Cryptocurrency is all the rage right now and you are not alone if you have more questions than answers.
One of the most frequently asked questions about cryptocurrency is whether it can be cashed out for real, or traditional, money.
And it’s a valid question if you want to invest in cryptocurrency or want to withdraw what you have already invested.
Since you are looking for the answer to this question, you are most likely new to the digital world of crypto.
So, below, this guide will explain the basics of cryptocurrency, including the different types of cryptocurrency, whether cryptocurrency is considered real money and, as a result, if it is possible to cash out crypto.
What Is Cryptocurrency?
If you have already put money into cryptocurrency, feel free to skip this part.
But if you are yet to invest and are thinking about investing, this section explains what cryptocurrency is (in layman’s terms) and how it works.
Cryptocurrency, also called crypto, is a digital currency stored in online digital wallets.
It is decentralized, which means it is not maintained or regulated by banks or governments.
Cryptocurrency gets its name from cryptography. Put simply, cryptography is a type of encryption using complex code to ensure information security.
In this case, the security and verification of cryptocurrency transactions.
Cryptocurrency is measured in units, which can be bought, sold, and traded online using cryptocurrency exchanges.
These units can also be created and subsequently put into circulation through a complex process called cryptocurrency mining.
All cryptocurrency transactions are recorded in a public peer-to-peer ledger system using cryptography, which is popularly known as blockchain.
Is Crypto Different From Bitcoin?
Bitcoin is a type of cryptocurrency, much like the dollar is a type of traditional currency.
In fact, Bitcoin was the first type of cryptocurrency to come out (invented anonymously), which started in 2009.
Having been around the longest, Bitcoin is the most well-known and popular type of cryptocurrency.
Other well-known and important cryptocurrencies include Ethereum, Litecoin, Cardano, Polkadot, Bitcoin Cash, Stellar, Dogecoin, and Binance Coin.
Is Crypto Real Money?
To answer the question whether crypto can be cashed out, it is important to understand if cryptocurrency is considered real money.
This includes the value of cryptocurrency and what it can be used for.
Owning cryptocurrency is, in fact, much like owning a key.
This private key gives you access to a fund and therefore the ability to trade it, sell it, withdraw it, or buy something with it.
As a digital currency, crypto gains its value through supply and demand.
This makes it volatile (unpredictable), experiencing frequent ups and downs that entirely depend on the current market demand.
Cryptocurrency is still also relatively new.
It is yet to be implemented to the same degree as traditional currency, but it is possible to be used for buying real-life products and services on e-commerce platforms that accept it.
Can You Cash Out Cryptocurrency?
So, can you cash out crypto? Or, in other words, can cryptocurrency be converted to cash?
The simple answer is yes. Through cryptocurrency exchanges, it is possible to cash out cryptocurrency/convert cryptocurrency cash.
This includes bank account transfers, which can be withdrawn into physical cash.
Cryptocurrency exchanges, also known as digital currency exchanges (DCE), are platforms or services, run by cryptocurrency businesses, that allow cryptocurrency investors to buy, sell, and trade cryptocurrency.
These can also be used to withdraw cryptocurrency to your bank account.
The most popular cryptocurrency exchange is Coinbase. Others include Gemini, Bisq, eToro, Binance, BlockFi, and Kraken.
But cryptocurrency exchanges are not the only way you can cash out cryptocurrency.
It can also be done through peer-to-peer crypto exchanges that allow direct and private cryptocurrency trading between investors.
Is Crypto Safe To Buy?
Now that you know that cryptocurrency can be cashed out, is cryptocurrency safe to buy?
If you are thinking about investing in cryptocurrency – whether that’s Bitcoin, Ethereum, or any other type of crypto – the first thing to be aware of is that cryptocurrency is decentralized and highly volatile (high-risk).
The value of cryptocurrency changes frequently depending on its market demand, which can be high or low due to a range of big and small factors.
It is also worth knowing that while blockchain is considered highly secure, it is not unhackable, as has been proved in the past.
And while cryptocurrency does make use of multi-factor authentication for its transactions, it still involves less regulatory protection as other financial investments such as stocks, bonds, and mutual funds.
Like anything you buy online, it is important to buy from trusted platforms and services.
Cryptocurrency brokers and cryptocurrency exchanges each have their own benefits and security measures, so it’s worth measuring these up before you invest.
How Do You Invest In Crypto For Beginners?
Last but not least, how should you go about investing in cryptocurrency if you are a beginner?
The first thing to do is to choose a method for investing in cryptocurrency.
This is typically, and most safely, done through a cryptocurrency exchange such as Coinbase.
The next thing to do is decide which type of cryptocurrency you want to invest in and how much.
You might want to invest in one – where that’s Bitcoin, Ethereum, Litecoin, Cardano, Polkadot, etc. – or a variety of different cryptocurrencies.
Depending on the current market and the value of the cryptocurrency/cryptocurrencies you are investing in, you might want to time when you choose to buy.
Once you have invested, store your funds (private keys) in a digital wallet.
For beginners, this will most likely be a (hot) wallet included with the cryptocurrency exchange you are using.
The last step is to simply maintain your cryptocurrency investment.
This includes choosing where to store it, trading it, and investing more or withdrawing based on the market demand.
The short answer? Yes – it is possible to convert cryptocurrency to cash by withdrawing it from your cryptocurrency exchange account to your bank account, which you can then withdraw into physical cash.
Another method is to trade crypto using peer-to-peer cryptocurrency exchanges, which allow private crypto trading between investors.
Either way, always make sure that the cryptocurrency platform you are using is safe and secure, and that you know what you are doing/are sure about buying before investing in any type of cryptocurrency.