Decided it’s time to get out of the Bitcoin craze or just want to be prepared for when you do? In this guide, we’ll teach you how to sell Bitcoins to make sure that you’re able to walk away when you want to and get what you’re owed in return. Be aware though, that if you decide to sell at the same time as everyone else, you can run into a few problems. Fortunately, we’re here to talk you through them all, so you can make an informed choice about when and where to sell your cryptocurrency.
There are two main methods for selling Bitcoin, each a little different from the another. Which is right for you will depend on how much you’re looking to sell, how much control you want over the eventual price you get for your cryptocurrency, and how much time you have on your hands.
Arguably the simplest and most ‘automated’ way to turn your Bitcoin into hard cash is through an exchange platform. They act as a middle-man for the famously decentralized cryptocurrency, by selling your Bitcoin for you. Some of the best examples include Coinbase, Bitstamp, and Kraken, and if they don’t offer what you want in an exchange, there are many others to choose from.
Whichever one you choose, the process for selling your Bitcoins on their platforms is much the same. You create an account and wallet with the exchange and link your bank account with it, or in some cases a local currency wallet. Next, you send your Bitcoins there just as you would if conducting a transaction with someone else. You take your deposit address from the exchange wallet and you send the Bitcoins you want to sell to it.
Once your coins have been deposited there, you can place a “sell order.” That will typically involve your Bitcoins being sold at the going market rate. Some exchanges will let you set a limit on your sale, so that if Bitcoin’s price were to drop below a certain point, the sale would not proceed.
After the sale has been completed, the funds in your relevant currency will be transferred directly to your linked bank account, or to your exchange currency account, at which point you can withdraw it as and when you like. Note though that you will usually be charged a small fee for using the exchange’s services.
The potential problems
As simple as the process of selling on an exchange is, it’s not always straightforward. Some sites will require you to provide photo-ID for verification before buying or selling on them, which must be manually verified. To avoid any delays, make sure you set up your sales account well in advance of when you plan to make the trade.
Even if you do though, there’s no guarantee that your chosen site will be accessible at the time of sale. A huge influx of buyers and sellers during frantic trading periods, DDOS attacks, and general maintenance problem, all can lead to site outages at the worst of times. That can leave your cryptocurrency or real money stuck with the site until it becomes accessible again.
It’s also important to remember that Bitcoin’s value can fluctuate by large amounts over short periods of time, which can lead to you selling for far less than you intended, or incur large transaction costs. Delays in a transaction being confirmed because of low fees can mean that payments take a long time to come through too. Avoiding selling at the same time as everyone else is your best bet to avoid most of these problems.
Although unlikely with most established exchanges, there is also a risk of sites doing a runner with your cryptocurrency or being hacked themselves, losing everyone’s money and coins in the process. You can avoid that sort of problem as best you can by not leaving any money or cryptocurrency in an exchange wallet for longer than necessary and only using ones that are well established and have insurance against theft.
If you’d rather have more of a hand in the actual sale process, direct trades (or peer-to-peer trades) are a somewhat safer alternative. You will need to register, which in some cases will mean confirming your identity, so as with all selling methods, we’d recommend getting your account set up well in advance of when you actually want to sell. Once you’re set up though, you can sell your Bitcoins in a much more ‘direct’ manner.
The actual method for the transaction will depend very much on which site you use, but setting up the sale is comparable on most sites. You set up a sell order for a specific value and when someone comes along looking to buy at the agreed upon price, the site will alert you that you can move ahead with the transaction. Once you give it the thumbs up, the buyer pays you, and you then send them the cryptocurrency in return.
The actual method of conducting the payment will very much depend on which platform you make the trade through. Sites like BitQuick keep things exclusively online, utilizing bank account transfers. However, sites like LocalBitcoin or Paxful have far more numerous options, including Moneygram, gift cards, cash in the mail, and even cash in person.
Although some of those methods are far more time consuming, many are much more anonymous and can allow you to keep your transaction away from prying eyes if that’s an advantage to you.
Since there is no middle-man exchange with direct trades you don’t need to worry about the platform itself running off with your money or being hacked and having it stolen. However, you can run into the same problems of the platform itself going down due to high-traffic or DDOS attacks. That doesn’t necessarily mean any of your funds are stuck there, whether its cryptocurrency or real-world alternatives, but you won’t be able to make any transactions while the site is down.
Verification requirements mean that you need to be forward thinking about the sale, but since transactions are conducted manually you run much less of a risk of being hit by problems with price fluctuations. As the seller, fees are much less likely to be a problem for you than they are the buyer.
If you’re selling Bitcoins in person for a cash trade via LocalBitcoin or one of the alternatives, it’s very important to make the trade in a public setting where you can remain safe. Although problems are rare, just as making any transaction in person with someone you’ve met online, you cannot be sure of their intentions until the trade has been completed.
Direct trades are also much more time consuming than automated exchanges. You have to make the trade manually and you have to be ready to do so in a timely manner. If you plan to meet someone in person for a cash trade, you need to factor in the time involved and any associated travel costs too.
For more information on cryptocurrencies and everything blockchain, check out our dedicated hub for the distributed technology.