How to sell Bitcoin
The term “Hodl” – an initially accidental and now deliberate misspelling of ‘hold’ – has become a meme within the Bitcoin community, such is the strength of the argument for not selling your coins. However, if you don’t want to hodl, or you intend to hodl only some of your coins, here’s how to sell Bitcoin.
Before you do anything else, you need to decide how much you would like to sell for. Unless you absolutely have to sell for some reason, check the price of Bitcoin over the previous month or so to get a sense of what the market is doing. That will help you decide what price you can expect to get and whether you still want to go ahead.
Put simply, you can sell in pretty much any place that you can buy Bitcoins. A Bitcoin exchange, for example, will sell you Bitcoins or buy them from you. Even some Bitcoin ATMs will allow you to sell coins – though not all do, so it’s worth checking first, especially if your nearest Bitcoin ATM is a long way away. Fees for selling through an ATM are usually high so check those too.
Selling through an exchange
If you’ve bought from an exchange before then you should already have an account and you will probably also have a wallet with that exchange. If you’re happy to sell your Bitcoins through them then you’ve already completed the first steps. However, if for some reason you don’t want to use that exchange – or if you did not acquire your Bitcoins through an exchange, but you do want to sell through one – then you will need to set up an account with the exchange that you do want to use.
It’s worth considering this in advance because exchanges typically have security and anti-money laundering procedures that they have to carry out with new customers. That could involve you submitting your ID for verification which can take time. If you leave this step until you have decided to sell, then you could end up waiting a while before you can actually make a sale.
The second thing to consider about an exchange before you open an account is their security. Exchanges have been hacked, which has led to people losing their cryptocurrency, and on occasion exchanges have simply disappeared with their customers’ money. The latter is thankfully rare, but still possible if you are lured to a less established exchange by the promise of good exchange rates or low fees.
Find an established exchange and check its policies on what happens if they are hacked. Then be sure not to leave your coins in the exchange wallet for too long.
The final consideration is that some exchanges have a limit on the maximum size of transactions that they will process in a week. In some cases this can be as low as £2,500. That can be an obstacle if you are planning to sell a lot of Bitcoins and want to take advantage of a particular price.
Remember: prices can be volatile
Once you have an exchange and a wallet, you need to transfer your coins to the wallet just as you would if you were making any kind of transaction. Then you need to create a ‘sell order’, which tells the exchange to sell your coins at a given price as quickly as possible. Some exchanges also allow you to add a limit so that you can abort the sale if the price falls below a certain amount.
That’s important for two reasons. First, the price of Bitcoin is volatile and it can change drastically in a very short space of time. The price might look great when you decide to sell but an unexpected – and sudden – slump could cause you to lose a lot of money. Second, as with any other Bitcoin transaction, your transfer of funds needs to be added to a verified block of transactions and that might take time. The longer your transaction waits in the queue, the more money you could lose if Bitcoin’s value falls.
One option to offset this is to split your Bitcoin holdings into multiple amounts and sell over a period of hours, days or weeks, depending on when you need the money. This will help to average out price differences.
Prices also vary between exchanges, usually based on the volume of buyers and sellers on the exchange and how much they are currently willing to spend. You can choose the price at which you are willing to sell, but that does not guarantee that you will find someone who is willing to pay it.
You can pay higher fees for your transaction to be processed more quickly, but how willing you are to do that will probably depend on the size of your transaction. The fees you pay will vary between exchanges in any case, but expect to pay anything up to one per cent per transaction.
Once the sale is complete, exchanges will usually put your money in your account with them and you will need to withdraw it, which can have further transaction costs. Again, check this in advance to avoid being caught out later.
The other option besides an exchange is to trade Bitcoin directly, through a peer-to-peer platform such as LocalBitcoins or Bisq. This is a more time-consuming process because you have to do everything yourself. In the case of a site such as LocalBitcoins, that can include going to an agreed place to meet the buyer in person and receive payment.
If you are going to do the latter, then arrange to meet in a public place. As with meeting any stranger from the internet, there is always a risk of getting scammed, so being in a public place provides some protection. Many sites allow you to see a buyer’s history and feedback. Look for a buyer with an established history of positive feedback over many transactions.
Public meetings aren’t the only option for selling your Bitcoins, of course. Many of these sites will allow bank transfers or let you accept payment in gift cards or by some other means. Again, this could be a more time-consuming process to set up than selling through an exchange, but it is more flexible. The pay-off for the extra effort is that prices are usually better. Buyers are often willing to pay above market rates for a private sale.
Once you have set up an account with one of these sites, you again create a ‘sell order’ to say that you want to sell your Bitcoins and at what price you are selling. Then you have to wait until a buyer comes along who is willing to pay your asking price. To make this process as quick as possible, it is worth spending time to find a site that has a large active community around it.
After finding a buyer, you will have to arrange the sale and how it will be conducted. In many cases, you pay your Bitcoins into an ‘escrow’ account – a neutral third party – to be released once you confirm that you have received payment.
Many brokers also buy through sites like LocalBitcoins. If you sell to a broker then you will have a good idea of who you are selling to and their track record, but you will have to take the price they are offering. You’ll need to shop around to find the best price as you would do with an exchange.
Companies like Wirex provide debit cards that link cryptocurrency and traditional bank accounts, which allow you to instantly exchange Bitcoin for ‘fiat currency’ and then use your debit card right away.
A final option to consider is not to sell your Bitcoins for cash at all, but instead to sell them for goods. If you’re ready to get rid of some or all of your Bitcoin investment, then consider buying something that you need – or would be buying anyway. Gift vouchers, mentioned above, are one option if there is a store that you shop with frequently. Depending on your country, it is possible to use Bitcoin to buy anything from flights to music.
You might also want to sell your Bitcoins to buy another cryptocurrency, such as Ethereum. Some exchanges will let you do this directly, so they are the ones to look for because you will pay less in transaction fees.