Cryptocurrency is on the tip of everyone’s tongue with Bitcoin and other cryptocurrencies seeing a massive rise in their valuations in 2017 and early 2018.
While some would like to see cryptocurrencies overtake fiat currencies like the United States Dollar (USD), Euro (EUR) and others completely, we are still far from that point. As such, most want to know how to convert cryptocurrency to fiat in order to take some (or all) of their paper profits off the table.
In this article, we’ll go over how to convert cryptocurrency to USD, perhaps the world’s most popular fiat currency.
Are You Converting Bitcoin or Less Popular “Altcoins” to USD?
First, you’ll have to know whether you’re aiming to convert Bitcoin (BTC) and other top cryptocurrencies like Ethereum (ETH), Litecoin (LTC) and Bitcoin Cash (BCH) to USD or if you’re converting less popular altcoins (altcoins being cryptocurrencies that aren’t Bitcoin) to USD.
Top cryptocurrencies like Bitcoin, Ethereum, Litecoin and Bitcoin Cash are easier to convert to USD because places like cryptocurrency exchanges usually have direct pairings of Bitcoin, Ethereum, Litecoin and Bitcoin Cash to USD.
In other words, you can sell the aforementioned cryptocurrencies for USD, and then withdraw to a payment method, such as a bank account.
For less popular altcoins, such as OmiseGO (still popular but less so than Bitcoin, Ethereum, Litecoin, and Bitcoin Cash), you usually first have to sell the altcoin for coins like Bitcoin, Ethereum, Litecoin, and Bitcoin Cash, then sell one of those coins for USD, which you can again withdraw to a payment method like your bank account.
Converting Cryptocurrency to USD
Converting Altcoins to BTC, ETH, LTC, BCH
Again, the process for converting less popular altcoins to USD is usually more complicated than converting coins like Bitcoin, Ethereum, Litecoin and Bitcoin Cash to USD. You usually need to sell altcoins for BTC, ETH, LTC, or BCH before cashing out in USD.
This isn’t always the case—it varies depending on factors like which altcoin it is, which exchanges allow you to sell it and if so, whether you can sell it for USD, etc.
Since trying to convert an altcoin to USD can involve one more step in the process of converting cryptocurrency to USD, we’ll go over that first.
Assuming that you already have an altcoin like OmiseGO and are looking to ultimately convert it to USD, you first want to sell the altcoin for a top cryptocurrency like Bitcoin, Ethereum, Litecoin or Bitcoin Cash.
Perhaps the easiest way to do this is by going through a cryptocurrency exchange such as Binance or Bittrex, known as the top exchanges for buying and selling altcoins. For the sake of simplicity, we’ll use Binance in this example.
You want to make sure that your altcoin is supported by Binance. If not, you can go to the page for your altcoin on Coinmarketcap.com and hit the “Markets” tab to see where your coin or token is traded. Try to use an exchange with lots of volume so that it is easy to sell your altcoin for BTC/ETH/LTC/BCH.
For example, the “Markets” tab for OmiseGO, shows that there is a lot of volume for the OMG/BTC pairing on Binance (as of April 6, 2018), which is what we want.
Once you’ve confirmed where you will sell your altcoin for one of the top cryptocurrencies (BTC/ETH/LTC/BCH), you want to move your altcoin to the appropriate exchange. In this example, we will move OMG to Binance. If you don’t have an account, it’s free and easy to sign up.
If your OMG is in a wallet that isn’t the one provided by Binance, you first want to withdraw your OMG to the wallet provided by Binance. Click “Deposit” on the OMG wallet provided by Binance to get the deposit address and send your OMG from your wallet to that address.
Once your OMG is on Binance, go to the trading page for OMG/BTC. Where it says “Sell OMG”, enter the amount of OMG you want to sell. Then, enter the BTC price that you want to sell it at.
To make it easy, take a price from the order book on the left (red = sell prices). Otherwise, you can just hit the “Market” tab and sell for the market price.
Once you’ve converted an altcoin like OMG into a more popular cryptocurrency like Bitcoin (or maybe you already had a crypto like BTC to begin with), it’s time to convert that Bitcoin into USD.
Cryptocurrency exchanges are currently the easiest way to convert cryptocurrency to USD. They offer high liquidity (you can sell your crypto for USD quickly) and can be tied to payment methods like bank account and PayPal account for easy USD withdrawal.
However, many require identity verification, especially for large withdrawals, which some cryptocurrency users are against.
Going along with our example, we will convert our Bitcoin into USD on Coinbase, one of the world’s most popular exchanges that is also known for its ease of use.
