Occasionally, the investment landscape is engulfed by a new commodity or instrument. There is usually a lot of hype and very quickly a number of platforms or broker sites are established. Cryptocurrencies have not been any different. Whilst it took a long time for cryptocurrencies to gain serious traction, the markets have exploded in recent years.
One of the reasons that cryptocurrencies gained acceptance so slowly was possibly the lack of a mechanism to dispose of the assets. Whilst coins were being mined and buyers were taking the plunge, there were very few avenues for changing back from crypto to fiat currencies.
The first known crypto to fiat sale took place in October 2009 when 5,050 BTC were sold for $5.02 and paid through PayPal. Although digital currency exchanges proliferated over the ensuing years, these were mostly for exchanging or purchasing digital currencies. The first real fully functional crypto to fiat exchange may have been Mt. Gox which was launched in July 2010.
How to capitalize on your crypto gains?
Of course, as with any investment, gains are always just theoretical until you can turn the asset back into a mainstream currency via a crypto to fiat trade. This works pretty much the same way as selling stocks or property - you need to find a buyer willing to buy your asset at your asking price.
Given all the hype around cryptocurrencies, there are more than enough buyers that will snap up a good offer. It's wise to keep in mind, though, that buyers will always be bargain hunting. However, unless you need the cash urgently, hold out to get your price. It may be a little scary at first because cryptocurrency prices can move quite sharply at times.
The actual crypto to fiat exchange process involves a few steps. Firstly, you need to register with an exchange or broker. In some jurisdictions this may involve identification and anti-money laundering measures. Thereafter, you deposit your crypto coins and follow the prompts to process the sale. Finally, you need to withdraw the fiat funds and transfer them to your bank account.
What to look out for when choosing a crypto to fiat off-ramp?
Along with all the players that have seized the cryptocurrency opportunity, a few new industry terms have emerged. New technology usually gives rise to new terms that are necessary to identify or describe unique new functions or characteristics.
With cryptocurrency trading, “off-ramp” and “on-ramp” are among those new terms. These refer to mechanisms through which you can enter or exit the cryptocurrency market. On and off ramps provide the interface that allows fiat to crypto and crypto to fiat exchanges to take place seamlessly. There are several specifics to look for in deciding on the best off-ramp:
- Currencies offered. This refers to both crypto and fiat currencies. Many ramps will offer only a select basket of currencies or only an on-ramp and not a crypto to fiat option.
- Location of the ramp provider. This will determine the legal and taxation framework of any crypto dealings. Apart from the corporate jurisdiction, it is also important to know where the financial license was issued as that would regulate the actual dealing activities.
- Support. Occasional technical issues are almost a given in the technology space. Choosing a provider with around the clock, reliable support is non-negotiable.
- Rates and fees. Transaction fees vary greatly and can erode modest gains quite significantly.
- Payment methods. The more payment methods available, the more customers can be accommodated. Another watch point is that different payment providers also have different fee structures. Crypto to fiat exchanges carry price volatility risks and this may be reflected in the fee structure.
- Transaction limits. Some traders may be restricted if limits are too low for their trading strategies.
- Other considerations such as anti-money laundering and Know Your Customer requirements, fraud prevention and security measures, and company stability should also be considered.
Is OTC better than the traditional exchanges?
Picking sides between Over the Counter (OTC) brokers and the traditional exchanges is not very easy. Choosing a vehicle for crypto to fiat deals is even more difficult as the options are a little more limited. Ultimately, the choice depends on the requirements of the individual investor.
OTC is generally suited to larger investors. The deals are typically bespoke and closed by a mediator bringing together a specific buyer and a specific seller. For crypto to fiat exchanges, liquidity is the lifeblood. Whilst traditional exchanges may cater for the smaller players, the higher end of the market will favor the peer-to-peer deals offered by the OTC market.
In contrast, the traditional exchanges are typically purely digital, and trades are automated based on certain preset parameters. Closing a deal on an exchange depends on there being simultaneously a buyer and seller with overlapping price expectations.
Which are the best crypto to fiat exchanges you can use?
There are several established names in the crypto trading space. When choosing an exchange, you should consider the same factors as we discussed in relation to choosing an off-ramp. We take a brief look at a few of the best-known exchanges that also offer crypto to fiat deals.
- Crypto.com offers proprietary crypto denominated debit card in addition to an exchange dealing with a comprehensive range of digital assets. Cardholders can spend cryptocurrencies as they would fiat currencies. They also have the opportunity to earn cash back incentives or interest.
- Nexthash is a relative newcomer to the digital asset markets. Offering the best of both worlds with an OTC trading desk and a fully regulated crypto exchange, Nexthash also features a P2P platform which facilitates crypto to fiat exchanges.
- Binance offers the largest range of trading pairs and have the lowest fees compared to the other major exchanges. Binance is available in more than 100 countries.
- Coinbase, founded in 2012, is one of the oldest and most popular exchanges. Although they offer a smaller basket of currencies, they also operate in more than 100 countries.
Choose Nexthash and capitalize on your crypto profits
Built on blockchain technology, Nexinter is Nexthash's state of the art cryptocurrency exchange. Pair this with the bespoke OTC desk, and you have the ultimate in trading flexibility. With multiple pairs, a hackproof payment gateway and a choice of payment methods, Nexthash is your best bet for crypto to fiat trading.