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Selling bitcoin and other cryptocurrencies isn’t difficult, but you will have to consider the different avenues available and decide which is right for you. In this article, we’ll cover four key methods you can use to sell your cryptocurrency and what downsides you should consider for each method.
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
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
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
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
How to Stay Safe Trading Bitcoin
- 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.
- Consider using a virtual private network like ExpressVPN or NordVPN to add an extra layer of protection when accessing your accounts.
- 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
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
- 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 Coinbase, 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.
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