2021 was certainly a year in which cryptocurrency exploded in popularity. A survey from the US cryptocurrency exchange Gemini, shows that nearly half of cryptocurrency holders were first-time participants in 2021, while it is believed the market is worth around two trillion dollars. Coins like Bitcoin reached their highest value to date, before a sharp fall, but the signs have encouraged many new investors to be involved.
Though Bitcoin was originally created to be an alternative currency, its volatility and high value makes this use impractical. The value of all crypto was over a trillion dollars larger in November 2021 compared to today. Like other commodities, it is now mostly used for trading between investors.
But once you have your cryptocurrency, what happens then? Price fluctuations, all too common for cryptocurrencies, could give you the jitters and want a way out. Fortunately, this is possible and relatively easy to convert your crypto back into dollars.
How to convert the crypto to cash
Lets use Bitcoin as the example, as it is by far the most ubiquitous and well known crypto item around.
Bitcoin can be sold an a cryptocurrency exchange, basically a huge marketplace for buying and selling crypto. Once sold, the money will go to the debit card associated with your account. It will take around a week for the funds to appear in your account.
Sick of people calling everything in crypto a Ponzi scheme. Some crypto projects are pump and dump schemes, while others are pyramid schemes. Others are just standard issue fraud. Others are just middlemen skimming of the top. Stop glossing over the diversity in the industry.
— Pat Dennis (@patdennis) April 25, 2022
Coinbase is the most popular website for buying and selling bitcoin. They process more Bitcoin transactions than any other broker and have a customer base of 13 million users.
Some things to be aware of
Like with all financial transactions, it is worth knowing some of the risks. Fraud is a key thing to consider when dealing with cryptocurrency, due to the decentralised nature of the platform. If you are selling things like NFTs to then cash out this is even more important as they are no government bodies to fall back on if you are scammed.
Bored Ape NFT owners, lured by the promise of “free” tokens, got caught in an Instagram hack and lost $3 million in the process https://t.co/zKwfDvoRSt
— Bloomberg Crypto (@crypto) April 30, 2022
Sales of any investments will also be subject to capital gains taxation. Simply put, a capital gain is any money made on an investment, cryptocurrency or otherwise. For example, if you made a $100 investment, and you cashed out once it grew to $110, the capital gain would be $10.
There is no capital gain until an asset is sold, which is a loophole the super-rich use to payoff loans without having to pay income tax as the profits are offset by the deduction of capital by taking out a loan.
Sick of people calling everything in crypto a Ponzi scheme. Some crypto projects are pump and dump schemes, while others are pyramid schemes. Others are just standard issue fraud. Others are just middlemen skimming of the top. Stop glossing over the diversity in the industry.Previous