How to Convert BTC to Your Bank Account
Recently, we wrote about how to purchase bitcoins through a direct bank transfer. This is generally a better way to buy cryptocurrency, as most exchanges will charge far less in service fees for the transaction than they would for a credit or debit card.
What about when it’s time to take your money out, though?
Eventually, most cryptocurrency users will want to convert their holdings into some form of cash that they can spend more easily than a digital token (although a surprising variety of businesses will accept bitcoin transfer as means of payment these days.) Whether you’re cashing out an ICO or just selling off some tokens as a routine transaction, putting the money back into your bank account will require less work than it took to spend it.
That’s chiefly because you may already have the infrastructure set up.
If you hold bitcoins, it means that you likely already have a cryptocurrency wallet linked with the exchange you used to acquire those coins in the first place. Either way though, your first step is to select the exchange on which you’ll sell your tokens.
When choosing an exchange focus on two criteria: First, what is the rate that they offer? Second, what is their transaction fee? Remember, cryptocurrency has no fixed value. The price is based entirely on supply and demand, which means that it can fluctuate from market to market. One exchange might offer hundreds of dollars more or less, so shop around. Coinbase.com and LocalBitCoins.com are both popular, and Block Geeks produced a helpful list of exchanges here.
Do some homework to get the best price for the lowest fee.
That said, you may not want to do that much legwork. In that case, services like Coinbase.com offer what is called “spot pricing.” Spot prices are a weighted price based on average buy and sell values across the marketplace. When you read articles reporting that bitcoins are currently worth $11,500, that’s a spot price. Selling at this value means that you’re getting a fair price for your coin, if not necessarily the best one.
Whatever price you sell the coins at, this value will be placed in your fiat wallet in the marketplace.
This wallet can be linked to your bank account to transfer the funds over directly, and it will most likely have to be. While most exchanges allow users to deposit funds through a debit card, many prohibit them from withdrawing funds the same way. Instead, you will have to use a bank account transfer. On most sites, this process simply requires you to enter your banking information into the fiat wallet, which will allow the website to process the transaction.
It is important to note at this point that there is an alternative option to selling bitcoins: direct, peer-to-peer sale outside of the marketplace. This is generally not advisable.
Some users may offer to buy your bitcoins in a personal transaction, and offer money for a direct transfer. This works like any other personal sale of property, and it also comes with substantial risk. You will be on your own to ensure that you receive payment for your bitcoin, and that can be particularly difficult if the transaction is made online. Although exchanges will charge a transaction fee (typically on the order of 2.99 percent), they also offer the security of knowing that you will receive payment for your property.
Interested in getting a better sense of your financial status before you start investing in bitcoin? Get your credit report today to get started.