Whenever investors become interested in investing in cryptocurrencies like Bitcoins, the first question that strikes their mind is the liquidity of this investment. The liquidity of an investment like cryptocurrency is determined by the ease of converting the investment into cash through sale or any other medium prescribed by law or customary trade practice. Like you should pay attention towards the phishing scam and know how to avoid them.
The liquidity of an investment like cryptocurrency is an important factor that motivates the investor to invest in Bitcoins and other forms of cryptocurrency because the ability to extract money from the investment plays a pivotal role in luring the customer.
Impetus on selling Bitcoins
Selling Bitcoin is considered the reverse process of buying Bitcoin by a different party. Selling of the Bitcoin is contingent upon the presence of the Bitcoins in the wallet, which depends upon the purchase of the Bitcoins by the investor.
This important mechanism can be executed with the help of different methods that have evolved over the period. This has increased the liquidity of the investment because the investment can be instantly converted into cash.
1. Exchanges of Cryptocurrency
Like a stock exchange on which securities such as equity shares and debt warrants are traded, a cryptocurrency exchange is a platform for simultaneous buying and selling of crypto assets like bitcoins. It acts like an intermediary that can find the prospective sellers to the prospective buyers and negotiate the final price at which the deal would be finalized.
The investors have to account for different types of exchange applications that have been developed with respect to Bitcoin Trading with Bitcoin Evolution. Accordingly, the investor has taken place the bid, the maximum price at which the cryptocurrency would be sold. It is only when the price at which the buyer wants to buy and the price at which the seller wants to sell strike a deal that the bitcoins are debited from the seller’s account and credited to the buyer’s account against the debit of consideration from the buyer’s account.
2. Person-to-person trade
This is a kind of direct trade that is executed between two entities which can be natural persons or legal persons. This can be performed on any online platform and even through the face-to-face transactions. But this particular form of selling Bitcoins can get complicated due to the fluctuating nature of the value of the Bitcoin. These Bitcoins need not be exchanged for cash, but also, they can be exchanged for other securities.
3. Automated Teller Machines for Bitcoin
Every investor is well versed in the functioning of the traditional ATMs in which a debit or credit card swipe can withdraw cash from the machine. But the automated teller machines which are associated with Bitcoins are different. QR code can be scanned easily. With the help of this code, the available Bitcoins can be transferred to the other party against the payment of consideration, usually received in cash.
But this method of converting Bitcoins into cash can be expensive because the machine usually charges a high transactions fees to convert Bitcoins into cash. Also, the location of the ATM can evaluate the value of different types of cryptocurrencies which can pose a problem at the time of exchange.
4. Using the services of Automated Clearing House
It is important to understand that if an investor is not in the position to find the methods of converting Bitcoins into cash feasible methods, then there is another method considered the easiest of all. This is considered to be the kind of method in which it becomes possible for the investor to deposit the Bitcoins into the automatic clearing house.
After the Bitcoins have been deposited, the clearing house has the current and present value of the Bitcoins. Accordingly, this value is converted into cash and is physically handed to the investors or electronically transferred to the bank accounts. It is useful for accepting both domestic and international transfers.
It can be concluded that all of the above methods are credible methods to convert bitcoins into cash. All these methods’ utility is to enhance the cryptocurrency’s liquidity, ultimately boosting the investor’s confidence to invest in this particular sector. Investor confidence is essential for the long-term survival of Bitcoins.