Nowadays, cryptocurrency has become a popular investment option for investors but they cannot spend their crypto to pay for dinner. But now, you can if you select from a few limited options. For this, people need to convert their crypto money into cash. It is very simple to do. There are various factors an individual may consider before converting their crypto into cash. Digital tokens are volatile and their value can fluctuate so if your timing is not right, then you potentially lose your money. On the other hand, an investor who can see the uncertainty around their digital currencies may consider converting their digital money into fiat currency.
In this write-up, we will discuss what you need to know about the conversion of your crypto into cash. Thus, keep in mind that if you draw your cash out, then you need to pay taxes on the profit. Although cryptocurrency is currently existing in a legal gray area in India. It is not to say that profit made from the investment in assets is outside of the ambit of taxes.
How to Convert Cryptocurrency into Cash?
To understand it, take Bitcoin as an example of the cryptocurrency that you need to convert into cash. Keep in mind that the conversion of cryptocurrency into cash involves taxation as well as an exchange fee that a broker will levy depending on the number of digital tokens. Do not forget that a broker may take one or two days to transfer your money to your bank. The cost of Bitcoin in India is Rs. 36.53 lakhs.
Now let’s come to the conversion of your cryptocurrency into cash with two methods.
1.Through Exchange or Broker
It is similar to the system of currency exchange at airports. Once the person deposits their cryptocurrency to exchange and needs to withdraw money into cash, the broker transfers your money to the bank account.
However, there are some money laundering restrictions on the broker, thus you have to withdraw money through the same bank account onto your deposit.
The major disadvantage of using this method is that it is a time-taking process but secure and safe. The exchange charges a conversion fee for the transaction process that varies from country to country and broker to broker.
2. Peer-to-Peer Exchange
Consider a more anonymous and quicker method as an individual can use a peer-to-peer platform to exchange their cryptocurrency into cash by selling it simply. The other benefit of using this method is to include a smaller fee or a better exchange rate as compared to the brokerage charged by a third party. Apart from that, we have to say, be careful of fraudsters.
It’s recommended to you that you should ask for ID proof and mode of payment before releasing the cryptocurrency. You can prefer to use a peer-to-peer platform to keep your digital tokens locked securely until your account in the bank is credited with your cash.