Selling bitcoins for fiat is a bad idea?

There's no better time to buy Bitcoin, but what about selling? Most Bitcoiners will say thatselling them is generally not worth it:it is a long-term investment with radical economic mechanisms that promise to grow in value in the future. But there are situations when for some reason you are forced to exchange cryptocurrency for dollars, euros, lira, rubles or won. The world still uses fiat currencies, so it is important to be able to exchange bitcoins for them.

Everyone will have their own ideal way to deposit and withdraw money from their cryptocurrency portfolio. In order to understand what works best for you, it is important to first ask yourself a series of questions:

What is your goal?Retirement Savings, Day Trading, or Hedging Against Traditional Financial Systems? Depending on the answer, different holders may have very different time preferences.
Are you familiar with the legal framework for yourregion / country related to storage and trading of cryptocurrencies? It is important to avoid problems, as regulation in this area is relatively recent and is not always properly informed.

The answers to these questions should help you adjust your path and find the right approach in terms of preferred convenience or privacy.

Easy Ways to Buy and Sell Bitcoins

Buying bitcoins has become very easy foraverage consumer, but regulators began to create obstacles. It is difficult to buy bitcoins without identification, but for some this is offset by the convenience of buying with a credit card. There are thousands of options for buying bitcoin with fiat, from ATMs that accept cash to apps that automatically place purchase orders. When buying bitcoins, it is recommended that you disclose as little information about yourself as possible, as with any online purchases.

The most suitable way of buying for youbitcoin depends on your desired level of privacy. However, wherever you buy, it's important to note that the process is only complete when you've transferred your bitcoins to a wallet whose keys are yours alone.

It would seem that selling bitcoins should beis similar to buying, but there are legislative nuances that complicate the process. In many countries, cryptocurrencies are subject to income tax, that is, when they are exchanged for local currency, part of the amount must be given to the state.

More serious complications are also possible,given the hostility towards cryptocurrencies by many governments and banking regulators. If you withdraw your bitcoins in any way that can be traced after the funds have arrived in your bank account, they may be frozen or arouse undue interest from law enforcement. So consider this before considering a sale. Additionally, bitcoin has established itself as a reliable store of value with a limited supply, so make sure to understand that fiat currency loses purchasing power over time.

There are many ways to exchangebitcoins to fiat, but the problem is how to do it confidentially. Again, direct exchange without intermediaries is best, but there are also exchanges where identity verification is not required to withdraw small amounts. Decentralized exchanges like Bisq allow you to trade without registration at all, which means you can completely hide your identity, while others like HodlHodl offer non-custodial solutions with a strong privacy bias.

If you suddenly have large amounts of Bitcoin,Consider over-the-counter (OTC) services that are considered very secure and confidential. Such services are offered by Kraken, Binance, Coinbase and many other major exchanges. However, for most investors, such services are not available, since they are usually intended for amounts that, when exchanged through an exchange, can destabilize the market.

Interesting on the topic: Bitcoin: what, why and how

Why withdraw bitcoins to fiat?

As mentioned at the beginning, there may besituations when you have no other choice but to exchange part of your cryptocurrency for cash. Ideally, this should be done when it is particularly beneficial. The more stable a coin is and the better it has proven itself, the more reasons to keep it. Bitcoin, for example, is the most decentralized and censorship-resistant cryptocurrency. Therefore, it makes sense to keep it as long as possible.

If you are lucky and your assets have grown byvalue, then you may need to pay tax. This usually only applies if you sell them and make a profit, but it's best to check your local laws. It's best to keep a cash reserve to cover regular taxes and any other obligations.(depending on where you live)... From an economic point of view, fiat currency is likely to be worth less in the future, so you should spend it before it depreciates.

If you are in urgent need of liquidity, bitcoins canto help. The fastest way to use them is to send directly to whoever you need to pay to, but you may need the services of an intermediary. If you cannot send cryptocurrency directly, then you may have to wait several days until the funds arrive in your bank account. Look for a low-fee service that offers fast transfer methods such as SEPA or SWIFT.

Unfortunately, the most convenient way to cash outbitcoin is to use the exchange. Depending on what currency you want to withdraw into, the options may be limited. Please note that stablecoins like USDT, BUSD, USDC, etc. are not dollars, but tokens pegged to the dollar rate. So make sure you exchange funds for real fiat currency. The major exchanges have greatly expanded their fiat withdrawal options, so check the information before making a decision.

But, again, if there is no urgent need,it is recommended that you keep an emergency supply of bitcoins in a secure hardware wallet. Every time you cash them out, you run the risk of inflation and declining purchasing power. If you believe in the benefits of bitcoin, then it is worth spending fiat in the first place.

Withdrawing bitcoins to fiat

All major exchanges are interested inintroducing fiat was as easy as possible, but until recently, it was more difficult to convert bitcoins into traditional money. It can be a good idea to exchange bitcoins for cash if the market is particularly volatile and you want to take profits, but don't forget about taxes.

Bitcoin has established itself rather asa relatively reliable store of value, not a quick exchange. It is worth weighing your needs before exchanging it for fiat, as in many cases other alternatives are preferable.

Need money urgently?

If not, then your bitcoins over time, ratherof all, will rise in value, in contrast to fiat currency, the purchasing power of which will fall. If you still need cash urgently, try to get it in a way that does not reveal too much personal information.

