Converting Altcoins to US Dollars and Other Fiat Currencies
The simplest way to cash out your altcoins to USD and other fiat currencies is by going through an exchange that supports fiat conversions. A second exchange is necessary because, unlike Bitcoin, altcoins are not readily convertible to fiat currency.
As it stands, only a select few tokens can be exchanged for fiat currencies. Additionally, only a handful of cryptocurrency exchanges can make this trade for you. The need to convert to the proper coin and navigate through multiple exchanges can make cashing out a confusing process.
Follow these simple steps to safely cash out your coins and deposit the funds directly into a bank account.
Step 1: Selecting a fiat-friendly exchange
The first thing that you’ll need to do is find an exchange that has a pairing for your desired fiat currency. The 3 most common fiat currencies available to convert to are (USD, EUR, GBP).
Coinbase and GDAX are two common exchanges that people use to cash out with because they support the 3 most popular fiat currencies. After our horrendous experience with Coinbase, we refuse to use them or GDAX (also owned by Coinbase) Many also use Gemini and Kraken to exchange their alts for fiat currency.
When deciding which exchange you will use to cash out with, consider
1) the available coin-fiat currency pairings
2) the cost of any Exchange Fees associated with making transactions.
Step 2: Identifying a Pairing With Your Desired Fiat Currency
Once you’ve selected an exchange, open the market to see the possible cryptocurrencies that can be converted to fiat. For example, here is what the pairings might look like on GDAX:
So, in this exchange, you can convert Bitcoin, Ether, or LiteCoin to the fiat currencies: USD, EUR, or GBP.
Step 3: Selecting a Coin to Convert With
After identifying your pairing options, it’s time to select one that will cost you the least money to cash out with. For example, many people prefer to convert with Ethereum rather than Bitcoin because Bitcoin has a significantly larger Network fee associated with each transaction. You want the combined total cost of your Network Fees and Exchange Fees to be as low as possible because having more money is fun.
Step 4: Exchanging Your Altcoins
After identifying your most cost-effective pairing, you can go ahead and exchange your altcoins for the cryptocurrency in your pairing. For example, if you’re cashing out 10,000 Golem (GNT), you’ll have to “sell” your GNT for Bitcoin or Ethereum. This will most likely be done on the market that currently holds your altcoins.
Step 5: Transferring to the Fiat Exchange
After setting up an account with your desired fiat-compatible exchange, locate the provided public key. Use this public key to send the coins that you just converted to from your previous exchange to the fiat exchange (here’s a tutorial for how to transfer coins from one exchange to another)
Step 6: Sell Your Coins and Cash Out
On the fiat exchange, navigate to the pairing that has your coin and desired fiat currency.
Select the option to sell on this pairing and enter your desired quantity and price. Place the order.
When the market allows for purchase of your coins, the funds will become available immediately in your fiat-exchange account. Simply withdraw those funds into your linked financial account.
Now that your coins have been fully converted into fiat currency, your money should be available on the fiat exchange.
Be aware of the costs you will incur from Network and Exchange fees during this process. You can use the image below to plan your most cost-efficient route for converting altcoins to fiat currencies:
Exchanges that Allow Cryptocurrency to fiat:
Investors should also understand the potential tax liability associated with trading or converting cryptocurrencies.
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