From Binance (or wherever we have our Bitcoin), we want to send our Bitcoin to Coinbase. As with Binance, we will deposit our Bitcoin into the Bitcoin wallet provided by Coinbase.
After our Bitcoin is in our Coinbase Bitcoin wallet, we will go to the Buy/Sell tab, where we can sell our Bitcoin for USD. Sell the BTC amount you desire from your Bitcoin Wallet and deposit it to your preferred payment method like a bank account or PayPal account.
Peer-to-Peer (P2P) Services like LocalBitcoins
As mentioned, cryptocurrency exchanges can ask for identity verification, which can turn off a lot of cryptocurrency users, who tend to be privacy advocates.
LocalBitcoins is a popular service that allows users to sell their Bitcoin to other users directly instead of going through an exchange. LocalBitcoins merely provides an escrow service that holds Bitcoin until the transaction is confirmed as complete.
While exchanges like Coinbase usually offer a limited amount of withdrawal options for users to convert their Bitcoin or other cryptocurrencies to USD, LocalBitcoins has many payment methods for users to convert Bitcoin to USD.
The following list is not exhaustive and Bitcoin conversion methods vary from country to country but assuming that you are in the United States and converting your Bitcoin to USD (since that is what the US uses), you can sell your Bitcoin for USD in many ways:
- Cash by mail
- Cash deposit
- Western Union
The above options are some of the most popular ways to convert Bitcoin to USD in the US on LocalBitcoins. However, you can even sell your Bitcoin for things like gift card codes or even cash in person.
Also, you can also sell a few altcoins like Dash, Ripple, Litecoin, Monero and Ethereum for BTC on LocalBitcoins instead of using an exchange, such as Binance or Bittrex.
Bitcoin ATMs can be a convenient way to convert cryptocurrency to USD. However, fees tend to be high and, of course, you need Bitcoin to withdraw cash from a Bitcoin ATM.
Moreover, Bitcoin ATMs are not always available in every country or city. You can use websites to see if Bitcoin ATMs are available in your area.
With Bitcoin ATMs, you go to the ATM and hit “withdraw” or whatever the relevant option is for the ATM to start the process.
Enter the amount of Bitcoin that you want to sell for USD. Large amounts may require an ID at some ATMs.
The ATM will give you an address to which you will send the Bitcoin you wish to sell.
After the Bitcoin transaction is confirmed, the ATM will dispense the cash. If the transaction is slow, the ATM may provide a redemption code for you to claim your cash from the ATM later.
Cryptocurrency Debit Cards
Cryptocurrency debit cards are another way to convert cryptocurrency to USD and can be pretty convenient.
As with normal debit cards, you top up your account and spend the card as you would a normal debit card. Cards can be topped up using Bitcoin or other cryptocurrencies depending on the card. The card company converts your Bitcoin or other cryptocurrency to USD when you use the card, such as at stores or ATMs.
Getting a prepaid cryptocurrency card usually requires ID verification.
Popular examples of cards that allow you to convert cryptocurrency to USD include Monaco and TenX.
Take Out a Loan
Taking out a cryptocurrency-based loan is a more unconventional way to convert your cryptocurrency to USD.
How it works is you take out a loan by putting up your cryptocurrency as collateral.
The cryptocurrency is held in a smart contract, or self-executing contract of computer code, and you receive USD in your bank account. You then pay back the loan like you would a normal loan.
The benefits of taking out a loan in this manner include avoiding taxable events like paying short-term capital gains tax on cryptocurrency sales as well as not missing out on price rises in cryptocurrency.
To elaborate, as you get back your cryptocurrency after paying back the loan, it is possible that in that time the value of the cryptocurrency will go up whereas if you converted it to USD by selling it outright, you would miss out on any potential price increases.
Ethlend and Salt are two companies that offer crypto-based loan services.
Sell to People You Know
This takes the P2P element of services like LocalBitcoins one step further.
Instead of going through a service like LocalBitcoins, you could just convert your cryptocurrency to USD by selling crypto to someone you know.
In this way, you could also sell smaller altcoins like OMG directly for USD if you know someone that is willing to buy OMG for USD.
Unfortunately for most cryptocurrency enthusiasts, for many purchases, you still need fiat currencies like USD.
Luckily, however, there are many ways to convert cryptocurrency to USD, and methods like using cryptocurrency exchanges, LocalBitcoins, Bitcoin ATMs, prepaid cards, loans and selling to people you know are just some of the ways you can do so.