How to Cash Out Altcoins?

Bitcoin (BTC) introduced the concept of decentralized, digital cash that works with the help of a blockchain network, independently of any centralized banking systems or government institutions. It later spurred thousands of developer teams into launching their own crypto projects during the following decade and ultimately creating a whole new industry.

While Bitcoin is considered the original crypto coin, all subsequent cryptos are called altcoins, where alt means an alternative to Bitcoin. With the rise of Bitcoin’s popularity and the coin’s price, the meaning of the word altcoin evolved – owning a Bitcoin became quite a privilege. A single Bitcoin reached the price of more than 50,000 USD in 2021, which is quite expensive for the average crypto enthusiast. Most altcoins, on the other hand, have a far lower value, with most of the low cap coins trading for amounts far less than 1 USD per coin.

In this guide, we’re going to take a detailed look at whether investing in altcoins is worth it, which are some of the most popular coins, and how to cash them out into fiat money like USD, AUD, GBP, or EUR once you’ve made some profit.

Are Altcoins Worth It Compared to Bitcoin?

The key question crypto beginners often ask themselves is whether it’s worth investing money in altcoins. When you take a look at the cryptocurrency analysis platform Coinmarketcap, you can easily see that Bitcoin accounts for almost half of the more than two trillion USD market cap of the whole cryptocurrency market.

However, unless you’re a large-scale investor with a lot of money, seriously investing in BTC will probably be out of the question for you, unless you want to buy just a fraction of a Bitcoin for a couple of hundred US dollars.

Altcoins, on the other hand, are much more affordable, depending on the different crypto projects you choose to invest in. There are two main incentives for people to invest in various altcoins.

The first one is the fact that you can make a lot of cash if you learn your way around the crypto market and start buying, selling, and exchanging cryptos, profiting from the whole process. Altcoins, just like Bitcoin is very volatile assets whose prices drastically fluctuate and you can make serious money from trading altcoins.

The second serious incentive for investing in altcoins is the potential long-term gains from such investments. Altcoin developers tend to offer users various functionalities to convince them to invest in their projects. These projects can offer people smart contract functionalities, decentralized finance (DeFi) features, decentralized application (DApp) development resources, and many more features that add value to those projects.

When a crypto project manages to secure business partnerships and investment fund support, its market value also rises thanks to the increase of the community’s trust in the project. Over time, successful projects with clear development visions and innovative functionalities tend to drastically rise in terms of market value, which means that an investment in the right altcoins today can mean a lot of money for you in a couple of years.

Trending Altcoins

If you take a look at the top 100 cryptocurrencies on Coinmarketcap or Coingecko, you’ll see a bunch of cryptos that all have serious market caps and affordable prices per coin. You can see their price fluctuation during the last 24 hours, 7 days, and even more, but for crypto beginners, it’s quite hard to decide which of these projects are really worth investing in. You need to spend hours and hours researching which crypto is good for what and what’s its background.

Fortunately, we did the legwork for you. Here is a selection of some of the top trending cryptocurrencies that shows just how much variety and innovation crypto projects can bring to the contemporary financial system.

Ethereum (ETH)

Just as BTC is considered the main crypto coin, Ethereum (ETH) is considered the main altcoin on the market. ETH was launched back in 2014 by developer and crypto enthusiast Vitalik Buterin, as a proof-of-work blockchain-based cryptocurrency ecosystem that aims to provide users with much more than transactions of funds.

In fact, Ethereum is an open-source crypto platform that provides developers with all the necessary resources to create smart contracts and decentralized apps thanks to its highly advanced blockchain technology.

Developers have the Ethereum programming language Solidity and the Ethereum Virtual Machine at their disposal to create fully decentralized apps that can be used in various industries such as healthcare, gaming, finance, education, and others. The mechanism that powers these apps is based on smart contracts, which are self-executing agreements built with computing code to automate complex operations such as regular payouts, transactions, data classification, and other essential aspects of decentralized apps.

Smart contracts save time and money, making things much easier, because healthcare institutions, for example, can automate the collection of patient status information into one system, so that a doctor can instantaneously view a patient’s whole health history with a couple of clicks. Such solutions are already implemented in the healthcare industry thanks to the Ethereum network.

Hundreds of cryptos and tokens are also built upon the Ethereum blockchain, which is another top reason for its number two spot on the market, right behind BTC.

Ripple (XRP)

Ripple is a great example of a digital cash cryptocurrency that’s great for facilitating lightning-fast, cross-border payments between any two locations in the world. Classic bank transfers fade in comparison, as they can take hours or sometimes even days when it comes to international transactions that require several intermediaries and extensive documentation.

XRP transactions take around 5 seconds to get approved on the Ripple blockchain and the network can process up to 1500 transactions per second, making it a perfect choice for large-scale business transactions on a reliable network.

Also, Ripple has a fantastic exchange system that enables automatic conversions of XRP coins to the local currency of the sender or receiver. This is done by pulling the best exchange rates from numerous fiat money exchanges and combining them to find the best exchange rate at the moment.

