How to withdraw your cryptocurrency revenue

How to withdraw your cryptocurrency revenue

During the last few years, Bitcoin and other cryptocurrencies have received considerable popularity, given the large trading volumes, capital invested and of course supply and demand laws. With these high demands, many jumped onto the bandwagon of exploring what cryptocurrencies are all about, and a good majority may have at some point ended up buying some coins too. The same would apply to the more advanced trader or investor.

Whichever the case, there comes a point when you would like to withdraw these assets into the real world where you can actually use them to buy goods and services. There are many ways to go, and for new users understanding, this may be somewhat challenging. But fear not, this article will help you put things into perspective and get you on your way to cross the bridge between the digital cryptocurrency world and the tangible one that we live in!

Fiat currency

Before we discuss how you can withdraw your cryptocurrencies let us explain what the word “Fiat” means as you may have heard this on almost all things related to exchanges and currencies. Fiat money is a currency that a government has declared to be legal tender, but it is not backed by a physical commodity. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material from which the money is made. The U.S. dollar is considered to be both fiat money and legal tender. Legal tender is any currency that a government declares to be legal. Many governments issue fiat currency, then make it legal tender by setting it as the standard for debt repayment.

Unlike many other exchanges, Lykke allows you to deposit fiat currencies into the exchange. You can make a wire transfer from your bank to Lykke bank account to deposit these funds to your Lykke Wallet account. Alternatively you can use your credit card, it’s much quicker. The most common fiat currencies that are accepted by exchanges are USD, EUR, GBP, CHF.

Forms of revenue

Once you’ve traded on crypto exchanges for a while you would have accumulated a fair share or cryptocurrencies, tokens and fiat currencies. Therefore the main two forms of revenue you would have are cryptocurrencies and fiat.

Withdrawing cryptocurrency

Unlike fiat currencies, cryptocurrencies can’t be sent directly to the bank. They need to be first exchanged for fiat currencies in the exchange and then the fiat currency can be withdrawn. (more on that below). You may, however, withdraw your cryptocurrency to another wallet. It is like sending funds from your wallet (where it resides now) to another wallet (it could be yours or someone else’s). All you would need to perform this transfer is the other person's wallet address. It’s like paying someone with crypto!

Most exchanges will deduct a small fee when you withdraw crypto funds from your wallet. The fee is usually fixed and deducted at source meaning taken out at the time of the transfer. Lykke clearly shows you the amount being transferred and the fee separately when you request the transfer to avoid any confusion.

It is worth mentioning that cryptocurrencies can also be withdrawn to a hardware wallet that you physically own. These little devices look like a flash drive which you plug into the USB port of your computer and transfer the funds into it. They have major advantages over standard software wallets such as:

  • immune to computer viruses that steal from software wallets,
  • can be used securely and interactively, private keys never need to touch potentially vulnerable software.

The withdrawal is considered complete when the exchange submits you the details of your transfer to the blockchain.

A few other not so common withdrawal methods worth mentioning here are:

  • Person to person exchanges. Services like LocalBitcoins.com operate a P2P marketplace, where those who are interested in either purchasing or selling digital currencies, can do so with other people. Most services like these are escrow-based and offer transparent fees, therefore trust issues are basically non-existent.
  • Bitcoin prepaid cards. Bitcoin prepaid, or debit cards have been around for a while. These cards are normal cards, generally issued by Visa or MasterCard which can be funded via BTC or other currencies.
  • Crypto loans. There is a number of new companies which will allow you to take out loans and use your cryptocurrency holdings as collateral. You deposit your currency into a smart contract where it is held and you receive fiat currency to your bank account.

Withdrawing fiat currency

Your revenue on the crypto exchange can also be converted into the traditional fiat currency that we talked about in the beginning. If you want to withdraw your cryptocurrency in the form of fiat currency, you would first need to convert it. You convert it in the same manner that you exchange other cryptocurrencies. For example, if you have BTC and wish to cash out to the bank in USD, you would first exchange your BTC for USD on the exchange. You may then withdraw the USD in any of the forms below:

  • Directly to a bank account
  • To a payment card

The most common and safe method used to withdraw these fiat currencies is by performing a SWIFT bank transfer (also known as a wire transfer) to your own personal bank account. Similar to withdrawing a cryptocurrency, most exchanges will charge you a fee to perform the withdrawal. One minor drawback of using this method is that the transfer depends on the bank SWIFT transfer network and is usually slower. In addition to that there are many intermediary banks that are involved to bring these funds to your country and into your bank account, and as a result, intermediary bank charges are often levied to the receiving user. Having said that it is still the trusted and proven method of fund transfer across the globe.

A newer trend is currently emerging where fiat currencies can be directly withdrawn to your payment card which was used to make a deposit into your account initially. This successfully completes the full circle of fiat money flows to and from Visa or MasterCard, meaning that you can deposit and withdraw funds in just a few clicks, once payment card is linked to your account. Currently only a few exchanges offer this service.

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