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23 July 2016
As a form of digital currency, bitcoins exist only electronically – all that you can see is records of transactions between different addresses. If you want to turn your bitcoins into real paper dollars that you can hold in your hands, there is just one solution – you need to find a person or a service willing to make a deal. The demand for fast and simple Bitcoin exchanging services is increasing globally. The exchange rate depends on the free market dynamic, but you can use the CoinDesk Bitcoin Price Index for reference.
There are 5 main ways of performing trade operations:
Cashing Out Online
This selling structure supposes that you need to interact with a potential buyer directly using an intermediary website to facilitate your connection for a certain fee. Basically, it works this way: you need to choose a suitable financial service, create a seller’s account and complete your ID verification to start using your account. Some services may freeze your bitcoins when you post a sell offer to prevent fraudulent activities. When you get paid, the website will transfer your cryptocurrency to the buyer.
Coinbase. You can use this financial service to transfer your bitcoins for free. If you want to sell your digital currency, you will need to pay the service fee depending on what payout method you chose: 1%-2% for a U.S. bank account, 1% for a Coinbase USD wallet, and 3.75% for PayPal.
BitBargain. As for this service, the application fee for sellers whose ID hasn’t been verified yet is 0.005 BTC (or 0 BTC if the ID has been verified), the commission for trading operations is 1%. If you want to receive an SMS message, you will need to pay 0.0003 BTC, a banking verification procedure costs 0.02 BTC.
Cashing Out Offline
If you want to sell your cryptocurrency directly and avoid service or cash withdrawal fees, you can meet with a potential trade partner personally at a cafe or some other meeting point. There are special financial services that automatically detect your geographical location and show actual offers in your region.
LocalBitcoins is one of the leading services connecting buyers and sellers online and in-person. You will need to open a bitcoin wallet, mark that you want to sell bitcoins and specify all necessary details of your offer (amount, location). This website allows users to rate each other, so you may check the reputation of your potential buyer in advance. The service fee is 1%.
Mycelium is another popular website offering its help in finding buyers locally. You can check the trustworthiness of your potential partner, and then discuss your meeting time and location using the chat option. Once you get paid for selling your bitcoins, you need to confirm the receipt of payment in your account, and the service will complete the transaction.
Of course, you can also find potential buyers on special cryptocurrency forums or Bitcoin conferences, but it can be quite dangerous because you won’t be able to check the buyer’s reputation – you can lose all your money dealing with an unknown person.
Bitcoin Trading Exchanges
Rather than trading with another person, you can find a trading platform combining the features of Forex trading and Bitcoin exchanges. You will need to open an account, place a sell order, state what type of currency you wish to sell and its amount, and define your price. When a similar purchase order is found, the exchange service will complete the transaction.
Kraken allows trading between bitcoins and EUR, USD, CAD, GBP, and JPY. The trading fees are around 0.10% – 0.35%, they vary depending on the quote currency volume. The processing fee that you need to pay for getting paper copies of your communications is $60 per page; the USD bank wire withdrawal fee is $5.
Bitfinex supports different e-currencies (bitcoins, litecoins, ethers) and offers its users six order types for different kinds of trading, exchange and margin funding operations. The trading fee is around 0.10% -0.20%, the bank wire fee is 0.100%, with a minimum fee of $20, the express bank wire fee is 1.000%, with a minimum fee of $20.
There is one more way to cash out your bitcoins – use an exchange service allowing you to instantly convert your digital money into dollars, euros or other currencies. You will need to choose what currency you have, its amount and what currency you want to get for it. When the transaction is completed, you can withdraw cash at ATMs using a pre-paid debit card from one of the partner services offered by the site.
To avoid getting tricked out of your money by fraudsters, pay attention to the date when the site was created (WHOIS Search), its ratings and reviews from other users, and the reserve available for your chosen conversion pairs. You can find this information on special aggregators allowing sorting e-currency exchange services according to some specific parameters, like exchange rates or testimonials. This information is usually organized in the form of a dynamically updated chart.
For example, you can use Magnetic-money.org to find the best exchange rate among several popular convertors. You can also see the reserve and rating of each offered site to evaluate its reliability and reputation. BestChange.com offers to compare exchange rates for dozens of popular directions. You can also check their Statistics section to analyze actual fintech market trends for up to 365 days.
Another exchanger monitor of this type is Okchanger.com where can compare the exchange rates for a chosen currency pair, check their reserve and read the reviews left by other users. All recommended partners are marked with a special “thumb up” symbol. The service also provides a lot of additional information – for example, you can find out the audience geography of a chosen exchange service or its popular directions for the last 30 days.
Electronic Payment Systems
You can also perform all conversion and withdrawal operations yourself using just one multifunctional electronic payment system. For example, you can open a bitcoin account and then withdraw your money using a wire transfer or a prepaid debit card. Thus, you can avoid numerous excessive transactions and fees. Some systems allow storing cryptocurrencies, while others can automatically convert your account balance to USD or EUR.
One of such payment systems offering to save time and money is Woldcore.eu. You can open an individual USD or EUR account and fund it using electronic currencies. The service doesn’t charge the account opening fee or maintenance fee, but you will need to pay 3-4.75% for transferring e-currencies. To get cash, you can order a Worldcore Ultimate MasterCard for $20, the ATM withdrawal limit is $4,000 per day.
So if you have some bitcoins in your wallet, there are many places where you can cash them out at a reasonable price, and your task is just to find the method that suits you best. The next step is to wait when merchants start accepting bitcoins offline to minimize all those intermediary operations. Taking into consideration the growing popularity of cryptocurrencies, it may become reality in several years.
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