Monero (XMR)

Privacy is a huge issue for crypto traders because transactions on some of the most popular blockchains such as Bitcoin or Ethereum are fully transparent and publicly checkable with a block explorer because these blockchains are distributed public ledgers. This is why privacy-focused cryptocurrencies such as Monero were developed.

Monero uses a private blockchain model where only blockchain users can track their transactions on the XMR blockchain. Also, a very advanced encryption model called ring signatures is implemented in order to obscure the source and destination of a transaction, as well as the number of transferred coins. Ring signatures create numerous fake transaction signatures that hide the real one from potential security breaches, concealing all transfer information from third parties.

Bitcoin Cash (BCH)

Bitcoin Cash is a famous altcoin that was created as a hard fork of the original BTC blockchain in 2017. A hard fork happens when part of the community of a certain crypto project decides to implement some radical changes in the blockchain but a large part of the community disagrees with the changes. When this happens, the original blockchain forks into two chains, the original one and the new one.

BCH was created because of the 1MB blockchain block size limitation of BTC. The block size of BCH was expanded to 8MB per block, enabling the processing of many more transactions in a single block.
Binance Coin (BNB)

Binance is one of the largest crypto exchanges in the world and it also has its own cryptocurrency, the Binance Coin, which is one of the top 10 cryptos in the world by market cap and adoption rate. Binance also has its own blockchain, the Binance Smartchain, which enables developers to build tokens based on the Binance network.

This coin is used to pay for transactions on Binance and it’s a great intermediary coin for buying and exchanging all Binance-Smartchain-based tokens.

Tether (USDT)

Tether is one of the top ten coins on the market and what distinguishes it from the rest is the fact that it’s a stable coin. Stablecoins are cryptos that aren’t volatile because their coin value is tied to a certain asset’s price such as the US dollar.

One USDT coin is always the price of 1 USD, which makes it a great coin for cashing out cryptocurrency trading gains. If you earn 100 dollars from trading cryptos and just keep those traded cryptos, their value might drop if they are quite volatile, but if you convert that 100 USD into Tether, you’ll always have those 100 dollars, ready for cashing out or for further crypto investments.

Cardano (ADA)

Cardano is a very promising crypto project launched in 2017 by Charles Hoskinson, a member of the original Ethereum developer team. ADA aims to provide users with smart contracts and decentralized app functionalities but it doesn’t use proof of work like ETH.
Physical cardano and binance coin on brown surface

Instead, Cardano uses a proof of stake algorithm, which doesn’t require the immense computing power of Ethereum miners that validate each transaction through proof of work.

The ADA blockchain confirms transactions based on coin staking, by granting transaction validating authority to ADA holders that stake their own coins as a guarantee for the truthful validation of transactions.

Dogecoin (DOGE)

Dogecoin is the most popular so-called meme coin on the market. It started out as a joke crypto back in 2013 but rose to immense popularity after it was publicly endorsed by Elon Musk. Since then, dozens of cryptos that aim to leverage the popularity of Dogecoin have emerged, using similar Doge meme names and icons.

DOGE is a good example of a coin that has managed to evolve from a total crypto outsider and literal joke in the crypto community, all the way to one of the top-ranking cryptos on the market.

Popular Methods for Cashing Out

If you decide on investing money in altcoins and manage to secure some profits from trading coins at the right moment, you’ll probably want to cash out at least a part of that profit into fiat money, since you can’t use crypto in the traditional financial system.

There are several options for cashing out your altcoins and these are the most popular ones for turning your coins into fiat money.

Crypto Exchanges

Cashing out altcoins through the use of cryptocurrency exchange platforms is one of the most popular methods. Popular crypto exchanges have huge trading volumes and are very reliable and trustworthy. You know your coins won’t get stolen and that you’ll really get what you ordered when placing an exchange order on a crypto platform.

You just need to follow these steps to cash out your coins and once you get the hang of it, cashing out through exchange platforms will become a routine operation for you.

Exchanges That Cash Out to Fiat: Binance and Coinbase

The first thing you need to do is choose an exchange platform for cashing out your coins. In order to keep the process as simple as possible, you need to select a fiat-friendly exchange platform that supports crypto to fiat conversion. Many exchange platforms support fiat money deposits but don’t have crypto to fiat cash-out options, or they only support crypto deposits and withdrawals.

Binance and Coinbase are some of the most popular exchange platforms on the market that support the withdrawal of fiat money. These exchanges are regulated platforms that are licensed to operate in the regions where their services are available, so it’s perfectly legal to use them to cash out your altcoins.

When creating a user account on these platforms, you’ll be required to give your personal information in order to comply with the KYC (know your customer) protocol, which requires regulated exchanges to keep detailed records of their customers in order to prevent scams and money laundering. You’ll need to provide your full name, address, phone number, email, and a photo of one of your official government-issued documents such as a government ID card, passport, or driver’s license. This information will remain confidential and the exchange platform won’t be sharing it with any third parties.

