Crypto bank accounts are continually growing in demand. If you have already joined the community of crypto enthusiasts, no doubt you know the vast possibilities and advantages at hand. However, one of the hassles you may be experiencing has to do with the transfer. This could be probably so you can use it to purchase actual things. How do you transfer crypto to your bank account? If this question has been bothering you, no worries. Please read on to find the answers and much more.
Cryptocurrency Wallets Vs Bank Accounts; The Difference
These two are very different from each other. Interestingly, though, they share some similarities. For one, you can access your funds through the two. Also, they have systems in place to protect and secure your money. Nonetheless, these two systems have charges on transactions. Remember, the more middlemen or intermediaries in a transaction, the higher the fees you will be charged. So, you can limit the number of intermediaries as much as possible. So, where does the difference come in?
While traditional bank accounts are entirely centralized, crypto wallets contain digital assets in a decentralized system. Additionally, blockchain technology in crypto wallets accommodates transactions without the involvement of centralized middlemen. This is contrary to what you will experience in a bank account.
Besides, banks are huge in protecting you against thieves, fraudsters, or hackers. There are procedures put in place to monitor accounts to take note of any suspicious activities taking place the bank can go to the extent of freezing your account. Unfortunately, you may not get this safety in crypto wallets. It can get to a point of not recovering your crypto in case of hacking.
How Do I Transfer Crypto to a Bank Account?
If you want to transfer crypto to your bank account, you must first transfer it to a centralized exchange, which can proceed to transfer it to your local currency or one of choice in a bank account. Unfortunately, this is not a one-step process. A lot is involved, thanks to the incompatibility of decentralized systems with traditional banks. The current innovations and systems are not yet in the capacity to facilitate this.
However, you may think of transferring crypto to your bank account as the process of converting one currency to the other. What does this mean? When you are transferring your crypto to your bank account you are “selling” it and then buying it for an equivalent amount in cash, in a currency of your choice e.g US dollars. Unlike the normal currency exchange rates which are affected by the central bank, inflation and other economic situations in a country, converting Bitcoin or any other cryptocurrency is only affected by demand. How many people are willing and ready to buy it at the moment?
The answer to this will affect the value you will get for your cryptocurrency. Therefore, transferring crypto to a bank account is not influenced by the economic structures of the world. Importantly, the idea that crypto will replace traditional currencies is growing, thus increasing the number of investors.
Notably, there are avenues you can use to facilitate the transfer of crypto to bank accounts. The following are the three main ones;
Third-Party Cryptocurrency Exchange Brokers
Examples of these include Coinbase and crypto ATMs and debit cards. They are an easy, secure and simple way of transferring crypto to bank accounts at a given rate. After depositing your crypto in the broker exchange, you can have a withdrawal sent to your bank account in a preferred currency. Unfortunately, it can take anywhere between 4 to 6 days before you get the money in your bank account. However, this period may be different from one country to the next. Also, they may have high transaction fees.
Moreover, we advise you to withdraw from the same bank account you deposited in to avoid brokers going contrary to money laundering laws.
This is a faster way of completing the transaction and is applicable when you are sending the crypto to another person. Some platforms allow you to sell your Bitcoin or other cryptos for cash. The buyer in this case can deposit cash into your bank account. To be safe and free from fraudsters, you can request proof of identification or payment. Additionally, you can go for a platform that keeps your crypto locked until you get the buyer’s cash in your bank account. Nonetheless, if you want to stay anonymous during the transaction, this is the way to go.
Open an Account with a Crypto bank
With crypto banks becoming easier to access lately, it is easy to transfer money to a traditional bank account. For this option, all you need to do is to open an account with a crypto bank. That allows all account holders to buy and sell, as well as exchange coins to fiat with an option deposit in the traditional bank account. Additionally, a crypto bank is full of other benefits such as allowing you to accept/make crypto payments and issuing you a crypto MasterCard.
With the different avenues of getting the value of crypto in cash, what are some of the things you should keep in mind?
What to Consider When Transferring Crypto to a Bank Account
The following are the things to keep in mind before you transfer your crypto to a bank account;
This is one of the challenges you may face. In most cases, transferring bitcoin or other currencies to a bank account attracts exchange fees. Besides, if you have to use various channels to finally get your crypto to your bank account, be prepared to provide more fees. However, if the fees are not too exaggerated, this is one of the best ways of transferring your crypto. Remember, the fees charged vary depending on the country the bank is located in.
If you are using a third-party platform or broker to handle the transfer, the process may take some time, a few days or so before you get the money in your bank account.
As already mentioned, when transferring the crypto to a bank account, you first of all “sell” it. If you happen to make profits in this process, there can be taxation on your profit income. The good thing is that if you are dealing with a reputable third-party broker, he will make a report entailing the transactions to help in taxation.
No Direct Link to Bank Accounts? No Problem
Cryptocurrency will soon replace traditional currencies. Nonetheless, they have a great potential of increasing in value. However, crypto wallets are not yet entirely interoperable. This means you cannot directly send your crypto to a bank account without using intermediaries. The lack of this partnership with traditional banks thus leaves you with two options; go for a third-party brokerage system, or consider peer-to-peer transfers. So, if you want to convert your crypto into cash, you can do so and get a similar value to allow you to purchase actual things. After all, the possibilities of blockchain are vast and worth exploring more.
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