Crypto Scams Are Increasing
There are two main types of crypto scams.
Scammers try to trick people into investing in fake opportunities to buy crypto. Watch out for these tactics:
- false promises of very high returns
- fake endorsement from celebrities or government agencies
- people who contact you through social media or text messages
- using dating apps to establish a romantic connection and gain trust
- multiple or constantly changing bank accounts used for transfers
Read more about the tactics used by investment scammers.
Rhett is scammed $97,000 by a fake endorsement
Rhett saw an article on a news website about The biggest deal in Shark Tank history, that can make YOU rich in just 7 days!
Rhett was interested in trading Bitcoin, so he provided his contact details. Soon, an Account Manager named Max began calling Rhett. Max called often, pressuring Rhett to open a trading account and make a deposit. By depositing between $40,000 and $50,000 upfront, Max promised Rhett he could earn at least $15,000 per month.
Max promised Rhett that the money he deposited would be safe because he would have total control of the account. Its more or less moving your money in your left pocket from your right pocket, Max said. Max promised Rhett that he could withdraw his money whenever he wanted to.
Rhett deposited more money in the hope he could recoup his losses. Rhett ended up depositing and losing a total of $97,000.
How To Cash Out Bitcoin Using A Broker Exchange
Using a broker exchange for your Bitcoin is also quite simple if you follow these easy steps:
- Sign up and complete the brokerages verification process.
- Deposit bitcoin into your account.
- Cash-out your bitcoin by depositing it into your bank account or PayPal account .
Keep in mind the withdrawal times may be 4-6 days. Transaction fees may also apply.
Turn Bitcoin Into Cash Using A Peer
Here are a few simple steps for how to turn Bitcoin into cash using peer-to-peer exchange:
- Decide which peer-to-peer exchange platform you want to use. LocalBitcoins is a popular option.
- Sign up and choose the location of your ideal buyer.
- Use the marketplace to find buyers, and send a trade request.
- Most peer-to-peer platforms have an escrow option where your bitcoins are not released to the buyer until you have confirmed youve received payment.
Peer-to-peer platforms also allow you to stay anonymous. You can use a VPN to secure your connection and choose payment methods such as web money or gift vouchers.
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How Does Bitcoin Mining Work
Bitcoin mining is the process of adding new transactions to the Bitcoin blockchain. Its a tough job. People who choose to mine Bitcoin use a process called proof of work, deploying computers in a race to solve mathematical puzzles that verify transactions.
To entice miners to keep racing to solve the puzzles and support the overall system, the Bitcoin code rewards miners with new Bitcoins. This is how new coins are created and new transactions are added to the blockchain, says Okoro.
In the early days, it was possible for the average person to mine Bitcoin, but thats no longer the case. The Bitcoin code is written to make solving its puzzles more and more challenging over time, requiring more and more computing resources. Today, Bitcoin mining requires powerful computers and access to massive amounts of cheap electricity to be successful.
Bitcoin mining also pays less than it used to, making it even harder to recoup the rising computational and electrical costs. In 2009, when this technology first came out, every time you got a stamp, you got a much larger amount of Bitcoin than you do today, says Flori Marquez, co-founder of BlockFi, a crypto wealth management company. There are more and more transactions the amount you get paid for each stamp is less and less. By 2140, its estimated all Bitcoins will have entered circulation, meaning mining will release no new coins, and miners may instead have to rely on transaction fees.
S To Cash Out Btc By Using Localbitcoins
Local bitcoin is one of the easiest and the quickest peer-to-peer methods of cashing out Bitcoin. Follow the below steps if you are interested in using the LocalBitcoin platform for converting your BTC into fiat currency:
- The first step involves signing up and opening an account on the Local Bitcoin platform.
- Make sure that you use a strong username and password to avoid facing any scams. After doing this, they will send a confirmation to your email address.After confirming your email address, log in using your credentials, and you will come across a sell bitcoin button appearing on the top of the screen.
- Now you have to enter the name of the country where you think your potential buyers are located. Set a selling amount of your BTC.
- If you have a Paypal account already, it will be great for you because you can use it here to cash out BTC. Enter the details related to your Paypal account and then send a trading request to the LocalBitcoin platform.
- Once you are done with the above steps, your buyers will receive a notification. If any buyer accepts your offer, you have to transfer BTC to the escrow of the exchange. This method is safest because the exchange will not release your bitcoin to the buyer until the payment is received.
- After receiving your payment in your Paypal account, click on the received button, and your transactions will get close.
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How To Cash Out Bitcoin Using Localbitcoins
1. First, you will need to open an account at Local Bitcoins. You can do this by .
2. Choose a username and a strong password. You also need to enter and confirm your email address.
3. Once you are logged in, click on Sell Bitcoins at the top of the page.
4. Then you need to choose the country where your ideal buyers are located. I recommend using your own country , however, this is up to you. In this example, I have selected the UK. You also need to enter the amount of Bitcoin you wish to sell.
