Taking Profits: Turning Crypto Into Fiat
In this section, we’re going to talk about how to turn your fiat to crypto, and vice versa!
Recently, I wrote a section about buying cryptocurrency, for the very first time. If you haven’t read it, make sure to check it out! In that section, I went through the steps that you would need to take in order to become a proud owner of crypto!
What if you already have your crypto, and are ready to take some profits - in other words, you want to cash out? Is it as simple to do as when you buy crypto, or are there some extra steps involved? You'll find answers to all of those questions (and more) in this section!
So, in this section, we’re going to talk about turning crypto into fiat money, and fiat to crypto. I’ll tell you about the best ways to convert crypto to fiat, in a step-by-step manner!
Let’s get right to it, then!
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4 Ways to Turn Fiat to Crypto VS Crypto to Fiat (Easily Explained)
Turning Crypto Into Fiat: The Exchange Method
So, while there are a few different ways of how you can turn fiat to crypto, and then crypto into fiat money, we’ll start off with the most obvious one - selling your cryptocurrency on a fiat-to-crypto exchange, for USD, EUR, or any other traditional currency, and then transferring it to your bank account.
Now, for the sake of covering every possible major scenario, I’ll talk about two different situations - first, I’ll assume that you’ve read the previous section about buying crypto, and already have cryptocurrency on an exchange platform, and later, I’ll also talk about what to do if you’re crypto is stored in a wallet somewhere.
Assuming that you’re already registered on a cryptocurrency exchange, have passed all of the required KYC & AML checks, and have your account all set up, with crypto assets on it, the “cashing out” part is actually really simple to do… In most cases.
You see, there’s a pretty good chance that all that you really need to do is sell your crypto on the exchange, for the currency of your choice, and then use the withdrawal feature on the platform! Most high-end exchanges will allow you to pick and choose the withdrawal method, but if you already have, say, the debit card that you used to buy crypto added to the exchange, you can click a few buttons, and wait for the money to reach your bank account.
Is it really that simple? Actually, yes - it is! You will naturally need to decide how much crypto you want to sell VS if you want to keep any on the exchange, but other than that, chances are that your process of turning crypto into fiat money is going to be very quick, simple, and straightforward.
Now, there’s another scenario where the exchange that you’re using might allow you to BUY crypto via a bank transfer or credit & debit cards (turn fiat to crypto), but doesn’t support an actual WITHDRAWAL feature, in fiat money. Some years back, this used to be the case somewhat often - there were but a handful of reliable exchanges that would allow you to “cash out”, so to speak.
Nowadays, this is a much rarer occurrence - but it still does happen! So, what should you do in a situation like this?
Well, there are two options - one is a bit simpler, and involves exchange platforms, while the other involves actually meeting other people. We’ll cross that bridge when we get there, though - for now, let’s focus on the first option.
Your first step is to find a cryptocurrency exchange, other than the one you’re currently using, and one that allows its clients to withdraw fiat money into their bank accounts. Once again, doing so shouldn’t prove to be difficult - most of the top-tier exchanges have this functionality!
Once you find an exchange like this, however, you will then need to register on it, pass the KYC checks, and transfer your crypto from the current exchange to the new one. Here, you will be able to sell it, and after adding a valid payment method, cash out!
Now, I admit - all of that sounds a bit convoluted, when you just machine-gun it out loud like that. But, I assure you - the process is actually much simpler than it looks, in reality! There are two things that you should pay the most attention to - picking an appropriate exchange, and ensuring that your crypto transfer is safe and correct. If these are topics that you’d like more information about, there are dedicated sections covering crypto exchanges and blockchain transactions on this Crypto 101 Handbook - check them out!
Now, another potential scenario might be that you’re holding your cryptocurrencies in a wallet - a separate piece of software or hardware that has nothing to do with an exchange. If that’s the case, all that you need to do is transfer your crypto from the wallet to a designated exchange platform of your choice, and sell it there. It’s similar to transferring your money from a bank account to an exchange, in a fiat VS crypto way!
