You deal with a regulated company when you sell bitcoin using an exchange service. AML and Know Your Customer (KYC) regulations must be followed by these businesses. These laws mandate the gathering and keeping of customer data, including identification and occasionally address proof.
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What Is Bitcoin (BTC)?
In contrast to centralized currencies controlled by banks and governments, bitcoin is a decentralized digital currency. It was introduced in 2009, making it the very first cryptocurrency.
In the words of its creator, Satoshi Nakamoto, Bitcoin was created to allow “online payments to be sent directly from one party to another without going through a financial institution.”
Currently, the market for cryptocurrencies is estimated to be worth $1.1 trillion, with Bitcoin accounting for 41% of that value.
Bitcoin has developed into an investment asset from its original role as a payments network. Most holders consider BTC a store of value, and it’s often referred to as “digital gold.”
How Does Bitcoin (BTC) Work?
Every Bitcoin consists of a file that is kept in a digital wallet on a computer or smartphone. To understand how the cryptocurrency works, it helps to understand these terms and a little context:
- Blockchain: Bitcoin is powered by open-source code known as blockchain, which creates a shared public history of transactions organized into “blocks” that are “chained” together to prevent tampering. Because of this technology, every Bitcoin user can operate knowing exactly who owns what and how much was exchanged. It also creates a permanent record of every transaction.
- Private and public keys: A Bitcoin wallet has a public key and a private key that together enable the owner to start and sign transactions electronically. This enables Bitcoin’s main feature—the secure transfer of ownership from one user to another—to work.
- Bitcoin mining: It is possible for users on the Bitcoin network to confirm that new transactions are consistent with previously completed ones through a process known as mining. By doing this, you can prevent yourself from spending a bitcoin that you don’t own or that you’ve already used.
Why Would You Sell Bitcoin (BTC)?
You can learn everything you need to know about other market forecasts by conducting a quick Google search. Generally speaking, very few people think that the next cycle top will be less than $100,000.
It’s challenging to estimate Bitcoin’s fair market value. Some people use the axiom that Bitcoin is either worth zero or one, according to this methodology. Usually, when people say this, they are referring to the possibility that Bitcoin will either lose all of its value or reach a value of $1,000,000 or higher.
Although it’s a lovely idea, it’s crucial to remember that a valuation of that magnitude is highly improbable to take place during the current bull market cycle. Even for Bitcoin, going from a previous all-time high of $20,000 to $1,000,000 is too extreme in the short term. What will be the fair market value of Bitcoin in the upcoming years?
One of the best models we’ve seen so far to estimate a fair price for Bitcoin is Plan B’s Stock to Flow (S2F) model, which was released about a year ago. Plan B is a well-known cryptocurrency analyst.
Where Can I Sell My Bitcoin (BTC)?
Option 1: Cryptocurrency Exchanges
Numerous fiat currencies are frequently supported by cryptocurrency exchanges. A cryptocurrency exchange can act as a middleman between cryptocurrency buyers and sellers. The first step in selling Bitcoin (BTC) for cash is to open an exchange account and add Bitcoin (BTC) to the hot Bitcoin (BTC) wallet that the exchange will give you.
To comply with KYC and AML regulations, it should be noted that the majority of trustworthy Bitcoin (BTC) exchanges demand personal information from their users before they can sell cryptocurrency.
The main benefit of using a cryptocurrency exchange to sell Bitcoin (BTC) for cash is that reputable exchanges have high liquidity and offer easy access to a sizable pool of potential buyers.
They are also fairly simple to use; all you have to do is place a sell offer, specify the quantity of cryptocurrency you wish to sell, and set the price per unit. Once your offer is accepted, the exchange will automatically complete the transaction.
Option 2: Direct Trades (person-to-person)
- Online P2P Selling
A variety of platforms facilitate the trading of bitcoin and other cryptoassets by offering 1) a venue for buyers and sellers to post their buy and sell orders, and 2) an escrow and dispute resolution service.
Since these platforms principally help people find each other, in many jurisdictions they aren’t technically classified as exchanges or ‘money transmitters,’ so in some cases they don’t require you to reveal your identity in order to use them. P2P platforms can therefore be a desirable way to buy bitcoin for buyers who are concerned about their privacy. Thus, there is usually no shortage of customers on such platforms.
However, since anonymity is possible on these platforms, fraud is more likely. For example, some people have fallen victim to the so-called “replace-by-fee” scam, where the buyer’s wallet shows bitcoin having been received, but in fact the transaction hasn’t been confirmed on the blockchain. The buyer will then release funds from escrow, but the “received” bitcoin will then disappear from buyer’s wallet display. The replace-by-fee vulnerability is discussed in more detail here, along with precautions you can take to avoid becoming a victim.
It’s crucial to keep local regulations in mind when peer-to-peer selling bitcoin. You might run afoul of the law in many regions if you sell more than a certain amount each day, weekly, or annually.
The process for selling bitcoin using a P2P platform is typically as follows:
Either make a listing for the quantity of bitcoin you want to sell or look through those of people who are looking to buy.
To lock up the bitcoin you’ll be selling into an escrow account, start a trade.
Verify the agreed-upon payment amount has been received using the agreed-upon payment method. The buyer may even need to be met in person in order to accept payment. The platform will transfer your bitcoin to the buyer’s wallet after you’ve confirmed payment.
- Face-to-face Transactions
A peer-to-peer (P2P) exchange lets you set your own price and uses the platform to help you find a buyer willing to pay it as opposed to doing the work for you. Following that, the two parties agree on how to split the cost. This can occasionally be done online through what are known as direct trades, but typically you would use a different bank transfer.
