How to Sell Bitcoins – A Beginner’s Guide
By: Ofir Beigel | Last updated: 11/12/19
People who want to sell their Bitcoins for fiat currency (i.e. dollars, euros, etc.) have several ways they can do so online and offline. In the following post, I will cover the different selling methods available.
How to Sell Bitcoins Summary
If you want to convert your Bitcoins back to “normal” money you’ll need to do the following:
- Find an exchange (e.g. Coinmama, CEX.io, Coinbase)
- Send your Bitcoins to that exchange
- Trade your Bitcoins for fiat
- Withdraw the fiat to your account
If Coinmama doesn’t work out for you here are some additional exchanges recommended for selling Bitcoin:
That’s how to sell Bitcoins in a nutshell. If you want a more detailed explanation about how to sell Bitcoins and to know about a variety of other methods available keep on reading. Here’s what I’ll cover:
- Selling Bitcoins in a Nutshell
- Selling Bitcoin with Paypal
- Selling Bitcoins with a Credit Card
- Selling Bitcoins with a Bank Account
- How do I Sell Bitcoin for Cash?
- Additional Ways of Selling Bitcoins
- Frequently Asked Questions
When you feel like it’s time to trade those precious Bitcoins back to fiat money there are a few things you’ll need to think about.
First, how do you want to get paid?
Do you want to receive money to your PayPal account? your credit card? your bank account? or maybe you prefer cash?
These considerations will lead you to the second question: Which exchange do you want to use?
Different exchanges provide different payment methods, fees, and exchange rates. It’s important to conduct ample market research before choosing the right exchange.
Finally, there’s the issue of taxation.
I won’t go into detail about this one since it’s different for each country. I’ll just say that it’s important to know how your country taxes cryptocurrency sales in order to understand if and when to report about the sale to authorities.
Some countries haven’t come up with clear guidelines, while others have very strict rules. Make sure to consult a CPA in your jurisdiction.
Now that we’ve got the basics out of the way, let me review the various methods you can use to sell Bitcoins.
One method people search for online often, is how to sell Bitcoins and receive funds to your PayPal account.
PayPal, in general, aren’t very fond of Bitcoin mainly due to the fact that they can’t give their customers chargeback protection for Bitcoin transactions (here’s why).
Having said that, there are still some workarounds that will allow you to sell Bitcoins for PayPal.
The popular exchange Coinbase (available in 103 countries worldwide) allows you to connect your Coinbase account with your PayPal account. While you won’t be able to buy Bitcoins this way, you will be able to sell Bitcoins on Coinbase and withdraw the funds to your Paypal account.
This feature is available in the US, UK, and the EU. Here’s how it’s done:
- Sign up to Coinbase
- Complete your account verification
- Go to Settings > Linked Accounts > Link a New Account button
- Choose PayPal and log in to your PayPal account
This is probably the fastest and most convenient method around if your country is supported. You can read my complete Coinbase review here.
If you’re not eligible to use Coinbase, you can still find buyers who will accept your Bitcoins for PayPal through LocalBitcoins.
LocalBitcoins is a marketplace where buyers and sellers meet and trade Bitcoins for a variety of payment methods, including PayPal.
Keep in mind that if you’re selling Bitcoin for PayPal credits, you’re risking getting scammed by a buyer that will file a complaint to PayPal saying that you never sent him the Bitcoins he paid for. You can read my complete LocalBitcoins review here.
Here’s how to sell Bitcoins for PayPal on LocalBitcoins:
- Open a LocalBitcoins account
- Go to “Sell Bitcoins”
- Choose a country – since you’re not meeting in person it doesn’t really matter which country you choose so personally I’d go with countries that have more probability to have sellers like USA, UK, etc.
- Choose “PayPal” as the payment method
- Select a buyer
Some exchanges allow you to withdraw funds straight to your credit card. This method is usually faster than a wire transfer but it’s also a bit more expensive.
London based Cex.io allows you to withdraw your funds to your MasterCard or Visa. The amount you can withdraw depends on your verification, with no limits on enhanced verification accounts.
Probably the most common method for selling your Bitcoins would be via a wire transfer or some other form of transfer to your bank account (e.g. SEPA, ACH, etc.).
If you reside within the EU, Coinmama gives you the option to sell your Bitcoins via a SEPA transfer. The advantages of SEPA are quick and relatively cheap transaction times.
Coinmama is considered relatively expensive when it comes to exchange rates. You can read my full Coinmama review here.
In order to maintain anonymity or maybe just out of plain convenience, some people prefer to sell their Bitcoin for cash or directly to another person. If that’s the case then you have several options.
Bitcoin ATMs are machines that accept Bitcoins and spew out cash. Not all ATMs allow you to sell Bitcoins, some allow you only to buy Bitcoins. Some of them won’t even require any type of id or verification.
Usually, ATMs have a restricted limit on how much you can withdraw, but for a small amount, this may be a good option. You can see a complete coverage of ATMs worldwide here.
Paxful have been running since 2015, and it allows you to find buyers (or sellers) that trade with varies payment methods including cash. This means Paxful can locate cash buyers in your area.
I recommend that you only trade by enabling escrow in Paxful. I also recommend that you only do in-person trades in a secure location. Good choices are bank lobbies, police-station foyers, and courthouses.
When dealing with a seller for the first time or when trading large amounts, it’s wise to choose a location with access controls, metal detectors, security cameras and guards. Overall, exercise common sense; although rare, there have been reported incidents of mugging and fraud.
You can read my Paxful review here.
In this post, I tried to focus on the main methods for selling Bitcoins. However, there are numerous other methods you can use to sell your Bitcoins.
For example, Skrill, Netteller, Amazon gift cards and more. Most of these options can actually be found on LocalBitcoins (you’ll be amazed by the variety).
Another option would be to just exchange your Bitcoins for real life goods you want to buy such as a car, a house, a computer, etc.
Is it Illegal to Sell Bitcoins for Cash?
It depends on the rules of your country. Most countries haven’t banned Bitcoin but a several few have (e.g. China). You can view the legal status of Bitcoin here.
How Long Does it Take to Sell a Bitcoin?
Depending on your payment method it can take anywhere from 2 seconds to several days. When using methods like PayPal and credit cards the transaction is usually instant (although it can take some time to show up on your account).
Wire transfers usually take longer since the money has to go through several intermediary banks until it reaches your account.
Can Bitcoins Be Traced?
Yes. Bitcoin is actually 100% traceable, however it’s hard to know who the person holding the Bitcoins is. Simply put, Bitcoin is pseudonymous. Here’s a short video about this issue:
There’s no shortage of methods you can use when it comes to selling Bitcoins. Keep in mind that the irreversible methods such as wire transfers will almost always give you better rates and lower fees than the reversible methods such as credit cards and PayPal.
The biggest question you probably have to ask is not how to sell Bitcoins but when to sell them. Trying to time to the market to make a profit is an almost impossible task. You can learn a bit more about this in my Bitcoin trading guide.
Do you know of any other methods for selling Bitcoins? Have any comments or questions? Leave them in the comment section below.
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