Cryptocurrency is fast emerging as a smart investment option across all strata of society, however there are certain practical issues with it as it cannot be exactly used for certain daily transactions like paying restaurant and provisions bills.
So the question arises as to whether cryptocurrency can be converted into cash. Now that’s an interesting question to ask isn’t it? Cryptocurrency is an extremely volatile virtual currency whose value fluctuates a lot. However it is quite easy to convert it into cash.
But before doing so, one needs to know certain things so that the actual value of money is not lost once cryptocurrency gets converted into cash. The possibility of losing the value of one’s money is quite high due to the volatility of the digital tokens.
Though it is possible to convert cryptocurrency into cash, the most important thing to remember is that since cryptocurrency is not legal tender in the country, one needs to pay taxes on profits.
So let’s find out how crypto can be converted into cash:
How to convert your crypto into cash?
To start with, let’s take an example of any cryptocurrency which needs to be converted into cash, for example, bitcoin. The first thing to remember here is converting cryptocurrency into cash will entail an exchange fee as well as taxation which will be levied by a third-party broker.
The fees of course will depend on the number of digital tokens which need to be converted into cash.
Also the broker normally takes a day or two to transfer the converted money into one’s bank account.
There are two methods to convert cryptocurrency into cash, either through an exchange or a broker.
It is quite like getting currency exchanged at airports, so once the digital currency or in our case, bitcoins are deposited with an exchange for withdrawal, the broker will transfer the converted value to one’s bank account.
However as there are restrictions on brokers related to money laundering, the investor should withdraw his or her money through the same bank account in which it was deposited.
The disadvantage with the entire process is that it is quite time consuming and though experts term it as safe, it takes some time before the money reflects in the account.
In addition to this, the exchange also charges a fee for each transaction and it also varies broker and country-wise.
Mode of transfer
Cryptocurrency can be converted through an exchange or a broker. One can use a peer-to-peer platform to convert digital coins into cash, by just selling it. Also this system entails lesser fees and guarantees a better exchange rate than one gets through a third-party brokerage.
Investors should also insist on identity proofs before getting cryptocurrency converted into cash. Here it is pertinent to note that one should beware of fraudsters.
Also one should keep one’s digital tokens locked till the converted amount is credited to the bank account.