Without being restricted by an exchange, you can sell cryptocurrencies using peer-to-peer (P2P) trading. In other words, as long as both parties agree and you’re in a P2P marketplace that doesn’t restrict payment methods, you could send gift cards for well-known online retailers, trade actual cash, or even send pricey art.
There are some issues with this, such as what will happen if the buyer doesn’t pay, and the peer-to-peer marketplaces will still know some details about you. Still, if having access to things like escrows to hold the Bitcoin (BTC) for fraud protection while prioritizing freedom of choice and little interference makes this a good step for you.
Option 3: Bitcoin (BTC) Atms
Although BTMs are completely secure, it may be difficult to accept that Bitcoin (BTC) ATMs are directly connected to the internet. BTMs come with technology that guards against hardware and software errors. Additionally, Bitcoin (BTC) ATMs are safe from threats posed by malware technology. Your digital wallet is secured and encrypted. No one else besides you can access your wallet without the proper passwords and security credentials.
The Cryptocurrency Compliance Cooperative was established by a number of Bitcoin (BTC) ATM operators to increase consumer protection when using Bitcoin (BTC) ATMs and to promote the legitimacy of the cash-to-cryptocurrency market.
How Do I Sell Bitcoin (BTC)?
Cryptocurrency Exchanges
- Step 1: Set up an exchange account
The first thing you must do is choose the type of payment you will accept in exchange for your Bitcoin (BTC).
It’s time to create an account on a platform that allows you to sell your Bitcoin (BTC), now that you know which currency you want in exchange for your cryptocurrency.
Bitcoin (BTC) can be sold on a plethora of platforms, but exchanges and brokers like Coinbase and Coinmama are by far the simplest.
It’s as easy as creating an Amazon account to sign up for Coinbase.
- Step 2: Transfer your Bitcoin (BTC) to your exchange wallet
You must now deposit your cryptocurrency assets on the exchange after creating your account.
Hit the “deposit” or “sell” button.
An address for your wallet and/or a QR code will be displayed to you.
Send the number of coins you want to sell by scanning that into your Bitcoin (BTC) wallet.
- Step 3: Place a sell order
It’s time to submit a sell offer on the selling platform at this point.
That entails figuring out the price at which you’re willing to sell your Bitcoin (BTC).
Every platform has a slightly different interface for doing this, but overall it functions in the same way.
Look for the “sell” or “trade” tab, and either sell at the price offered by the broker or create a custom sell order on an exchange order book.
With a broker, the only difference is that you sell at the spot price (less a few fees).
You can decide on any price you want for an exchange. Simply put, if your price is too high, don’t expect any buyers to accept the sell.
The nice thing about cryptocurrency exchanges is that their fees frequently compare favorably to brokerages’.
Direct Trades (person-to-person Trading)
- Step 1: Go to the P2P Trading Page
Select (1) “Buy Crypto” then click (2) “P2P Trading” on the top navigation.
- Step 2: Choose to Sell and Set Your Currencies
Click (1) “Sell” and select the currency you want to buy (The example currency is the USDT. Filter the price and the (2) “Payment” in the drop-down, select an ad, then click (3) “Sell”.
- Step 3: Find a Buyer
After the buyer makes payment, the transaction will now display “To be released”. Please confirm that you have indeed received payment from the buyer through the payment app/method you chose. After you confirm the receipt of money from the buyer, tap “Confirm release” and “Confirm” to release the crypto to the buyer’s account. Please do not release any cryptocurrency if you have not yet received any payment in order to prevent any financial losses.
- Step 4: Choose How Much You Want to Sell
Enter the amount (in your fiat currency) or quantity (in crypto) you want to buy and click (2) “Sell”. The transaction will now display “Payment to be made by buyer”.
- Step 5: Send the Offer
To communicate with the buyer throughout the process, use the chat window on the right side.
If you have any issues in the transaction process, you can contact the buyer using the chat window on the top right of the page or you can click “Appeal” and our customer service team will assist you in processing the order.
- Step 6: Confirm the Release
The transaction will now display “Pending Payment”. After the buyer makes payment, the transaction will now display “Confirm Receipt”. Please confirm that the buyer actually paid you via the payment app/method you chose. After you confirm the receipt of money from the buyer, tap “Payment received” and “Confirm” to release the crypto to the buyer’s account. To avoid any financial losses, please DO NOT release cryptocurrency if you have not yet received any payment.
Bitcoin (BTC) Atms
- Step 1: Choose withdraw cash
- Step 2: Choose Bitcoin (BTC) (these machines normally may support other cryptocurrencies)
- Step 3: Choose amount to withdraw
- Step 4: Send Bitcoin (BTC)s to given address QR code
- Step 5: Receive cash immediately as Bitcoin (BTC)s transaction is propagated on the network
What You Need To Know Before You Sell Bitcoin
Three things are necessary to start using bitcoin: an exchange, a wallet, and the ability to purchase the digital currency. With our guide on how to buy bitcoin, this last one is simple, but the other two are still crucial. Both the wallet and the exchange give you a place to store your bitcoin for the long term.
When selecting an exchange, you should look for one with lots of users, excellent customer service, and affordable fees. The three exchanges Coinbase, Robinhood, and Binance are particularly well-liked by new users. Although nothing really binds you to a particular exchange, you are free to try new ones and quickly switch at any time.
Wallets, however, can be a lot more complicated. “Cold wallets” — physical devices holding cryptocurrencies offline — come with a steep up-front cost, but “hot wallets” — pieces of software that hold your coins on a computer — are often less secure. Hot wallets are a good place to start, though, as they are suitable for temporary storage and are simple to set up.