Note, though, that there’s a potential alternative route, as well - some wallets have built-in tools that would allow you to sell crypto, straight from the wallet! This depends on what wallet it is that you’re using, but if your crypto storage supports a feature like this, it’s definitely worth considering, since you skip out on a lot of steps!
Turning Crypto Into Fiat: The In-Person Meetup Method
Continuing on, up to this point, we’ve discussed the “easy”, or “preferable” methods of turning crypto into cash - all you need is an exchange, and a valid withdrawal method, and you’re set! Well, that’s assuming that you’ve already bought crypto, and know how exchanges work, in the first place - if that’s still something you’re feeling iffy about, make sure to read a dedicated section about it before moving on whit this one!
Now, there’s another approach that you could take, as well - one that involves meeting other people, and selling your crypto in the real world.
Straight off the bat, let me just say - I do NOT recommend doing this, neither for fiat-to-crypto, nor crypto-to-fiat conversion purposes! With crypto transactions becoming simpler and faster to perform, on exchanges, there really is no major reason why you would go through all of that effort of meeting another individual, and performing the transaction this way.
Well, maybe there is one reason - if you’re really adamant about preserving your anonymity.
Think about it this way - say, you’ve never bought any crypto, and are not registered on any type of exchange platform. Yet, you already own cryptocurrency - maybe a friend sent it to you, or someone paid you for your awesome drawing in crypto tokens? Whatever the case might be, you’re at a point where you want to turn your crypto into fiat money.
However, you are really serious about your privacy, and thus, registering on a cryptocurrency exchange, and providing it with all of your sensitive information just doesn’t sound appealing to you. In a situation like this, your only real other option is to find a potential buyer from your area, meet them, and make the transaction.
If, for any reason, you do decide that an in-person transaction is “the way to go”, there are a few things that you need to be aware of. First and foremost, never go alone - always bring at least one other friend, to keep you company and provide that extra safety.
Secondly, make sure to meet the buyer in a public place, like the mall or a coffee shop. This will make you both feel easier about the meeting, since there will be other people around.
Lastly, if you’re accepting cash for your crypto, you should carry a fake-money checking machine with you. This way, you’ll be able to check the money on the spot, and won’t need to worry about potentially being scammed.
Let me reiterate, though - in-person crypto sales are a very specific, niche scenario that, in the vast majority of cases, isn’t the recommended thing to do. Instead, you’re much better off going the traditional, exchange route.
Don’t Forget the Taxes!
Now that you know how to turn crypto into fiat money, it would be very irresponsible of me to let you go without talking about one last thing. And, it’s actually a topic that everyone in the crypto space are really excited about - taxes!
Well, maybe it’s not the most exciting topic that one might think of, but it’s definitely a huge and important point that needs to be considered, when you’re dealing with buying and selling crypto.
No matter if you sell cryptocurrencies on an exchange, directly from your wallet, in person, or in any other way imaginable, your sale will be considered a taxable event. Thus, you should take some time out of your day, make a cup of coffee, sit down, and really look into the specifics of crypto taxation in your country.
What I’m getting at is simple - while you might have made an awesome profit from your initial crypto investment, part of that profit will likely need to be paid, as taxes! Of course, when you’re performing an in-person transaction, things become much more complicated - you need to declare the sale yourself, and there’s no exchange to pull the data from, at the end of the tax year.
Just one more reason to stay safe, and only buy and sell crypto on reliable, trusted cryptocurrency exchange platforms!
Now, if you’re really concerned about the crypto taxes, and are looking for every possible legal solution of how to minimize them, I highly recommend checking out this section on how to avoid cryptocurrency taxes - legally, of course! Maybe you’ll be eligible for a tax reduction, or perhaps there’s some other, specific law in your region, that will allow you to save a lot of money on taxes?
That being said, it's about all the basic information you need to know as a crypto beginner. Just remember - the best way to convert crypto to fiat is via a trusted, reliable exchange platform.