Select an Intermediary Coin (If Necessary)

When you’ve selected a fiat-friendly exchange and created a user account, you might need to first convert your altcoins to an intermediary coin that will more easily be exchanged for fiat money. For example, if you want to cash out some XMR or DOGE coins but your exchange doesn’t support the direct conversion of those digital assets into fiat money, you’ll need to select an intermediary coin from which you’ll be able to cash out into fiat.

Bitcoin and Ethereum are the most popular intermediary coins because they are the most popular cryptocurrencies and all exchanges that allow conversions to fiat money support at least BTC to USD conversions, but they usually also support ETH to USD exchanges.

Select an Appropriate Crypto-Fiat Trading Pair

If you don’t need to convert your altcoins to an intermediary coin or if you’ve already done it, you’re ready to select a crypto/fiat trading pair in order to cash out your coins. You should look to select a trading pair that will convert your cryptos into a fiat currency that will be most convenient for you to send to your bank account.

For example, if you’re located in Australia and have a local bank account, then you should look for a trading pair such as BTC/AUD, in order to avoid any extra steps such as converting USD to AUD and losing an additional percentage of your funds due to conversion fees.

Keep in mind that, trade fees aside, converting your altcoins to fiat money will cost you exchange fees, and sending the converted cash to your bank account will also incur an additional fee. You should definitely check your exchange platform’s fee policy before converting your cryptos because differences in fees can be quite large between some popular exchange platforms.

Send the Cash to You Bank Account

Once you’ve converted your altcoins to fiat money, you’re ready to send the cash to your bank account. In order to use your fiat money for everyday purchases or fund your credit card or debit card, you need to send the money to your bank account first. Most banks don’t deal with cryptocurrencies because digital currencies still aren’t recognized as legitimate assets by the traditional banking system.

This is why you need to convert your coins into fiat, but a lot of banks also don’t want to deal with fiat money transactions that originate from cryptocurrencies, because they aren’t able to confirm that the money comes from legitimate sources. This is why it’s best if you check with your bank whether they accept cash transactions that originate from cryptocurrencies.

Also, some banks may freeze your incoming assets if they have any suspicions regarding the origins of the money and they may require you to provide extensive documentation and further explanations about the source of the money. This can be quite inconvenient and complicated if your money comes from crypto trading because you would need to provide detailed records about each purchase from which you’ve profited.

The best solution is to make sure your bank accepts cash transfers from crypto exchanges to avoid any unpleasant surprises.

Cashout Through OTC Broker or Peer-To-Peer Exchange

Another popular option for cashing out altcoins is to use an OTC (over-the-counter) broker service or to facilitate a peer-to-peer exchange. Using an OTC broker service means that you utilize a platform like Kraken, which has an OTC service to list your offer of how many altcoins you wish to convert to fiat money at a specific rate.

This means that you can control most of the agreement parameters because you can set a specific price on your altcoins. An OTC deal can take some time however because there might not be any interested buyers at the moment that want to purchase your altcoins at the price you’ve listed.

A peer-to-peer cash out is also a type of direct deal between a buyer and seller but there’s no intermediary platform that guarantees the deal will go through. This means that you need to manually find an interested buyer on a crypto-related forum or social media group and then negotiate the terms of the exchange directly.

This can be profitable because you’ll avoid all sorts of platform fees, but it can also be very risky because no one can guarantee you that the other side will really fulfill the agreement. It’s best if you find a peer-to-peer trader that’s trusted by the community and recommended by other traders.

Crypto ATMs

In case you have a crypto ATM in your area, you might use it to cash out your altcoins. You should check to see if there are any of these machines in your vicinity. If you manage to find a crypto ATM nearby, all you need to do is first convert your coins to intermediary crypto supported by the crypto ATM. Bitcoin is the most common crypto available on crypto ATMs, so it’s best to convert your altcoin to BTC and send them to your crypto wallet.

Then you go to the machine, sell Bitcoin through the ATM, and withdraw your fiat money. Keep in mind that crypto ATMs charge relatively high fees and have daily withdrawal limits that might not be the best solution if you’re looking to cash out a lot of altcoins.

Don’t Forget About Taxes

No matter which cash-out method you choose, it’s very important to keep in mind that any profits made from crypto trading are considered capital gains, which are taxable events. You’ll need to annually file crypto taxes and report them to your local tax authorities because if you fail to file your crypto taxes, you might get into a lot of legal trouble for evading taxes.

A Few Final Words…

Investing in crypto assets isn’t risk-free, because these are highly volatile assets, whose prices constantly fluctuate, but if you learn enough about the crypto market and invest in the right coins at the right time, you might make some serious cash. This guide has listed some of the most popular altcoins on the market, along with detailed explanations on how to cash out your coins into fiat money. We hope it has equipped you with the knowledge you need to start investing in your altcoin of choice.

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