How to exchange fiat money into crypto

How to exchange a large sum of dollars for USDT-1
Cryptocurrency is a full-fledged digital asset. It can be loosely compared to stocks: tokens have their own value, and by storing them in a wallet, you can earn "dividends" (through staking). Some coins significantly increase in value over time. But what about converting cryptocurrency into cash? What methods are available today for converting existing tokens into fiat? How can you quickly exchange cryptocurrency into cash with minimal losses?

Options for Exchange

Method 1: Exchange services

For an average user who isn't well-versed in the digital token market, using exchange services might seem like one of the simplest ways to convert cryptocurrency into cash. There are numerous exchange services that accept crypto, and convenient aggregator websites like Bestchange allow you to compare exchange rates for different coins across multiple exchange services. However, there's a catch: most of them only offer withdrawals to bank cards or electronic wallets, and the commission for such exchanges ranges from 1% to 20% or even more.

In other words, users first need to use an exchange service and then withdraw money from the card or electronic wallet, which might also incur a commission of 0.5% to 2%. This isn't the best option for large sums. Additionally, exchange services don't always have sufficient liquidity. They mainly specialize in small exchanges, typically up to $500 to $1000. If you need to sell cryptocurrency in larger volumes, you'll have to split your tokens into smaller transactions and convert them to fiat through multiple exchange services. There's always the possibility that the bank receiving the funds might block the card if it detects "suspicious transactions." If the person can't prove the source of the funds, it might lead to involvement of tax authorities, and the funds could be frozen indefinitely.

Method 2: Cryptocurrency Exchanges

All cryptocurrency exchanges can be divided into two categories:
1. Centralized exchanges – online platforms operating similarly to government or private banks.
2. Decentralized exchanges – platforms where there is no single group of leaders. The exchange's operation isn't subject to any central authority.

It's only possible to convert crypto into cash through centralized platforms – that's where services like P2P or direct withdrawal to bank cards and electronic wallets are available. Some of the most popular companies in this category today are Binance, Coinbase, ByBit, Bitnex, Kraken, and many others. The main advantages of such exchanges compared to exchange services are:
- Significantly lower fees (around 0.01% to 0.3% for coin conversion).
- Ability to exchange large sums, as these exchanges involve traders with multimillion turnovers.

However, the main drawback is the necessity of mandatory verification. Sellers of cryptocurrency must verify their identity by providing the exchange with identification documents and sometimes even bank statements with the citizen's registered address. This process can take several hours to 2-3 days. Moreover, it takes some time for even experienced users to understand how the exchange works and then deposit their tokens on the platform. These companies actively collaborate with government regulatory bodies. Thus, information about the exchange is likely to be reported to tax authorities. This means that the transaction amount must be declared, and around 20% income tax must be paid.
Some exchanges also offer P2P with the option to directly convert coins into cash. However, the exchange rate in these cases is much lower than the market rate. This method only works if both the seller and the buyer are from the same city or region, which is quite rare.
The option of receiving cash through centralized exchanges is best suited for active traders who pay taxes and withdraw funds through investment accounts.

Method 3: Cryptocurrency ATMs

In major cities, you can also find cryptocurrency ATMs: these are analogs of traditional ATMs, but instead of cashing out funds from a bank card, you do it from a cryptocurrency wallet. This option is convenient but comes with several nuances:

1. Cryptocurrency ATMs are quite rare. Even in the largest cities around the world, they are few in number.
2. Cryptocurrency ATMs have high fees. In most cases, their exchange rates are even worse for users than those of online exchange services.
3. They support a limited range of cryptocurrencies. Usually, they only accept the most popular tokens such as BTC, ETH, ADA, USDT, SOL. Unfortunately, other coins are not accepted.
4. Cryptocurrency ATMs have limited fiat reserves. Additionally, there are daily withdrawal limits ranging from $500 to $2000. Thus, they aren't suitable for large sums.
5. There's a risk of encountering scammers. Numerous cases have been reported where fake cryptocurrency ATMs were installed in major shopping centers. People exchange cryptocurrency in them, transfer their coins, but don't receive cash in return. Retrieving funds or identifying culprits afterward is often impossible.

Direct Exchange for Cash

It's quite straightforward: you need to find a buyer who is willing to directly purchase digital assets for cash. If you've faced difficulties with this in the past, there are now fully operational offline exchange services that allow you to exchange in many countries worldwide, often at rates close to the market rate. Additional advantages of this method include:
- Mitigated risk of exchange account or bank account suspension. Banks and exchanges frequently block profiles after significant withdrawals, citing security reasons. Sometimes, they also request documents to verify the source of funds.
- Exchange data isn't reported to tax or fiscal authorities. This isn't a legal violation as there's no legislative requirement for these companies to share such information.
- You can convert large volumes of tokens into cash directly. This is useful if you intend to use the funds to purchase transportation or real estate.
- A wide range of tokens can be directly exchanged using this method.
- Safe. Cryptocurrency transfer is executed at the moment of receiving cash.
- No need for a bank card, and withdrawals are instantaneous. You don't need to wait for blockchain confirmation as with regular online exchanges or trading platforms.
As an example, you can consider the offline exchange service GeCrypto, which has an extensive international network. Token-to-cash conversion with them follows this algorithm:
1. The seller contacts a GeCrypto representative through a convenient method. This can be done by visiting the company's office, making a phone call, or using their Telegram bot.
2. Specify the amount, currency, and the volume and list of tokens you intend to exchange.
3. The request is processed, and the user receives cash without any bureaucratic hurdles.

Currently, this service is available in more than 30 cities, including Tbilisi, and the list is continually expanding. The optimal method for converting cryptocurrency into cash directly depends on the desired amount the user wants to get in the end. Consider the following recommendations:
- For small amounts, around $50 to $100, the easiest route is through exchange services, provided you're comfortable with their fees.
- For traders, using centralized exchanges is advisable, but be aware that you'll likely need to report such income to tax authorities.
- In other cases, selling directly to a buyer, preferably through offline exchange services like GeCrypto, is the most secure option.

It's also possible that other options will emerge in the future. The possibility of cryptocurrency payments in regular stores and cafes is already introduced. However, the lack of legislative regulation of the circulation of digital assets remains a major obstacle: some countries are hesitant to acknowledge cryptocurrency as a legitimate form of payment.