How to Cash Out Crypto in Canada: Complete Guide 2023
When it comes to investing in crypto, you will find a thousand ways out there. But when it comes to taking your money out of a trading platform and converting it to fiat, it’ll leave you wishing you never invested in the first place. The process can feel especially daunting at first if you’re not that tech-savvy. There are various ways that you can cash out your crypto in Canada. You can either sell it on an exchange, go to a broker, use an ATM, or use a peer-to-peer market. All of these ways have their pros and cons, and you can use any one of the methods based on your ease of use and accessibility.
The investment climate has changed a lot in the past few years. Cryptocurrencies first rose to fame after the great debacle of 2008, when the housing bubble burst and the entire world was engulfed in a financial crisis. An entity known only as Satoshi Nakamoto announced that the people had lost faith in the status quo, and demanded a more equitable distribution of wealth. That was when Bitcoin was allegedly born as a stark reminder to the financial world that there are better ways to do certain things.
Although Bitcoin met a lot of criticism at first, its following has only increased with time, and through the path paved by Bitcoin, many other cryptocurrencies also came into the scene, providing different solutions to find a niche for themselves in the global economy.
Let’s take a deeper look into what Bitcoin and the blockchain really are, and what truly sets them apart from traditional financial systems.
Bitcoin on the Blockchain
You’ve probably heard the word ‘Bitcoin’ spoken so many times in conjunction with the word ‘blockchain’ that it is imprinted in your brain that there is a close relationship between the two, and that is true to a certain level. To start with, you need to understand what a blockchain is.
A blockchain is a distributed database that stores data in blocks, connecting them to form a chain of blocks, or a ‘blockchain’. A certain number of transactions can be entered into a block, after which a new block is minted that contains information about the previous block as well as more space to store more data.
The most important feature of a blockchain is that it is decentralized, that is, there is no central authority controlling it. How does that even work? Bitcoin’s blockchain was created on the basis of a proof-of-work protocol. Anyone could add data and validate transactions as long as they solved a series of complex mathematical problems that required significant amounts of computing power to prove that they were not malicious actors.
The creators thus disappeared into myth, and the blockchain was maintained by common people. However, there needed to be a way to conduct transactions, and to give people an incentive to expending computing power to maintain the blockchain. Thus, the native token of Bitcoin, BTC, was treated as a currency.
All transactions on the Bitcoin blockchain are conducted with BTC. People who maintain the blockchain, also popularly referred to as ‘miners’, get rewarded with BTC for their efforts. As fiat money started pouring into the system with more and more people wanting to own BTC and use the blockchain for transactions, the value of BTC rose exponentially.
Is that all Blockchains can do?
Bitcoin was a disruptive technology that intended to replace the entire fiat financial system, securing its place as the money that people trusted. It was a fairly straightforward use of blockchain technology that nonetheless attracted a lot of people. However, Bitcoin only really scratched the surface of what a blockchain can truly do.
When the Ethereum blockchain came along, it envisioned a different future. It saw a future in which blockchain technologies could coexist with traditional financial systems. For the first time, it introduced the concept of smart contracts. Smart contracts allow both individual users and companies to draw up digital contracts that are executed on the blockchain and upheld by it. The introduction of smart contracts opened up a myriad of opportunities, allowing the creation of decentralized applications that dealt with all sorts of things like finance, social media, and entertainment.
Smart contracts are a bid to vest control away from the corporation, and they’re working. Soon, when the dream of Web 3.0 is achieved, we will have social media, entertainment, games, finance, and everything controlled through consensus instead of the global elite.
We live in a world where it is a very sane and wise option to invest in cryptocurrencies, especially since they offer better returns than most other investment options in this post-covid economy. For the people who invested at the right time and started selling at the peak of the bull run, there is now only one thing left to do; take their money out and enjoy the fruit of their investments. Let’s start by taking a look at how you can use an exchange to do that.
Using Cryptocurrency Exchanges for Canadian dollars
A cryptocurrency exchange acts as an intermediary between buyers and sellers. They provide a secure platform where people can store, buy, and sell cryptocurrencies without the constant of being defrauded. The way it works is that buyers and sellers place orders, and the exchange finds compatible buy and sell orders and executes them. Exchanges use a variety of order types to allow people to trade crypto exactly the way they want to so that users can easily sell Bitcoin and other cryptocurrencies.
You can place limit orders which will automatically be executed when a certain price is reached. For example, you place a limit sell order to sell Bitcoin as soon as it reaches 60,000. The order will be executed as soon as the price hits that level and people are willing to buy BTC at that price. You can also place a stop-loss order. For example, consider that you bought BTC at 40,000, and want to sell it as soon as it goes to 39,000 to protect yourself from further losses. The order will be executed when the market price reaches 39,000 on the exchange you’re trading on. If you can surely sell Bitcoin depends on the liquidity of the exchange and trading platform though. Not always might there be buyers ready to take the offer.
