Graphics By: @tripode
The second newbies initiative task has started. I was chosen to participate in this great opportunity. You can read more about it here. Thank you again you @aliento, @starstrings01, and the whole SMILE community for marking this possible.
My task this time is to find the best way to convert from Crypto to Fiat. I live in the United States, so this process can be really easy but comes with some big caveats.
I’ll first start by detailing how to buy Crypto in the United States. There are a lot of different options, but the two most trusted ways to go from fiat to crypto is to use Binance.us or Coinbase. You’ll notice that the United States has a different Binance than other places. This is because of the many requirements and restrictions the country has on Crypto. This version has far fewer options and is much less useful compared to the Binance many of you are probably used to. For this reason, I stick with Coinbase for my crypto purchases. Their process is simple. You link your bank account and use your money there to buy USDC. Since I’m using fiat from the US this is a 1/1 trade. From there I can trade my USDC for any of the cryptos offered on Coinbase. They have a much larger list to choose from than Binance. From there I can hold onto the crypto I’ve bought, or move the crypto to the wallet I want it in.
Photo By: Nick Chong
The process to convert from crypto to fiat is very similar just in reverse. As long as the crypto I want to sell is on Coinbase I can send it there directly. If it’s not on Coinbase then I first have to convert to a more common coin like BTC, ETH, or DAI, and then send it. There are some situations where the market does not have a matching coin to Coinbase. In these cases, I send the Crypto to MetaMask, convert it to a Coinbase accepted crypto, and send it from there. Once the crypto is on Coinbase I simply convert it to Fiat and send it to my bank account.
Photo By:Nick Chong
This all sounds pretty easy, but if you are familiar with crypto you know the issue here. Fees. The majority of Coinbase’s accepted coins are based on BTC or ETH. These chains have crazy high fees right now. Along with that you also pay a fee when you convert crypto to or from fiat or USDC. If I have to convert crypto on MetaMask that’s another fee. On top of that, the United States taxes income from crypto, so that’s more of your profits. This makes it very difficult to go from crypto to fiat without losing a lot of your earnings. For that reason instead of Fiat, I try to move my earnings into stablecoins. That way I can safely preserve my profits until they are high enough to justify the fees, or the fees go down.
That’s the process for me. Relatively easy, but very expensive. There may be a better way to do it, but I haven’t found one yet. If there is a better option for me I would love to hear about it, so feel free to tell me in the comments, or post a link if you know of any good articles. Thank you for taking the time to read this post. I hope you enjoyed it.