CeFi wallet supports the FTM network. Accuracy in copying the wallet address is paramount to prevent the irreversible loss of funds.
CeFi Wallets: Your Gateway to Fiat
CeFi wallets offer a more direct route to convert your crypto into fiat currency. These platforms are integrated with centralized banking systems, allowing for a smoother transition. Options for cashing out include direct transfers to payment cards, bank accounts, PayPal, or engaging in peer-to-peer transactions. Each method serves different needs and preferences, with peer-to-peer exchanges offering a personalized approach but requiring more diligence during the transaction.
Exploring Crypto ATMs
For those seeking a tangible interaction, cryptocurrency ATMs provide an alternative means to convert Bitcoin and other cryptocurrencies into cash. Availability varies by location, so it’s advisable to research the presence of such ATMs in your area.
Please scrutinize these machines with the upmost suspicion. Skimmers are a thing. Scammers exists. And laxy mfërs are out to rob you.
The Rise of Crypto Payment Apps
Crypto payment apps are becoming increasingly popular for their convenience and the ability to bypass traditional cash-out processes. These apps allow you to use your crypto funds directly for purchases, although their utility is subject to the acceptance of merchants and the regulatory environment of your location. Examples include the Binance Card, Plutus, Renegade, and the BitPay app, each offering unique features tailored to the crypto-savvy user.
Security and Compliance: Non-Negotiables
Adhering to security protocols and compliance regulations is non-negotiable in the realm of cryptocurrency. This includes undergoing Know Your Customer (KYC) procedures with CeFi wallets and staying informed about the latest security practices, such as two-factor authentication (2FA). Google Authenticator is among the popular tools providing an added layer of security through time-sensitive codes.
Navigating Taxes and Regulations
The tax implications and regulatory requirements for cashing out crypto vary significantly across jurisdictions. Proactive research and the use of crypto tax-friendly apps like CoinLedger and Koinly can simplify compliance and ensure you’re not caught off-guard by tax obligations. You would also do well to read this article on How to Pay Crypto Tax.
So now you know how to Cash out your Crypto
Cashing out your cryptocurrency involves more than simply converting digital assets into fiat currency; it’s about making informed decisions that align with your financial goals, security standards, and regulatory obligations. By understanding the diverse avenues available and their respective considerations, you’re better equipped to navigate the complex landscape of digital finance with confidence.
Written by
Siana Marcellus
Educator
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