Cryptocurrency is now a popular investment option for young adults but you can’t exactly spend your cryptocurrency to pay for your dinner. Well, you can if you want to choose from a few limited options (with big companies coming in) but for the most part, people still need to convert their crypto into cash. The good news is that it is very easy to do. Having said that, there are many factors that an individual might want to consider before converting their cryptocurrency into cash. Digital tokens are very volatile and their values fluctuate a lot, so if your timing is wrong, you could potentially lose money. On the other hand, a risk-averse investor, after seeing the uncertainty around digital currencies, might consider converting their digital money into fiat currency.
Either way, here’s what you need to know about monetizing your cryptocurrency. Just remember that if you cash in, you will need to pay taxes on your winnings – although crypto is currently in a legal gray area in India, that doesn’t mean that the gains from investing in this asset are outside the scope of taxation.
How to monetize your crypto?
Let’s understand it by taking Bitcoin as an example of a cryptocurrency that you want to convert into cash. Remember to keep in mind that converting any cryptocurrency to cash will involve taxation as well as exchange fees charged by a third party broker depending on the number of digital tokens. Do not forget that the third-party broker may take a day or two to transfer funds to your bank account. Bitcoin price in India stopped at Rs. 36.53 lakhs as of 10am EST on August 16th.
Now let’s move on to converting cryptocurrency into cash. There are two ways to do this.
Through an exchange or broker
This is similar to the currency exchange system in airports. Once you deposit your digital currency to the exchange and request a withdrawal, the broker will transfer the funds to your bank account.
However, due to brokers having restrictions on money laundering, you have to withdraw your money through the same bank account you made the deposit with.
The biggest drawback of this conversion method is the time it takes. Experts say it’s safe and secure, but it takes time for the money to reflect in your bank account. The exchange also charges transaction fees, which vary from broker to broker and country to country.
Through an exchange or broker
Considered a faster and more anonymous way, an individual can use a peer-to-peer platform to convert their digital currency into cash by simply selling it. Other advantages include lower fees and the possibility of a better exchange rate compared to a third party brokerage. Having said that, you have to beware of scammers.
It is recommended that you require proof of identity and payment before issuing cryptocurrency.
You can also use a peer-to-peer platform that keeps your digital tokens locked until the funds are credited to your bank account.
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