If you are a newbie when it comes to cryptocurrencies the truth is that you may be wondering how to get out of your investment, or how to do it the right way. Even while some companies have made it difficult for investors to convert their cryptocurrencies into real money, traders still have many options for converting their digital currency into U.S. dollars. You should be aware of the tax implications of any asset sale.
The holding period is one of the factors considered when determining the tax liability associated with recognizing a capital gain. Of course, you may be eligible for a write-off if you expect to make a loss on the sale. If you anticipate a recovery in bitcoin prices, though, you may be better off waiting out the current downturn.
So, How to Convert?
The process itself is very simple. If you are doing it in your browser, you should:
- Log in to access your Coinbase profile.
- From the navigation bar, select Buy / Sell > Convert.
- At this point, a panel with various cryptocurrency exchange rates would be accessible. Specify how much Bitcoin you want to swap for in local currency.
- Select the button for Convert Preview and confirm the currency exchange.
If you are doing it on your phone, go to Coinbase Initially, choose “More,” then “Convert.” From the drop-down menu on the panel, select the cryptocurrency you want to exchange it for. Put the amount of fiat currency you wish to convert to cryptocurrency in the third step.
How to Convert Cryptocurrencies with Cost-Saving Tips – 2023 Guide
Always Have a Strategy
It can be tough to tell the difference between genuine Bitcoin recommendations and scams, as there are many sharks out there willing to take your money. There were 7,118 reports of Bitcoin investment fraud in the first nine months of 2021.
The average loss per victim, as reported by Action Fraud, was £20,500 in 2020. When bombarded with data regarding a cryptocurrency, try to stay cool-headed. Take a critical look at the platform or project. Steer clear of currencies that promise the moon but can’t deliver.
Be Aware of Your Fees
An investor can carry out a wide range of transactions on a cryptocurrency exchange, each with a different fee structure. Cryptocurrency prices can move often and without prior notice, so it’s crucial to keep a watch on them when trading. In general, there are two different types of cryptocurrency fees.
Finances Expenses: In order to make money, a cryptocurrency exchange must integrate into the monetary system. Common examples of this are commissions on trades and other financial dealings. Deposits are made while moving cryptocurrency to digital wallets for online storage.
Cryptocurrency is a digital asset that is not governed by any central authority at the present time. Digital currencies are stored in computers and on networks all around the world, and transactions between buyers and sellers happen directly between them without any middlemen.
Be Aware of Your Opportunities and When to Take Them
Finding profitable investing opportunities is crucial. If you come across a greater investing opportunity, you should sell your crypto holdings. Think about if you’re prepared to withdraw from your current investment and direct your money in a different direction.
But keep in mind that picking option 1 over option 2 has an “opportunity cost” attached to it. This may help to explain cryptocurrency’s volatility, which is another trait that makes regular transactions with them problematic.
Consider the gains you might be missing out on before selling your current cryptocurrency. Even individuals who have multiple investments can attest to this. If you’re considering spending your time and money on something other than cryptocurrencies, there are advantages and disadvantages to think about.
How to Keep Your Fees Low
Since Bitcoin debuted over a decade ago, crypto trading is still new. Thus, brokers’ fee pass-through has no industry standard. As Robinhood prepares for its IPO, its zero-commission approach is under criticism.
Even crypto dealers have unclear fees. Coinbase and Gemini charge a 0.5% spread (or convenience fee) on all transactions and costs starting at $0.99, depending on the transaction amount. According to Justin Barlow, a research analyst at The Tie, a digital asset information services provider, Coinbase’s fees are 1.5% of the purchase value. Crypto trade fees can be reduced. In this case, you can do the following:
Decentralize exchanges – these exchanges allow peer-to-peer crypto swaps with cheap costs.
Uniswap charges 0.3% and PancakeSwap 0.25%.
Lower-fee centralized exchanges.
Trade discount coins. Binance.US users with Binance coins receive a 25% discount on spot trades.
FAQ for Crypto Cost Savings
How Does BTC Exchange Work?
You can trade Bitcoin and other cryptocurrencies like ether and Litecoin for traditional currencies like the US dollar on a website called a cryptocurrency exchange. After funding your exchange account with Bitcoin, placing a sell order, and having it filled, you can then withdraw funds from your exchange account to your bank account.
Is It Possible to Legally Trade Crypto for Cash?
Buying and selling Bitcoins in person is possible. Those that are interested in purchasing Bitcoin for cash can be found through peer-to-peer networks or local Bitcoin gatherings. It’s essential to be cautious and conduct business in safe environments.
Is There a Fee When Converting Crypto to Cash?
There are always fees when exchanging digital currency like Bitcoin for fiat currency. There may be fees associated with making a deposit, withdrawing funds, or exchanging currencies while using a cryptocurrency exchange. You should be aware of any potential hidden costs or price disparities in peer-to-peer transactions, as there may be some negotiation involved and there may not always be clear-cut fees.
Having Said All of That
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