5. As you will see below, there are many different ways to cash out your Bitcoin.
6. In this example, I will show you how to cash out Bitcoin using PayPal. As you can see, the buyer has a 100% feedback rating, and has completed more than 1000 trades! This is a sign of a serious, legitimate buyer.
7. Confirm the amount of Bitcoin you want to sell and enter your PayPal email address. Then click on Send Trade Request.
8. Your buyer will then receive a notification to say that you would like to sell your Bitcoins to them. Once they accept, you will then send your Bitcoins to the LocalBitcoins escrow . So, the buyer will not receive your Bitcoins until they have paid you, and you confirm they have done so.
9. The buyer should contact you to let you know that the funds have been sent. Check that the funds have arrived in your PayPal, then click on Payment Received, and you’re finished.
Congratulations! You now know how to cash out Bitcoin using a P2P exchange.
Considerations When Cashing Out Bitcoin
Before you convert all your bitcoin to cash, consider the following pitfalls:
- Taxes If you are making a profit on selling your bitcoin, you will have to pay taxes on your profit income. Keep this in mind while planning your tax year. Any reputable third-party broker exchanges will report their transactions for tax purposes.
- Fees Most bitcoin-to-bank-account methods will entail exchange fees.
- Speed Third-party broker exchanges may take a couple of days to transfer the money into your bank account.
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Cryptocurrency Taxation In The Us
In the United States, profits from the sale of cryptocurrencies like bitcoin are treated as capital gains. That means that you have to pay the capital gains tax on your profits.
- For short-term capital gains , the tax rate is equal to your regular income tax rate. The higher your income for the year, the higher the tax rate will be.
- For long-term capital gains , the tax rate is lower. Depending on your income, the long-term capital gains tax rate ranges from 0% to 20%.
Keep in mind that you can deduct capital losses to reduce your taxable gains.
If you lost money from investments or trading bitcoin or other cryptocurrencies, you may subtract those losses from your gains when filing your taxes.
Withdrawing Your Funds After The Sale
Even after youve sold your Bitcoin, your transaction hasnt been fully completed. The final step is to withdraw the proceeds of your sale into either your bank account or your cryptocurrency wallet.
If youve sold Bitcoin through a platform that permits AUD withdrawals, check to see what withdrawal methods are supported. Options include:
- Bank transfer
When choosing your withdrawal method, make sure you consider:
- Fees. Many platforms impose a withdrawal fee, and the fee charged usually varies depending on the withdrawal method selected.
- Limits. Are there any minimum or maximum limits on how much you can transfer? How do they differ between withdrawal methods? Can you increase these limits by providing additional verification or ID?
- Processing times. How long will it take for the AUD to arrive in your wallet or bank account? For example, while cash withdrawals are instant, bank transfers can take several days to arrive.
- Any other restrictions. For example, some exchanges will require you to withdraw funds using the same payment method with which you made your deposit.
Once again, check whether there are any limits on the amount of crypto you can withdraw per-transaction or in any 24-hour period. Youll also need to factor any withdrawal fee into the total cost of the transaction.
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Is It Safe To Give Out My Bitcoin Cash Address
You can safely give out your Bitcoin Cash address to friends, family, and acquaintances. No one can steal your bitcoin cash unless they have both your address and the private key to it. However, you should know that, since the Bitcoin Cash network is publicly viewable, anyone who knows your Bitcoin Cash address can easily find out exactly how much bitcoin cash you have at that address by simply pasting the address into a Bitcoin Cash block explorer like this one. They can also see every transaction you’ve ever made using that address. If you don’t want people to see this information, you’ll need to use a fresh Bitcoin Cash address. Luckily, that’s easy to do! The Bitcoin.com Wallet, for example, allows you to create an unlimited number of new Bitcoin Cash addresses with the touch a button.
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What Does This Price Drop Mean For Crypto Investors
For those who invest in crypto for the long-term using a buy-and-hold strategy, swings like this are to be expected. The recent dips are nothing to be overly worried about, according to Humphrey Yang, the personal finance expert behind Humphrey Talks, who says he avoids checking his own investments during volatile market dips.
Ive been through the 2017 cycle, too, Yang says, referencing the crypto crash of 2017 that saw many major cryptocurrencies, including Bitcoin, lose major value. I know that these things are super volatile, like some days they can go down 80%.
Experts recommend keeping your cryptocurrency investments to under 5% of your portfolio. If youve done that, then dont stress about the swings, because theyre going to keep happening, according to Bill Noble, Chief Technical Analyst at Token Metrics, a cryptocurrency analytics platform.
Volatility is as old as the hills, and its not going anywhere, Noble says. Its something you have to deal with.
