Updated August 21, 2018
As Bitcoin/USD exchange rate swings wildly, many have been interested in cashing out their Bitcoin. Well, not necessarily during the current correction, but maybe after BTC hits new highs in 2018. It’s always good to be ready to withdraw some of your Bitcoin to cash. Let’s go over some of the most common (and desired!) ways of cashing out Bitcoin.
How to withdraw Bitcoins to cash
There are several major ways to do it (click the link to jump to the section):
- Peer to peer marketplaces and DEXs
- Sell Bitcoin anonymously
- Sell Bitcoin for PayPal
- Bitcoin debit cards
- Centralized exchanges -> bank account
- Other workarounds
- Cashing out large amounts of Bitcoin
Let’s go over them.
Cashing out your Bitcoin using peer to peer marketplaces
If you need the hard cash instead of your Bitcoin – LocalBitcoinsis your #1 choice. It is a peer to peer marketplace that matches Bitcoin buyers and sellers locally. If you need actual cash – you will have to find a Bitcoin buyer near your location, deposit Bitcoin to LocalBitcoins’ escrow service, meet the buyer, get cash, and then confirm the transaction so LocalBitcoin releases sold BTC to the buyer.
LocalBitcoins has a built-in reputation system as a protection against scammers, so you might need to work a bit to increase your trust rating. Running several deals every now and then is a good idea, that will keep your trader profile active and legitimate, so sign up to LocalBitcoins now. Great thing about LocalBitcoins is that it supports all possible local payment methods that vary from country to country, so along with receiving cash you can opt for various electronic payments popular in your location. Unfortunately LocalBItcoins will often require ID verification and lock suspicious accounts, so don’t start with large trades.
Natually, meeting with your Bitcoin buyer to receive cash requires extra security, because you could be physically robbed or abducted if you are selling a large amount of Bitcoin. For this reason, consider asking for a bank account transfer or select another payment method. In this case you will have to sacrifice the anonymity of your transaction for the sake of its’ security.
Using a decentralized exchange
Decentralized exchanges work similar to p2p marketplaces, but there’s a little more of a learning curve. Hodl Hodl is currently the best and most functional decentralized exchange where you can buy and sell Bitcoin by being matched with the other party. Currently there are buy and sell for withdrawing Bitcoin to cash, bank accounts, PayPal, Western Union and a lot more.
How to convert Bitcoins to cash anonymously
If anonymity of the transaction is a must for you, then you’re left with direct peer to peer exchanges. These are LocalBitcoins (unless they randomly ask you for an ID) and Paxful and Hodl Hodl. Set up your accounts using VPN services, do not use your name or your main e-mail, and follow other anonymity rules – but be ready for higher fees everywhere.
Selling Bitcoin with PayPal
Although PayPal is popular for online purchases, it’s a payment system inherently different from Bitcoin. PayPal payments are easily reversible and the company almost always sides with the buyer, which opens a lot of room for scammers.
Luckily, Coinbase has stepped in and enabled withdrawals to PayPal. If you’ve been using Coinbase to buy or trade Bitcoin previously then all you need to do is go to “Buy/sell Bitcoins” and select “sell Bitcoins” and select PayPal as the payment method. Note an extra 3.75% fee will be added to the transaction.
Obviously this is not an anonymous solution, as Coinbase needs to verify your government-issued ID, and so does PayPal. So if you want to withdraw some of your Bitcoin to PayPal eventually, register at Coinbase and get verified in advance.
Europe’s equivalent of CoinBase is BitPanda. Once you register and verify your ID you will have an option to cash out your Bitcoins to PayPal. If you are storing your coin in a hardware wallet (you should be!) then just transfer it to your BitPanda account and then withdraw to PayPal.
Paxful and LocalBitcoins also offer an option to sell your Bitcoin for PayPal. However, use that as a last resort only, because such transactions will cost you more. There are very few reasons when you have to combine the anonymous peer-to-peer marketplace with a conventional centralized payment method.
If you check Paxful for Bitcoin to PayPal trades, you will notice very high costs that serve to minimize risk. If you sell your Bitcoin via PayPal, in theory your buyer could open a dispute with PayPal and claim they never received your Bitcoin, which is when your funds might get returned to them or frozen. That is why sellers always charge hefty premiums over the regular price while selling Bitcoin for PayPal’s fiat currencies. The Coinbase/Bitpanda solution for PayPal sale of BTC is the clear winner here.
Using Bitcoin debit cards to withdraw Bitcoin to cash at an ATM
If you plan to withdraw your Bitcoin or other crypto for daily purchases, getting a prepaid Bitcoin debit card is a great idea. There are dozens of Bitcoin ATM card providers (all of them reviewed here) that work in a similar way. Once you sign up and receive a wallet address, by sending Bitcoin to that address you will be able to withdraw it to cash at any ATM worldwide.
Currently there are temporary issues with most of the debit card providers, but many have announced coming solutions already, so select a card provider and sign up to be ready for ATM withdrawals.
How to transfer Bitcoin to my Bank Account?
Coinbase / Gdax is the #1 option, working with both ACH and SEPA transfers.
Gemini could be a good alternative option, if they’re available in your state.
Bitpanda is the go-to exchange for Bitcoin trasnfers to bank accounts.
Coinfinity is a better option for Austrian residents, supporting SOFORT trasnfers to the bank account.
Alternative ways of cashing out your Bitcoin
Here’s a list of the more funky methods of cashing out your Bitcoin. Leave a comment if you know or been using any similar hacks:
- Withdrawing Bitcoin to Revolut prepaid cards. Revolut is a popular payment ecosystem that lets you liquidate Bitcoin as well.
How to cash out large amounts of Bitcoin
If you have been holding a large amount of Bitcoin you might want to select an OTC marketplace. OTC means “over the counter” and it refers to all trades done privately between several parties. OTC trades do not influence the BTC/USD exchange rates since they are not visible to any observers, plus you’d be saving money on fees. These are the OTC marketplaces to check out, but by all means do your own research: