How to Sell Bitcoins

sell btc

Selling bitcoins is done a lot like buying bitcoins, only in the opposite direction. When it comes to selling though, it becomes a bit more risky (being that bitcoin is not reversible and that opens the doors for a lot of scams). Understanding the methods for selling, as well as what to look for when it comes to buyers is important in cutting down the chances of losing money.

Selling Online

Selling bitcoins online through peer-to-peer trades is one of the most risky ways to handle it. The methods that are used include:

  • PayPal sales
  • Other web wallets (including things like Payza and Skrill)
  • Bank deposits
  • Cash in the mail
  • Gift cards
  • Credit cards

The thing to consider here is the reversibility of transactions. Whereas bitcoin can not be reversed (and once the funds have been sent to a buyer they know for a fact that they can’t simply be taken back), the same is not true with any of the methods above other than cash (which brings up its own risks). As examples:

    • PayPal can be reversed through a dispute process. If the payments are gifted (meaning not reversible), people claim their account was fraudulently accessed and still reverse them.
    • Other web wallets are in the same boat as PayPal
    • Bank deposits can be flagged (the money being deposited can actually be deemed as high-risk or illegal, getting your account frozen)
    • Cash in the mail may never actually be sent or may be stolen on the way to your home
    • Gift cards can be wiped of their value (or not even have any value) as soon as you get the card, nullifying their benefit
    • Credit cards can be disputed

In all of the above cases, there are negatives to doing the transactions only online. To help combat this, there are rating systems on sites that allow people to deal with one another using cryptocurrencies. For BitcoinTalk, this is the trust system. For Localbitcoins, this is the reputation system. Paying close attention to the problems people have with one another is important for minimizing their effects on you. Dealing with a person that has a great track record can lead to a good experience, while dealing with someone that has been actively scamming is obviously not a good idea.

Exchanges

Exchanges are a very popular way to sell bitcoins online because it is just as simple as buying. The only real difference is that instead of getting bitcoins back, you are getting back fiat. It is worth noting, however, that while the process is pretty much the same, withdrawals in fiat come with a lot more regulation surrounding the transfers. These require paperwork to satisfy the AML and KYC laws. As a result, this is sometimes more off-putting, but at the same time it can also be considered as being a provably legal route to cashing out. In the case of Coinbase, for example, they are constantly evaluating the laws and regulations and ensure that every withdrawal that occurs is by the law. This helps ensure that your bank account will not be frozen after the sale, ensuring that you will receive the money.

Fees for making withdrawals from exchanges are generally around 1% as a variable rate. Some will also include a flat-rate fee, and may also tack on other fees depending on the withdrawal method that is used. As an example, withdrawing via bank wire will cost the exchange money, so they will usually pass that on as a fee. It is also worth noting that banks may charge fees depending on the method that is being used for the transfer.

In-Person

In-person transactions are usually the safest route for making a sale, due to being able to verify the funds prior to finalizing the transaction. For example, if someone is giving cash it can be verified at a bank before sending over the bitcoins. Along with this, a lot of people like to use in-person transactions because they can get a slightly higher rate. Not to mention the anonymity that just isn’t available using the other methods listed above.

In-person transactions do have their own problems, though, in that when dealing with large amounts of money it can bring up dangerous situations. Along with the danger itself (being that you’re carrying cash), there is also the fact that the bills can be counterfeit. It is therefore extremely important to be in a place where you can check out the money that is being passed over, such as at a bank. This helps ensure that you catch any potential problems before giving the other party the bitcoins, rather than after.

A Note on Sending First

Who should send first in at transaction is always a hot topic. Some people stand by the idea that the seller should show the goods (and hand them to the buyer) prior to receiving any money. Others believe it’s the other way around. With bitcoin, things get even more complicated due to the irreversible nature of them. Different people are going to have different opinions on this, but the rules of safety some believe should be followed are:

    • If the buying party has a lot of feedback and it’s all positive (and not small amounts being traded), they are likely going to be a trustworthy party. During your due diligence and information gathering on a person you plan to deal with, always ensure that the data is recent. Someone that had a lot of positive feedback many months ago and nothing recent may be someone to exercise caution with.
    • If the buying party does not have a well-known and trusted reputation, make sure they send first. This ensures that you are not caught in a sticky situation should something happen on their end. It just really is not worth the risk to do it otherwise.
    • 0Use trusted escrow services. If you cannot agree on who sends first find a neutral 3rd party escrow service and split the fees between you. I’ve used several escrow services in the past and have always had a positive experience.

Please note that the entire scenario is situational, and it’s something that is definitely not going to be the same in every case. Just be aware of who you are dealing with and how you feel about it. If you feel that it is worth pursuing the deal with that person, go for it. If you feel for any reason that you should not, be sure to go with your gut instinct!