As long as your crypto investments dont stand in the way of your other financial goals and youve only put in what youre ultimately OK with losing, Yang recommends using the same strategy that works for all long-term investments: set it and forget it.
Dont check on it. Thats the best thing you can do. If you let your emotions get too much into it then you might sell at the wrong time, make the wrong decision, says Yang.
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Best Way To Cash Out Bitcoin
There are several ways to convert Bitcoin to fiat currency. Selecting which the best way for you depends on if you want to convert bitcoins to cash anonymously. There are two general methods for converting bitcoin: on an exchange or off an exchange.
- On-exchange: crypto exchanges offer the advantage of fast, reliable and secure transactions. Some of these exchanges trade in fiat currencies and allow you to link your bank account so you can withdraw directly. However, to increase withdrawal limits to a range adequate for large amounts of bitcoin you must provide personal information, which compromises anonymity. Slippage can also be an issue when cashing in on-exchange.
- Off-exchange: this type of trading happens directly between two people. There are two slight variations of this method: One is to trade with an over-the-counter broker and the other one is peer-to-peer trading. In both cases, you would be trading directly with a person. The difference is that the former is a professional crypto trader, while the latter is not. Off-exchange trading allows greater levels of anonymity, but you must be very careful who you trade with. The same anonymity that protects you also offers a layer of protection to scammers who may be after your bitcoin.
Select A Bitcoin Wallet
When possible, cryptocurrencies should be stored in wallets, essentially bank accounts for cryptocurrencies. Importantly, if you store your Bitcoin on cryptocurrency exchanges, the exchanges technically have control over the crypto. But if you withdraw to a wallet, you have complete control over your digital assets. This is very important: if you keep your funds in exchanges, theres a chance that the exchange might go bust, or the owners run away with customer funds.
When picking out a Bitcoin Wallet, make sure that you consider backup and security features. There are generally two forms of wallets: hot and cold wallets.
A hot wallet is one connected to the internet: if a hacker managed to gain control of it via some malicious code, then theyd be able to get to your Bitcoins. But its more convenient: these wallets are connected to the internet, via mobile, desktop, or web apps, meaning you can use them straight away. Theyre also free. Popular hot wallets include Electroneum or Trust Wallet.
Think of the hot wallet as the one you carry to the mall: its full of cash, but easier to steal. By contrast, a cold wallet is the equivalent of storing your cash in a safe: its very secure, but isnt very convenient to use.
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How To Sell Bitcoin: What Are My Options
The step-by-step guides above take you through the process of selling Bitcoin on an exchange. However, this is just one of several options available when you want to cash out your Bitcoin, so lets take a closer at what other options you have.
Selling to a cryptocurrency broker
- Why might you choose this option? If youre looking for a convenient and simple way to turn Bitcoin into AUD or another fiat currency.
- Pros: Convenient, quick and easy, allows you to exchange BTC for fiat
- Cons: Transaction fees can sometimes be steep or the rates poor, ID verification process can cause delays
This refers to selling cryptocurrency directly to an exchange at a market price chosen by the exchange. Many cryptocurrency exchanges offer brokerage services, and you’ll often see brokerage services referred to as “instant buy/sell” or “quick sell” options. This is a popular option for anyone looking to sell Bitcoin, because it’s fast and easy to do from the comfort of your couch. The downside is that you may be able to get a better price elsewhere, and you need to make sure the broker is offering you a fair price for your Bitcoin.
Selling through a cryptocurrency exchange market
Selling via a Bitcoin ATM
Selling peer to peer
A Brief History Of Bitcoin Bubbles
The Great Bitcoin Bubble of 2017 made every other financial bubble before it, seem like a regular day on the NYSE. After reaching heights of nearly $20,000 a coin, the Bitcoin price slipped down to the $3,300-mark.
However, the cryptocurrency steadily recovered toward the $11,000handle over the coming year, and as of the start of Q4, 2019, the Bitcoin price is $8,300, after a selloff from the $10,000-mark.
The Bitcoin Bubble of 2017 caught everyone off-guard, even seasoned Bitcoin believers. The growth in the currencys value from the $4,000-handle to $20,000, took less than 9-months, and most economists have never witnessed anything like it in their lifetimes.
As the price crossed the $10,000-handle for the first time, the world started to get Bitcoin fever. The growth to the $20,000-handle barely took 2-months, and people thought that Bitcoin could reach $1-million a coin.
However, this mania was short-lived. The cryptocurrency crashed over the first three months of 2018, giving many investors a hard landing in the process. During the height of the mania, there were reports of people doing stupid things to acquire Bitcoin.
Stories of people putting mortgages on their homes to buy Bitcoin were common, and the stories of scams involving mining companies and ICOs continued to grow. The ICO mania sparked by the rise in the Alt-coin sector also cost many investors their shirts.
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