Last updated July 29th, 2016
So you got paid in Bitcoin for the first time by a betting company, or perhaps by someone you did some work for, and now you want to swap it for currency or use it to buy something in the shops. Here is our simple guide on how to sell Bitcoin or spend it in the real world.
Bitcoin (BTC) is fast becoming the currency of online betting, especially in the USA-facing sector. It does circumvent a lot of transaction costs and problems, but we already have an entire article dedicated to the benefits of bitcoin, so we won’t cover that once again here.
We have also detailed the best ways to buy bitcoin. Selling the cryptocurrency Bitcoin into fiat currency, which is the geek word for normal money, is a simple reverse of that procedure. An alternative to selling BTC for cash is simply to spend it, whether that be at the shops, on your groceries or in a restaurant. That is exactly what you can do, so read on for USAbetting.com’s guide.
Selling Bitcoin At An Exchange
An exchange is probably the best option for selling Bitcoin. Most of the readership here at USAbetting is based in the United States, so that is where our emphasis lies. There are many Bitcoin exchanges, with more springing up all the time. Different exchanges tend to suit different currencies and nationalities.
The two we rate highly for Americans are Coinbase and Kraken. Both these are based in the United States and are above-board and regulated. Of course if they ever went bust then you would probably lose your money, but they seem massively-financed and so are the best options.
We do suggest that you use an exchange to swap your funds from Bitcoin to your chosen currency and then get your money out. That is the safest approach. Many people use exchanges as an almost permanent store of their Bitcoin and we do not recommend that. Exchanges have failed. Mt Gox was the biggest exchange of its type – it went under and a lot of people lost out. That is why we are recommending firms that are large and exist in a regulated environment, it is the safest option.
We have used both Coinbase and Kraken, and we suggest you start off with either one. The former is probably best for US residents, while the latter favors the UK and Europeans.
Now before we get into the specifics of selling via an exchange, there is a note of caution. Be aware the Bitcoin exchange may ask for ‘source of funds’ documents. So you need to feel comfortable that you could be asked about the where the Bitcoin came from. The bigger the sums involved then the bigger the problem this becomes, and it tends to happen at the withdrawal stage. So maybe keep those withdrawal sums in four figures, even if you have to split it into several transactions over a longer timeframe.
Coinbase is getting a reputation for being quite hot on this type of thing. The other thing the exchanges, particularly Coinbase, dislike is any link to the USA offshore betting industry. So the rule has to be that you do not send Bitcoin to or from any betting account, such as one you might have at Bovada Sportsbook for example, directly to or from your exchange account. Always send Bitcoin payments via the wallet on your PC.
How To Use A Bitcoin Wallet
If you don’t yet have your own Bitcoin wallet then Electrum is a good and easy-to-use option. This can be downloaded via electrum.org. Getting to grips with Electrum (or any other acceptable wallet, see: bitcoin.org/en/choose-your-wallet for the list of them) and reading about the best way to secure your Bitcoin using Electrum has to be a priority. This bit of software is very straightforward and can be downloaded onto your PC and / or smart phone in a minute. Ensure you use the password protection on it and you can tighten the security of your stored Bitcoin even further if you desire by using the ‘cold storage’ options.
Using Electrum means that you can then give out Bitcoin addresses and receive BTC into the wallet from any source. The other rule is only ever use a Bitcoin address once. Give a separate Bitcoin address to everyone who sends you a payment and replace it with another address each time. Electrum (and your exchange account) will generate countless addresses for you to use, so it is an easy thing to do. You can also annotate each address in your Electrum wallet with notes, so you can identify who has which address and so where the source of funds received come from.
Sell That Bitcoin
Now to sell Bitcoin at an exchange, you need to send it into the exchange account you have set up. All exchanges work the same way and the software they use differs only marginally. So if you get to grips with one exchange, you have mastered them all.
If you want to swap your Bitcoin to Euros then Kraken is the best option. If you want to swap it to USD then we recommend Coinbase because their withdrawals in USD are less hassle and their USD exchange is stronger.
If you want them in GBP then we recommend using Kraken to Euros (you must ignore Kraken’s abysmal GBP exchange) and withdraw in Euros to your GBP bank account and suffer the conversion to GBP when the bank receives the Euro SEPA payment. Sepa is like BACS, but Europe wide. The alternative is to set up a Euro account at your UK bank, but this is not as readily-available an option as you might expect with the British banks.
Kraken’s GBP exchange has very low volume, a wide spread and always favours the seller. There is a reason, it is almost impossible to get GBP out of Kraken. This is because they use a company called Paycash to do the payment, and Paycash demand the ‘source of funds’ documents almost every time. If you can’t suffer the delay with a very slapdash and slow Kraken support system then it is best to stick with Euro withdrawals, because they are internal and do not go via the dreaded Paycash. Even with these, keep them in four figures to avoid enquiries.
