When deciding how to sell your bitcoin, you first need to consider which
method best suits your situation: selling bitcoin online or selling bitcoin in person. Each option has its own
advantages and disadvantages.
Selling bitcoin online
Selling bitcoin online
is by far the more common way of trading your bitcoin. There are now
three ways to go about selling bitcoin online.
1.
The first way involves a direct trade with another person, an intermediary
facilitating the connection.
2.
The second way is through an online exchange, where your trade is with the
exchange rather than another individual.
3. New peer-to-peer
trading marketplaces that allow bitcoin owners to obtain discounted
goods with their bitcoin via others that want to obtain the cryptocurrency
with credit/debit cards. The two groups are brought together to solve both
problems in a kind of peer-to-peer exchange.
1. Direct trades: Websites that offer this type of
selling structure include Coinbase and LocalBitcoins in the US, and BitBargain UK and Bittylicious in the UK.
On these sites, you
will usually have to register as a seller. This involves verifying your
identity, which we will discuss again later. Once you have registered, you can
post an offer, signalling that you want to sell, and the website will alert you
when a buyer wants to trade with you. From there, your interaction is solely
with the buyer, but you use the website to complete your trade.
The process of selling on Bitbargain UK and (more so) Bittylicious can be quite involved and requires some
patience. However, support at the former site has been great in our experience.
Bitcoin users with bank accounts in the United States should consider usingCoinbase or Circle,
which have both won many fans with their simplicity.
2. Exchange trades: The other way to sell bitcoins is
to register with an online exchange. You will still have to verify your
identity, but in this case you won’t have to do as much work when it comes to
organizing the sale.
Exchanges act as an
intermediary who holds everyone's funds. You place a ‘sell order’ (just as you
would place a buy order), stating the volume (amount) and type of currency you
wish to sell (eg bitcoin), and the price per unit you wish to sell for.
As soon as someone
places a matching buy order, the exchange will complete the transaction. The
currency will then be credited to your account.
The downside that
accompanies this ease of use is that, if you are selling bitcoin for fiat
currencies, you will need to withdraw those funds to your bank. If the exchange
is facing liquidity problems or issues with its banks, it can take an
inordinate amount of time to receive your funds.
Mt. Gox became infamous for this problem before it went bankrupt, and BTC-e has recently been plagued with reports
of similar difficulties. Therefore, you should carefully research the exchange
you intend to use before committing funds.
Alternatively, you could use a pure cryptocurrency exchange to change
bitcoin for another cryptocurrency. It's less likely that anyone would want to
do this, but there are reasons such as arbitrage, or the rare occasion if a
shop accepts something other than bitcoin (for example, Bitcoin Shop now accepts litecoin and dogeoin too, for a wide range of goods).
Examples of these types
of sites are: BTER, CoinCorner and Cryptsy.
In addition, you’ll have to pay a fee to use some exchanges. BTC-e charges
a flat 0.2%. For overviews of what fees are charged by the various
cyrptocurrency markets and what volumes are being traded, see CoinCompare and Bitcoin Charts for up-to-date information.
Another consideration is that there will be some limit to the amount of
money you are allowed to store (subject to change over time) on an exchange.
Regardless, it is not wise to use exchanges to store your entire pot
of coins, even though it can appear to be the easy option if all you
are doing is speculating.
You should take
responsibility for your own funds, and store any unneeded amounts on your own
devices or offline, rather than trusting an exchange that might one day be
hacked.
3. Peer-to-peer trading marketplaces
A new development in the bitcoin space is the advent of sites like Brawker and Purse, which set out to bring together two groups of
people with specific and complementary needs.
The first group
are individuals who want to be able to use bitcoin to buy goods
from sites which do not yet directly accept digital currencies. The second
comprises of others who would like to buy bitcoin with a credit or debit
card. The marketplace brings together individuals with matching
requirements to effectively sell bitcoin to one and provide discounted goods
for the other.
The
marketplace acts as an intermediary, offering users the platform, bitcoin
wallet and escrow for transactions.
How it works:
1. Alice posts her
required Amazon wish list on the marketplace, stating the discount
she would like (normally up to 25%).
