New to Bitcoin? Start at 1.1
3.8Lesson 8 of 11
Selling and cashing out
This lesson answers
- How do I cash out bitcoin?
- How do I sell bitcoin from my own wallet?
- How long does it take to get the money in my bank?
- Why is my bank asking where the money came from?
- Do I pay tax when I sell bitcoin?
Most people cash out the same way they bought: on an exchange or app that pays out to a bank account. You sell the bitcoin for your own currency, then withdraw the money. It usually takes from a few minutes to a few working days.
- 1 bitcoin
- …US dollars
- Change in 24 hours
- …
What you actually receive is lower: the exchange's fee and spread come off, and a withdrawal fee may too.
See it on satoshis.watch →The steps
- If the bitcoin is in your own wallet, send it to your deposit address on the exchange and wait for the confirmations it requires. Check the address the same careful way as any payment.
- Sell for your currency. A sale at the market price is instant; an order at a price you set waits until someone takes it.
- Withdraw to a bank account in your own name. Many exchanges hold new accounts' first withdrawals for a few days.
Fees, limits and questions
Expect a trading fee or spread on the sale, and sometimes a fee for the bank withdrawal. Exchanges set daily and monthly limits, which usually rise once your identity is fully checked. For large amounts, both the exchange and your bank may ask where the money came from. That is normal under anti-money-laundering rules; records of when and how you bought the bitcoin usually answer it.
Other ways, and their risks
Some people sell to another person directly, or through a platform that matches buyers and sellers. There is no company in the middle to protect either side, and fake payment receipts and reversed bank transfers are common tricks. Some bitcoin ATMs also buy bitcoin for cash, usually at a high fee.
Keep a record
In many countries, selling bitcoin for more than you paid creates a taxable gain, and selling for less can create a loss you can report. Keep the date, the amount, the price and the fees of each purchase and sale. See taxes and records.
Check yourself
Practice, not a test. Think of your answer first, then reveal it.
1Your bitcoin is in your own wallet. What is the first step to sell it on an exchange?Reveal
Send it to your deposit address at the exchange, and wait for the confirmations it needs.
2Why might a bank hold a large transfer from an exchange?Reveal
Banks have to check where large or unusual amounts come from. Records of the purchase and sale usually settle it.
3Someone online offers a better price if you send your bitcoin first. What is the risk?Reveal
Bitcoin payments can't be reversed. If they don't pay, there is no one to get it back from.
Sources
- Financial Action Task Force, Recommendation 15 on virtual assets (2019): why exchanges and banks check identity and the source of funds.
- Price: a public market feed, refreshed every few minutes.