Bitcoin is one of the best-known cryptocurrencies and one that many people have decided to buy and hold like an investment.
People who own bitcoin often wonder how they can convert that bitcoin into cash and withdraw it to their bank account. the answer varies depending on where you keep your bitcoins.
Reading: Withdraw bitcoin to bank account
how it works for different exchanges/wallets
There are many different bitcoin exchanges that you can use to convert your bitcoins to cash.
currency base
coinbase is a company that facilitates the buying and selling of different cryptocurrencies, including bitcoin.
When you set up a coinbase account, you can link a bank account to your account.
You can deposit cash from your bank account to your coinbase account and use that money to buy cryptocurrencies.
when you want to convert cryptocurrencies into dollars, you can sell those coins through coinbase and withdraw the profits. coinbase deposits the money into your bank account within a few days.
bitmark
bitstamp, like coinbase, is a website that facilitates the exchange of different cryptocurrencies and cash.
now:
bitstamp does not allow linking of bank accounts.
Instead, you must enter your bank account details each time you want to make a transaction.
if you have bitcoin, you can use bitstamp to sell that bitcoin for US dollars. you can then provide your banking information to withdraw those dollars to the bank account of your choice.
bitstamp charges 0.0005 btc for each withdrawal.
bittrex
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Most bittrex customers who verify their identity can buy and sell bitcoin directly for fiat currencies such as the US dollar.
There are only a few states where residents cannot trade normal currencies.
As long as you don’t live in one of the excluded states (vermont, new york, connecticut, nebraska, hawaii and nevada), you can withdraw cash directly to a linked bank account.
There is a minimum withdrawal of $10 ($50 for wire transfer withdrawals).
kraken
kraken allows you to withdraw in a variety of currencies, including US dollars, British pounds and Canadian dollars.
Withdrawals are usually made via bank transfer, so you will need to provide your bank information to start a withdrawal.
please note:
many banks charge a fee for electronic income transfers.
kraken charges a fee for each transfer, with the fee ranging from $4 to $40.
remember to pay taxes
If you are trading bitcoins, you may see the value of your cryptocurrency fluctuate wildly.
if you’re lucky, you could end up selling your bitcoin for much more than you paid for it.
remember:
Any profit made from cryptocurrency trading is taxable. how the tax is applied depends on where you live.
taxation of cryptocurrencies in the united states
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In the United States, proceeds from the sale of cryptocurrencies such as bitcoin are treated as capital gains. that means you have to pay capital gains tax on your profits.
- For short-term capital gains (those in bitcoin held for less than a year), the tax rate is equal to your regular income tax rate. the higher your income for the year, the higher the tax rate.
- For long-term capital gains (those in bitcoins held for at least one year), the tax rate is lower. Depending on your income, the long-term capital gains tax rate ranges from 0% to 20%.
Remember that you can deduct capital losses to reduce your taxable earnings.
If you lost money from investing or trading bitcoin or other cryptocurrencies, you can subtract those losses from your earnings when filing your taxes.
what’s going on in the UK or other countries?
just like us. In the US, the UK government views cryptocurrencies, such as bitcoin, as very similar to other types of investments and makes taxpayers pay capital gains tax on profits made from bitcoin trading.
If you’re unsure how cryptocurrency is taxed where you live or think you could use some help calculating how much you owe in taxes, you should always contact a local tax professional.
They can point you in the right direction and help you determine your true tax liability.
beware of money withdrawal scams
Cryptocurrencies are still relatively new and much of the market is unregulated.
There are many scams that claim to help you convert crypto into cash that you can withdraw to your bank account.
Sometimes these offers will advertise better than typical conversion rates or low fees.
the reality is:
With cryptocurrencies, it can be nearly impossible to get your funds back if you transfer them to an unreliable exchange or organization.
Watch out for scams and use only reputable and trusted companies to exchange your bitcoin for cash.
conclusion
Cryptocurrencies like bitcoin can be exciting and many people are tempted to trade cryptocurrencies to try and make a profit.
Understanding the safest way to convert your bitcoin to cash can help you turn your trading profits into money you can spend in your everyday life.
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