2. Bob has a credit/debit
card and wants to buy bitcoin matching the value of Alice's purchase(s). He
accepts the trade and, through the marketplace, buys the Amazon goods and
requests they be delivered to Alice's address.
3. Once the goods are
delivered, Alice notifies the marketplace and Bob's bitcoin are released from
escrow and arrive in his wallet, minus Alice's agreed discount and a small
fee for the marketplace.
This system does mean
that Bob will be paying a relatively high fee for the service, but also means
he will be easily able to acquire bitcoin via bank card.
Concerns with withdrawing funds
The universal way to
move money around the world is international wire transfers. Most (if not all)
online bitcoin markets support this method of transferral.
Another way to transfer money to your bank after selling bitcoin is via the
"Single European Payments Area" (SEPA) system. SEPA was designed to make international
transfers between member states of the European Union more efficient. Some
exchanges (such as Kraken and BTC-e) support these payments.
However, transfers
take a very long time (around four days), and can incur large charges –
potentially making trading prohibitively expensive. HSBC, for example, charges
£4 per SEPA payment made via online banking and £9 per WorldPay transaction.
Barclays charges £15 per SEPA payment and £25 for other international
transactions.
If you are opening an
account with the specific purpose of receiving funds from bitcoin trading, you
may find high street banks refuse to do business with you. HSBC has explicitly
refused the author of this guide accounts for bitcoin trading.
You can also use third-party payment processors to withdraw and receive
fiat funds. The numbers of these services is dwindling, however. OKPAY recently stopped engaging with bitcoin businesses.
Identity verification
While many of the bitcoin markets mentioned here require very little
identification from buyers, they require a lot of proof of identity from
sellers. There are few legal requirements from bitcoin markets to record who
their users are, but most (if not all) are preemptively collecting identity
data in anticipation of forthcoming regulations.
To make becoming a
seller easier, it is worth at least considering completing the identity
verification process when you first join the site. Getting this step out of the
way can remove barriers to selling if and when you’re ready to make the move.
Expect markets to ask
you to upload scans of two utility bills displaying your name and address,
along with a photo ID (such as a passport or driving licence). Some (such as
BitBargain UK) may even ask you to take a selfie including your photo ID and
the name of the market on a piece of paper!
If you are not
comfortable uploading such personal documents to an (effectively) untrusted
business, then you will have a difficult time finding somewhere to sell bitcoinonline.
2. Selling bitcoin in person
Selling bitcoin in
person can, in many ways, be the easiest way to pass on your digital currency.
Simply scanning a QR code on another person's phone and accepting cash-in-hand
is about as easy as a bitcoin transaction can get.
If you have friends or
family who want to buy bitcoin, the process is simple. Set them up with a
bitcoin wallet, send them the bitcoins and collect your cash.
There are several
things to be aware of when selling bitcoin in person.
Agree on a price: Decide on a rate works for you.
·
Many use a price from a prominent bitcoin exchange, or the CoinDesk Bitcoin Price Index.
·
Some sellers apply a percentage on top of these rates to cover costs and as
a convenience/anonymity premium.
·
You could use a mobile app to calculate prices. Popular apps include
Zeroblock and BTCreport.
·
It helps to be aware of local fluctuations in price. Price can vary from
country to country, often due to difficulties in obtaining bitcoin with the
local national currency.
·
There are many bitcoin meetups around the world where people are happy to trade
bitcoin and other cryptocurrencies.
Stay safe
·
It is always wise when carrying a large amount of cash to meet in a public
place and/or go with a friend.
LocalBitcoins
·
Alternatively, you could advertise yourself as a bitcoin seller to a wider
audience. The definitive site for this is LocalBitcoins. This website allows users to rate each other,
so one may assess the trustworthiness of a potential trade partner. You may be
able to sell with a premium attached once you have a reliable reputation.
·
You do not need to verify your identity as on other sites.
·
Again, if you are setting yourself up for an in-person meeting using
LocalBitcoins, you must always think about the general safety rules for meeting
a stranger from the Internet.
·
LocalBitcoins also supports escrow transactions, however, these are for
online transactions, not face-to-face deals. Therefore, do not comply with
requests for someone who asks for escrow for a face-to-face transaction.
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