Four ways to sell bitcoin
Cryptocurrency has become increasingly popular in recent years. A 2021 study found that about 46 million Americans—roughly 17% of the adult population—now own bitcoin. But buying bitcoin is only one piece of the puzzle. To make a profit on your investment, you’ll also have to know how to sell your cryptocurrency.
There are several different methods you can use to sell your bitcoin and other cryptocurrencies. Each one has advantages, downsides, and risks you should be aware of. Here are four ways you can sell your bitcoin:
1. Selling via exchanges
A cryptocurrency exchange is a trading platform where investors can buy and sell bitcoin and other digital currencies. These exchanges act as intermediaries between buyers and sellers, similar to a brokerage firm. You can add money to your exchange account and then use it to trade cryptocurrencies.
Why you should use an exchange
The benefit of selling your cryptocurrency via an exchange is that it’s simple and convenient. There are countless buyers and sellers congregated in one space, and you aren’t doing the work of finding your own buyer.
Additionally, the exchange handles all of the details of the transaction. Not only can you sell your bitcoin for U.S. dollars, but you can also sell it for other cryptocurrencies.
Why you shouldn't use an exchange
A downside of using an exchange is that you’re likely to pay trading fees, depending on the platform you use.
2. Direct trade
A direct trade is when you sell your cryptocurrency directly to another individual. This method can be done online by scanning the other party’s wallet QR code and transferring the coin to them, while they send you payment using some other means.
Why you should use direct trade
There are certainly some perks to this method.
- You can sell your cryptocurrency to someone you know without an intermediary, trading fees, or having a record of your sale.
- You can negotiate the price you want, and there’s no one overseeing that transaction.
Why you shouldn't use direct trade
There are also some downsides to consider:
- Direct trades can be very risky if you don’t know and trust the other party. There’s a risk of them taking the cryptocurrency you’ve sent and not paying you as promised.
- Additionally, this method may simply be more inconvenient than selling on an exchange.
3. Selling via online P2P trading
Similar to selling bitcoin via an exchange, you can also sell them on a peer-to-peer marketplace. These P2P transactions are done on a trading platform, but the platform doesn’t facilitate the trade in the same way an exchange would or act as an intermediary.
Why you should use P2P
There are some benefits to this type of trading.
- First, you have all the control, including who you sell your cryptocurrency to and how much you charge.
- Additionally, there are no trading fees like there are on an exchange.
Why you shouldn't use P2P
Using P2P trading is less convenient, as there’s no intermediary arranging and facilitating the transaction for you. There’s also some risk using this method since there isn’t an exchange to add an extra layer of security to vet potential customers.
4. Bitcoin ATM
Bitcoin ATMs are a newer concept that allows you to trade bitcoin and receive cash in exchange. These kiosks resemble traditional bank ATMs, but instead of taking money from your bank account, you’re selling bitcoin from your wallet and getting money in return. You may be charged a service fee for using a Bitcoin ATM. But be careful if you use Bitcoin ATMs, as they have high fees and may lack necessary safeguards, according to the Consumer Financial Protection Bureau.
How to stay safe trading bitcoin
If you’re buying and selling bitcoin and other cryptocurrencies, it’s critical that you consider the risks and take precautions to keep yourself and your finances safe.
- As with any online account, keep your passwords safe. If someone can access the password to your crypto wallet or a cryptocurrency exchange, they can potentially steal your coins.
- Next, consider what wallet you’ll use for your cryptocurrency. The wallet holds the private keys necessary to access your coins. A digital wallet increases the likelihood of hacking, while a cold wallet keeps your coins the safest.
- You should also know the security measures on the platform you’re using. Cryptocurrency exchanges require traders to provide identification to sign up, and these transactions are often public. But other marketplaces may not collect information about traders. Bitcoin ATMs also have their own security concerns, since they don’t have all of the safety features you might expect.
- Finally, be cautious of direct trades. With this type of trade, you’re skipping the intermediary and working directly with a person, either online or in-person. Be careful of your personal and financial safety when meeting another individual in person. And with these trades, consider collecting payment upfront to avoid a situation where someone steals your cryptocurrency and doesn’t pay you as promised.
Common fees when selling bitcoin
When you use a cryptocurrency exchange to sell your bitcoin and other cryptocurrencies, you may be subject to trading fees. The fee you pay could be based on a percentage of your transaction amount or simply a flat fee per trade.
Any exchange should make you aware of their fees upfront, so traders aren’t surprised with them during the transaction. Many publish a list of fees on their website, so you can see them before even signing up for the exchange.
How to sell bitcoin — step by step
Using an exchange is the simplest and most common way to sell cryptocurrencies. Here’s how to sell your bitcoin on an online exchange:
- Set Up an Exchange Account — First, sign up for an account on the exchange of your choice. There are many to choose from, with some of the most popular being Crypto.com, eToro, and Gemini. Information needed to sign up will include your name, email address, password, and more.
- Verify Your Identity — Once you sign up, you’ll have to provide proof of identification and verify your identity. Proof of identity can include a passport or driver’s license and Social Security number. For some exchanges, you may also have to submit a selfie of you holding your government-issued ID.
- Transfer Coins to Your Exchange Wallet– To sell your cryptocurrency, you’ll have to transfer your coins from your current wallet to your exchange account. If you currently store your cryptocurrency on the exchange where you plan to sell them, then this step will be easy.Otherwise, you’ll have to transfer your coins from your current wallet to the exchange before you can sell them. Keep in mind that this step can take several days, so be sure to make the transfer before you want to sell.
- Place a Sell Order — To sell your cryptocurrency, you’ll ultimately have to place what’s called a sell order. Simply indicate the cryptocurrency you want to sell, how much you want to sell, and where you want your payment deposited. Some platforms may have limits on the amount you can sell, and there will be a short holding period before the sale is complete.
The bottom line
Ready to sell your bitcoin or another cryptocurrency? We’ve covered the most popular methods, and now it’s up to you to choose which makes the most sense for you. Each method has its own advantages, but each one also has downsides. When considering which is the right method, consider the fees you’ll pay, the safety measures in place, and which is most accessible for you.