The best exchange for pure GBP is the UK-based Coinfloor, which is a really reputable spot. But remember those ‘source of funds’ documents we mentioned, Coinfloor is hot on that type of thing. Also, while Coinfloor is good, Kraken’s Bitcoin/Euro exchange does still have ten times the daily volume at the time of writing, and that is an advantage.
Anyway, to return to the core point of swapping your BTC for fiat currency, your exchange account will have a ‘deposit’ section where you can get a Bitcoin address to send the funds into your account. Remember to generate a new address each time you send the Bitcoin from your Electrum wallet on your PC to the exchange.
The image below shows the deposit section for your Kraken account and you can see the option to generate a bitcoin address to use to send your BTC into your exchange account. We have obscured the previously-used addresses in the account for privacy:
Once you send the Bitcoin, the exchange waits for six confirmations before the amount is cleared within your account. Six confirmations should take around 50 minutes, but we have found it can be much faster or slower depending on the backlog of global BTC transactions. Be aware that the fee paid does speed things up, a miserly fee will mean the transaction takes longer. We are talking the difference of a cent or two in fee, not big money. Electrum comes with a default setting for the fee, and it may prove counter-productive to reduce it just to save a dime.
Now that you Bitcoin is in your account you can swap it on the Kraken exchange for dollars or euros. Despite being a US company, Kraken’s biggest exchange with most volume is the Bitcoin to Euro option. That is because the withdrawal option via Euros has less red tape than their USD withdrawal option.
Remember, we recommend Coinbase’s USD exchange if you are an American resident and Kraken if you are from Europe or the UK or wish specifically to use a Euro exchange.
Now that you have swapped your Bitcoin to the fiat currency of your choice, just go the exchange’s withdrawal section and transfer the funds to your bank account. The image below shows what that section looks like within your Coinbase account:
You can see that in the account shown in the image above there are no transactions showing for USD, but if you had USD in the account the withdraw button top right would just need to be clicked. Also, see the menu on the left-hand side. It really could not be simpler to use, just switch between currencies to deposit or withdraw them.
Spending Bitcoin With A Debit Card
Rather than selling into a fiat currency on an exchange by the method USAbetting.com has just outlined, perhaps you just wish to spend your Bitcoin at the local mall or hypermarket. At the moment the idea of using a crypto currency to pay for your groceries seems impossible, at least to most people who know little about the subject. However this can be done very easily, all you have to do is load a debit card specifically for that purpose.
So if you have some Bitcoin, maybe gained via your activity with the USA sportsbooks or casinos, then debit cards are a great option to consider.
The difference between a credit card and debit card is that the former gives you credit. With a debit card you first need to load that card with money before paying for anything. If there is no money loaded on your debit card then the card’s transaction will fail. You cannot go overdrawn with a debit card.
So you could load your Bitcoin onto a debit card and the debit card company will convert that bitcoin to your currency of choice, whether that be US dollars, euros or British pounds. The debit card company makes its money by charging a fee on conversion of the bitcoin to the local currency and will usually charge to provide you with the debit card.
The two biggest companies offering this useful service, and that between them cover most nationalities and currencies are:
- bitpay.com/visa/ – Bitpay provides a service for US residents only. The debit card can be used anywhere that accepts Visa, including ATMs (cash machines).
- xapo.com/card/ – Xapo provides a service for most European countries and the UK. This company does not accept Americans. The debit card is vailable in USD, EUR or GBP and can be used at ATMs and anywhere that accepts Visa. Xapo is a UK company.
Swapping Your Bitcoin For Other Items
There is also a burgeoning website called localbitcoins.com which allows you to swap Bitcoin for almost anything. It puts you in touch with other people who want Bitcoin. They might swap it for cash, a paypal or neteller payment or something like that. It is a great idea, but one word of warning, you are dealing with other people directly. The company localbitcoins.com just provides the platform (a bit like ebay does when you sell something), so there is more chance of fraud or transactions going wrong.
How To Sell or Spend Bitcoin – Our Conclusion
Between the Bitcoin exchanges, the debit cards and localbitcoins.com all your bases should be completely covered. Between these options you can achieve whatever spending pattern you desire. That might be selling your Bitcoin into normal fiat currency or spending your Bitcoin at the shops, or perhaps withdrawing those funds from an ATM cash machine.
This article has shown you how to sell or spend your Bitcoin. It is simple, but as time goes on it will become even more accessible and not just be the currency of the Bitcoin sportsbooks and other similarly progressive companies. It has to get even easier to use in the real world if greater adoption is to take place. That way it will become part of the mainstream and expect its value to keep rising as that happens. So, one last word of advice, remember to keep some Bitcoin aside for a rainy day. It may prove to be the best investment you ever made.