How to transfer Bitcoins to my bank account
During the last few years, cryptocurrencies have exploded in both popularity and value. This surge was largely driven by public interest, huge volumes of capital injection and increased trading activity. With most cryptocurrencies hitting their all-time highs, thousands of investors have been made extremely wealthy within no time. Regardless of the reasons, there comes a time when you will want to convert your digital currencies into government-issued fiat currency. This cashout process is not as straightforward and may trouble newcomers. Plummeting prices could also trigger a sale of digital currencies. For example, when bitcoin’s prices began crumbling a week ago, I quickly figured out how to transfer bitcoins to my bank account. Cashing out cryptocurrencies is an obstacle that has haunted the blockchain industry since its inception and itis not unusual for cryptocurrency investors to experience frustration when attempting to cash out their hard-earned Cryptocurrencies.
What are the available options?
When it comes to transferring bitcoins to your bank account, you essentially have two options;
- Selling them through an exchange.
- Trading bitcoins directly for physical cash via P2P sites like LocalBitcoins.com.
Both options have their advantages and disadvantages, selling cryptocurrency through an exchange remains the easiest and most popular way. Hence, we are going to focus on the fundamentals of cashing out bitcoins through an exchange.
Selling bitcoins through an exchange
Exchanges have made the cash out process effortless and seamless. If you have funds stored in a wallet and need to convert them to fiat, you have to begin by opening an account at an exchange. You may encounter several hurdles in the course of opening an account. Verification is the most notable challenge. Here, you’ll need to provide valid government-issued identification documents such as a passport or driving license. There are several exchanges that offer cash out services but it is imperative to find an exchange that operates in your local currency and jurisdiction.
Coinbase is customer-centric and excellent for starters. It is the most popular exchange due to low transaction fees. On the flip-side, it’s only available in handful countries and supports relatively few features.
Here, you don’t need to exchange your digital currency for Bitcoin or Ether during cash out on Kraken. Kraken allows users to exchange Ripple, Monero, or ZCash for USD. However, its interface and design is not the most intuitive
Bitstamp is quite reliable, accepts credit cards and good for huge transactions. The downside is that you can only trade Bitcoins for fiat on Bitstamp.
Its service is available worldwide. CEX.IO accepts credit cards and has a user-friendly interface.
Although there are surprisingly few regulated exchanges, Gemini is fully regulated and duly licensed in the US. It has a user-friendly interface, top-notch security, and great analytic tools. Its downside is that Gemini trading pairs are limited to Bitcoin, Ether, and US dollar. Gemini has no deposit or withdrawal fees.
Setting up an account and linking a bank account
Once you have an account in an exchange, you will need to set up a bank account and complete the verification processes. You can also link your account to a debit or credit card. This process takes anywhere between a few minutes and a couple of hours or even days. You’ll then need to transfer your digital currency to the exchange. If you have Bitcoins in your external wallet, create a Bitcoin wallet on the online exchange. For other types of digital currencies, create a wallet that corresponds to it. Once your wallet is ready, locate the ‘deposit’ or ‘add funds’ tab on the wallet in the exchange to generate an address. Use the address generated to transfer funds from your external wallet to the exchange.
So, you now have your wallet in an exchange with cryptocurrency sitting on it. If you have a different cryptocurrency other than Bitcoin or Ethereum, convert it accordingly. For instance, if I have Litecoins and seeking how to transfer bitcoins to my bank account, I’ll have to convert it to Bitcoins in LTC-BTC market. Once converted, I’ll then send Bitcoin back to the initial exchange.
Finally, how to transfer bitcoins to my bank account
You need to trade your bitcoins USD, Euro or any other supported currencies available on the exchange. With bitcoins, for example, you can execute a sell order in a BTC-USD or BTC-EUR market. When a market order is up and running, the exchange price is locked. Most exchanges provide detailed instructions on how to transfer Bitcoins to the bank. In most cases, you’ll complete the process by making a few clicks. The exchange will then convert your Bitcoins into fiat money and send the obtained funds to your bank account. Coinbase users can easily seek customer support should any trouble arise. For any withdrawal made from the Eurozone via Kraken and Coinbase, users will need to complete SEPA deposit. The Coinbase EUR wallet provides elaborate instructions that simplify the process. The fees for buying or selling bitcoins with a bank transfer usually hovers around $1 or less.
What about the exchange rate?
The exchange rate is locked in at the order placement time. For instance, if you completed the withdrawal process when BTC-USD was trading at $13519, the rate will hold until your money is available for use. The linked bank account receives the proceeds from the sale of digital currency after 3-5 days depending on your bank’s clearing policy.
Risks of withdrawing money through an exchange
- In case an exchange experiences a liquidity problem, you might have to wait for an inordinate amount of time before you receive your funds.
- Online exchanges are largely unregulated and stalked by hackers. Steer clear from exchanges plagued with poor security and pathetic investor protection. The infamous Mt.Gox, for instance, was hacked, losing 650,000 bitcoins from 25,000 investors. Hackers made away with a massive $400 million.
- There is also a limited amount of money that can be kept an exchange at a time. Nonetheless, it’s unwise to store your entire pot of coins in an exchange.
Disclosure: Out of all the available options of how to transfer bitcoins to my bank account, I’ve always trusted popular online exchanges.
By Felix Kingston