How to sell Bitcoin
The sale of bitcoin isn’t as straightforward as the purchase of bitcoin. There are decisions required to be made when deciding how to sell bitcoins with the chief consideration being the one that best suits you between selling online and selling in person. With each of the methods, there are positives and negatives.
Selling bitcoin online
This is the most popular method of selling bitcoins and there are three ways of going about this:
- By a direct trade with another person with an intermediary facilitating the connection.
- Through an online exchange where instead of transacting with an individual, the trade is with the exchange.
- Through a peer-to-peer trading market place where owners of bitcoins are allowed to acquire discounted goods with bitcoins through persons that are interested in getting the cryptocurrency with their credit/debit cards. Both needs are met by a kind of peer-to-peer exchange that brings the groups together.
For direct trades, you would have to register as a seller on websites that offer this type of selling structure like Coinbase and LocalBitcoins in the US, BitBargin and Bittylicious in the UK. After verifying your identity, you can post offers indicating you want to sell bitcoins and be notified by the website once there’s a ready buyer. Communication henceforth is solely with the buyer but the website is used to complete the transaction.
Coinbase or Circle in the US is recommended for bitcoin users with bank accounts due to their simplicity.
For Exchange trades, exchanges serve as an intermediary, holding everyone’s funds. After you register and have verified your identity, you place a ‘sell order’ stating the volume (amount) and currency denomination you intend to sell (e.g bitcoin) and the price per unit you wish to sell for. The moment anyone places a matching order, the exchange completes the action immediately and credits the currency to your account.
The negative with using exchanges is that, if you are selling bitcoin for fiat currencies, the amount would have to be withdrawn to your bank and if the exchange is facing liquidity problems or has an issue with the bank, it can take a significant amount of time to receive your funds. Therefore, one has to carefully perform a study on the exchange before putting his/her funds in.
Alternatively, it is possible to use a cryptocurrency exchange to acquire another cryptocurrency using bitcoins. This option is not popular but could be used for other reasons such as arbitrage.
Some exchanges charge a fee for their use e.g BTC-e (now shut down) demands a flat 0.2%. Also some exchanges have limits, subsequent to change over time, of amounts of money you can store. However, it is not advisable to store your entire coin savings even if it appears to be an easy option for speculators. It is advisable to store coins not needed on a personal device or offline instead of trusting an exchange that could be attacked by hackers.
For peer-to-peer trading, two different persons with specific but complementary needs are brought together. The first set of people intend to use bitcoins to purchase items from sites who do not accept cryptocurrencies while the second set of individuals comprise of those wanting to buy bitcoin with debit or credit cards. The peer-to-peer marketplace serves as a middleman by offering users on the platform a bitcoin wallet and an escrow account for transactions. It brings together individuals with matching interests thereby making discounted goods available to one while simultaneously selling bitcoins to the other.
How it works:
- X posts his required Amazon wish list on the marketplace, stating the discount he would allow (could be up to 25%)
- Y, who has a credit/debit card and wants to buy bitcoins of the same value as the item(s) X intends to purchase. He accepts the trade and buys the items from Amazon requesting that they are sent to X’s address.
- As the items get delivered, X informs the marketplace and the bitcoin value is released from escrow to his bitcoin wallet after deducting X’s agreed discount and a transaction fee for the marketplace.
On this platform, Y pays a relatively higher amount for the service but can effortlessly acquire bitcoin through bank card.
Concerns with withdrawing funds
The most acceptable means of money transfer globally is through wire transfers and almost all the online bitcoin markets supports this method of transfer. It is also possible to transfer money to the bank after selling your bitcoin through the “Single European Payments Area” (SEPA) which was designed to transfer funds among member states of the European Union. Exchanges like BTC-e and Kraken accept this payment type, however, the transfer could take a significant amount of time (days) and could incur a large charge – making the transaction expensive. HSBC, for instance, charges $8 per SEPA payment made through online banking platforms and $18 per WorldPay transactions while Barclays charges $30 per SEPA payment and $50 for other international transactions. Few banks may refuse to transact with you when you open an account with the particular intent of receiving bitcoin trading funds. Third party processors can also be used to receive and withdraw fiat currencies but their services are dwindling.
With many bitcoin markets requiring little identification from buyers, most require a stringent proof of identity from sellers. While there is a small amount of legal requirements regarding recording users of the bitcoin markets, most markets collects identity data in expectation of future regulations. It is important to complete the identity verification process as soon as you join the site if you intend to sell. You would be required to upload scans of utility bills showing your name and address, and a photo ID such as a passport or driver’s license. Some marketplace like the BitBargain in the UK may ask that you take a selfie with your photo ID and the name of the market place on a sheet of paper. Without uploading such personal documents, you might find it extremely difficult to sell bitcoin online.
Selling a bitcoin in person
One of the easiest way to sell cryptocurrencies is by doing transactions in person. This can be done by simply scanning the QR code on another person’s phone and accepting cash in hand for the transaction. If you have a friend or family needing bitcoin, you can easily help them set up a bitcoin address on a wallet, send them the bitcoin and collect the cash equivalent from them. However, when dealing in person, one should be aware of a few things:
- Agree on price: Deciding on your preferred rate
- Most users stick with the price of a reputable exchange
- Some sellers add a percentage to the exchange amount to serve as a premium for convenience and anonymity.
- You could calculate prices using a mobile application like ZeroBlock and BTCreport.
- It is useful in staying updated on price volatility of the bitcoin locally.
- Trading is possible at bitcoin meet ups where users can exchange their cryptocurrencies.
- Stay safe
- It is always advisable to be accompanied by someone when carrying a large amount of cash and ensure to meet up in a public setting.
- Advertising yourself as a bitcoin seller to a wider audience is possible using the LocalBitcoin site. As users of the site rate one another, it is easy to ascertain the trustworthiness of a potential trade partner. One can afford to sell at a premium once you’ve reached a level of trustworthiness.
- There is no need to verify your identity like is the case in other sites.
- When setting up for a face-to-face meeting with the trade partner gotten through the website, it is always advisable to ensure optimum safety.
- LocalBitcoins accept escrow transactions for online transactions and not face-to-face meetings. Therefore, it is advised to ignore anyone demanding a face-to-face transaction for escrow deals.