Can cryptocurrency be converted to cash?
2021 has certainly been a year where cryptocurrency exploded in popularity. A survey from US cryptocurrency exchange Gemini, shows nearly half of cryptocurrency holders were first-time participants in 2021, amid speculation the market is worth about two trillion dollars. Coins like Bitcoin hit their highest value yet, before a steep drop, but the signs encouraged many new investors to get involved.
Although Bitcoin was originally created to be an alternative currency, its volatility and high value make this use impractical. The value of all cryptos was more than a trillion dollars higher in November 2021 compared to today. Like other commodities, it is now mainly used for trade between investors.
But once you have your cryptocurrency, what then? Price fluctuations, all too common for cryptocurrencies, could give you the jitters and make you want to get out. Fortunately, it is possible and relatively easy to convert your crypto back into dollars.
How to convert crypto to cash
Let’s take Bitcoin as an example, as it is by far the most widespread and well-known cryptographic item.
Bitcoin can be sold at a cryptocurrency exchange, essentially a huge marketplace for buying and selling crypto. Once sold, the money will go to the debit card associated with your account. It will take about a week for the funds to appear in your account.
Coinbase is the most popular website for buying and selling bitcoins. They process more bitcoin transactions than any other broker and have a customer base of 13 million users.
Some things to know
As with all financial transactions, it is worth knowing some of the risks. Fraud is a key consideration when it comes to cryptocurrency, due to the decentralized nature of the platform. If you’re selling things like NFTs and then cashing in, that’s even more important because they’re not government agencies to fall back on if you’re scammed.
Sales of any investment will also be subject to capital gains tax. Simply, a capital gain is any amount of money realized on an investment, cryptocurrency or otherwise. For example, if you made an investment of $100 and cashed it out once it reached $110, the capital gain would be $10.
There are no capital gain until a property is soldwhich is a loophole that the super-rich use to repay loans without having to pay income tax as the profits are offset by the capital deduction by taking out a loan.