The exchange makes money in the process by charging users transaction fees. For Canadian users, there are a lot of options available when it comes to exchanges. You have Coinbase and Gemini amongst the most well-known ones. There are also Binance, KuCoin, Bitfinex, BitStamp, and others that offer services in Canada.
Using a Broker to sell Bitcoin
The problem with exchanges is that they can be a hard pill to swallow. You open your average exchange, you’ll find yourself being bombarded by tabs upon tabs, lists and rankings, prices and modulations, and much more. Each of those tabs has a myriad of tabs and buttons inside them, with graphs popping out of nowhere and so many fluctuating numbers that you’ll feel like you’ve entered the matrix. This is usually what people who are not that good with tech experience the first time they enter into an exchange.
If you want to bypass all this trouble, you have the easier option of using a broker to sell bitcoin and other cryptos. People confuse brokerages and exchanges when it comes to crypto. A brokerage usually routes its funds to an exchange, sells it, and gives you back the converted currency directly into your bank account.
The plus point of using a brokerage like Bitbuy, for example, is that it is extremely easy to use. The interface is simple, and you just have to enter the cryptocurrency and the amount that you would like to sell, and then you have to choose what currency you want in return for that. The brokerage handles all other concerns for you, and you can just take your money into your bank account via wire transfer.
Of course, this convenience comes at the expense of better pricing opportunities and lower fees that are available on exchanges, but most people would gladly use a brokerage than lose their hard-earned money by making a mistake on an exchange. To facilitate users, many companies and exchanges provide instant buy and sell services, which are essentially brokerages built into a bigger system.
P2P Marketplaces for Low Trading Fees
A P2P (peer to peer) marketplace is perhaps the closest to the heart of the blockchain ideology. It connects people with people, reducing the need of having intermediaries to almost zero. In exchange, the order book takes to buy and sell orders and executes them based on compatibility. In a peer-to-peer marketplace, you deal directly with buyers and sellers who place their ads on a website or a similar service to allow people to see their offers and interact with them.
There are many options available for Canadian users, including but not limited to Paxful, Bisq, and LocalCryptos. All of these marketplaces attract a certain kind of crowd, with their pros and cons, so it’s always a great idea to do a little bit of research before you jump into the marketplace.
Trading directly with people means that there are chances that you’ll find better opportunities than you do on an exchange or in a brokerage. You also get a greater variety of payment options, ranging from PayPal and bank wire to your bank account, cash withdrawals in fiat currency in the withdrawal method of your choice, and much more. There is a lot of flexibility and options to explore since the only limit is you and the person you’re dealing with.
However, certain risks are also involved. Although most exchanges have an escrow system, there’s still a myriad of ways that you can be scammed out of your money. There are countless stories out there of people finding ways to cheat the escrow system and rob people of crypto worth thousands of dollars, so you should always be careful in your dealings, and make sure that you don’t trade with shady accounts in an attempt to get a better deal. There are ways people can get your wallet address and conduct an e-transfer to leave you broke.
Using an ATM with your Bank Account
This is perhaps one of the most exciting ways to convert your crypto to Canadian dollars. Who would’ve thought that in 2022, there would be a dedicated Bitcoin ATM where you can buy and sell crypto at the push of a button? Canada is way ahead of the world when it comes to this. You can use your debit card, bank transfers, and cash to make transactions on the blockchain directly from the ATM, which is perhaps the closest that the blockchain and cryptocurrencies can come to connect with traditional economic systems.
All you have to do is scan the QR code, and then, depending on the type of ATM, you can either get cash, a bank transfer, or a transfer to a crypto wallet that supports Canadian dollars. You will have to use your wallet address and/or your bank account in the process. The process is really easy, but using Bitcoin ATMs has its cons. The first and most obvious one is the waiting times. Depending on which crypto you’re selling, making transactions on the blockchain can take anywhere from a few seconds to a couple of minutes, so make sure you have some time at your disposal.
Another issue with Crypto ATMs is that they charge an atrocious withdrawal fee, which can go up to a maximum of 10%. That is a hefty sum of money. Thus, at this moment, it’s best to leave Crypto ATMs as a last-ditch effort, if all else fails to work.
This is our list of methods that you can use to empty your Bitcoin wallet, sell your digital currency, and get the sweet taste of some fiat money for your crypto investments. Your bank accounts await to be filled with an e-transfer. Go ahead to your nearest Bitcoin ATM, utilize a Canada–friendly cryptocurrency exchange, or broker, and sell your cryptos and Bitcoin instantly for capital gains in dollar value.
Skrumble.com provides all its content for informational purposes only, and this should not be taken as financial advice to buy, trade or sell cryptocurrency or use any specific exchange. Please do not use this website as investment advice, financial advice or legal advice, and each individual’s needs may vary from that of the author. This post includes affiliate links with our partners who may compensate us.