For small amounts, use exchanges orexchangers that do not require identification up to a certain threshold, but for large ones, look among your friends for someone with whom you can conduct a transaction without intermediaries. Do not settle for deals with strangers if you are not sure about your safety; ideally, an impartial escrow service should be used in such cases.

Looking for faster transactions?

Bitcoin actually confirms the majoritytransactions faster than a bank. If you set the appropriate commission, then your funds in most cases will be transferred within an hour, while when using the bank, a delay of several days is possible. Many cryptocurrencies offer almost instant transfers, but they should be used with caution, having a good look at their reliability, since they are often centralized and their network, and with it your funds, is controlled by someone.

Do you want to buy something but don't have enough fiat?

Ideally, you should strive for a balancedportfolio, but if a significant part of your money is invested in bitcoins and you need to buy something, it is better to just use a cryptocurrency payment portal. Some of these portals allow you to buy something even where bitcoins are not directly accepted, so it is worth considering this option before rushing to cash out cryptocurrency.

There are also cryptocurrency credit cards that promise cashback(or cryptoback)from your everyday purchases.While this is a potentially great way to accelerate the adoption of cryptocurrencies, these services are not yet proven and may be too centralized to effectively support your independence. Until a product comes along that gives you complete control over your keys, the promised benefits are not worth the risks of trusting a third party.

Cryptocurrency exchange for fiat

Some people prefer to trade alternativecryptocurrencies that are more volatile. It's risky and can lead to losses, but it's worth thinking about strategy as well: what is your ultimate goal? Earn more Fiat or Bitcoin? In the short term, it makes sense to withdraw large profits in fiat currency if you have something to spend it on right away, for example, if you want to buy real estate or stocks. This way you can avoid fluctuations in bitcoin and altcoins. But if you are pursuing a long-term strategy, it is worth exchanging your altcoin profits for bitcoins to protect against strong fluctuations and inflation in fiat currencies.

In countries with strong inflation, investments inBitcoin or the less volatile altcoins will help preserve wealth that would otherwise be worthless. In such cases, the fastest way to cash out, other than direct hand-to-hand exchanges, is to convert altcoins to Bitcoin or Ether and then use a major exchange that supports your local currency to withdraw. Getting money quickly compensates for some of the disadvantages, but more personal information will have to be disclosed.

Many cryptocurrencies depreciate whenmore tokens are created. This means that the funds you hold will be worth relatively less over time, so it makes sense to convert them to a fixed-supply cryptocurrency like Bitcoin. There are also projects that "throw" investors, pouring out their coins on the market, because of which their value collapses. They, as well as projects that can "freeze" their tokens, should be avoided, since here you are completely dependent on the development team.

Many altcoins are only traded in comparativelysmall exchanges. If you have significant positions and want to withdraw them, often you first need to exchange them for Bitcoin or Ether and then transfer them to an exchange where you can withdraw them to the desired fiat currency. But, perhaps you will benefit in the future if you keep as much of your funds in bitcoin and transfer to a hardware wallet instead of withdrawing the entire amount in fiat. Again, unless you are in urgent need of fiat, try to keep a balanced portfolio and use the profits to grow your positions in both bitcoin and fiat.

Fiat for spending, Bitcoin for saving

Investments - be it stocks, bonds or bitcoin- have become more convenient for ordinary consumers. While the future of the monetary system looks uncertain, the popularity of apps offering quick and easy access to stocks has skyrocketed. These types of assets are mainly of interest to those who want to make sure that their savings will maintain or increase their value in the future. Of course, no asset can guarantee this, but, according to many, holding fiat is even more risky.

The average modern investor costsspread your money across multiple asset classes so you don't keep too many eggs in one basket. While stocks may seem like a sensible safe haven, investors should be aware that they are dependent on the management of companies, at risk of changes in supply or management decisions that could negatively impact the price. Bitcoin's supply, by contrast, is fixed, and only general consensus can allow any change in token governance.

If you are interested in investing in bitcoin,for this, as with any asset, you should not use money that you cannot afford to lose, and it is also worth considering long-term holding of positions. Make sure you have a good understanding of the assets you are investing in and know which strategy is best if you want to capitalize on them. Fiat is for spending, so plan your budget for your day to day needs before setting aside money for investments. Then you will not need to cash out assets before they rise in value enough.

Bitcoin may get less over timevolatile, as more investors will hold it. We saw recently that stock prices can inflate amid a depreciation of the dollar. Assets like bitcoin can outpace inflation by protecting your savings. As Bitcoin becomes less correlated with the behavior of the dollar and stocks, it will be more in demand as a store of value and its price will be less dependent on other markets, so that it can be used to hedge against losses in other sectors.

Withdraw funds to a hardware wallet, not a bank

Of course, it's up to you whether you want to exchangeyour bitcoins to fiat. In order for people to understand what the value of cryptocurrency is, they need to change their thinking, and, perhaps, the above tips will contribute to this.

Cryptocurrency allows you to free yourself fromcentral banks, but for this you need to use it. Bitcoin loses its advantage if the ultimate goal is simply to increase your fiat balance. Try to create a hierarchy of your assets based on which one is the most valuable. What will be more difficult or more expensive to acquire in the future? Ask this question for different time horizons and then get an idea of where to start when you need more liquidity. In most cases, you will probably not be the first to cash out with bitcoins.

You can always thank the translator for the work done:BTC:1BHr4jrPPVwdWRpFTekaD34EZ2vo9p8FoCETH:0xf45a9988c71363b717E48645A412D1eDa0342e7E