How to withdraw Bitcoin to a bank account: A beginner’s guide

Key takeaways

• Three primary methods for withdrawing Bitcoin from your bank account are peer-to-peer (P2P) exchanges, cryptocurrency exchanges and Bitcoin ATMs.
• P2P exchanges offer a direct and often more personalized approach to Bitcoin withdrawal. They typically involve dealing directly with another individual.
• While direct selling on crypto exchanges can be convenient, it’s subject to regulatory restrictions in certain regions. The process involves using an order book to match buyers and sellers.
• Bitcoin ATMs offer a physical way to withdraw Bitcoin as cash. However, they may have location limitations and might require identity verification.

Withdrawing Bitcoin to your bank account might initially seem complicated, but it’s a straightforward process once you know the steps. Whether you’ve just made your first profit and want to cash it out or just looking for a refresher, this beginner’s guide will help you navigate the process. 

You have several choices when exchanging your Bitcoin for cash and transferring it to your bank account:

• Peer-to-peer (P2P) platform: You can sell your Bitcoin (BTC) to someone who will deposit the money into your bank account.
• Cryptocurrency exchange: Selling on an exchange that uses an order book is another option. It’s fairly easy but restricted in several countries because of regulations.
• Bitcoin ATM: If you prefer to do it the old-fashioned way, you can withdraw cash straight from a Bitcoin ATM and deposit it into your bank.

Every approach has advantages, so pick the best one for you!

First, let’s start by learning how to cash out Bitcoin using a P2P exchange:

Selling Bitcoin via a P2P exchange

P2P exchanges are popular among crypto users looking to withdraw money for several reasons. The platforms connect buyers and sellers of cryptocurrencies directly with each other. 

Many centralized crypto exchanges have their own P2P platforms. To safeguard the transactions, exchanges typically hold the sellers’ cryptocurrency in escrow. Escrow services provide security by acting as a neutral party that holds funds or assets until agreed-upon conditions are fulfilled. This reduces the risk of fraud.

Once the seller confirms receipt of payment from the buyer, the crypto is transferred to the buyer’s account.

P2P platforms offer a straightforward user experience. If you aren’t already registered, you usually need to complete a Know Your Customer (KYC) process. Depending on where you are, you can choose from several withdrawal methods, including bank wire transfers, PayPal or mobile payment. 

Did you know? The first-ever Bitcoin transaction was made in 2010 when a programmer paid 10,000 BTC for two pizzas.

To help you understand the process of converting Bitcoin to cash (fiat currency) on a P2P platform, here is a walkthrough using Binance P2P as an example:

Step 1: Create an account and complete verification

• Sign up with your email or phone.

• Complete the verification process. This includes verifying your email and phone number. Binance will send a one-time password to your email and phone number, which you need to log in. 
• This is followed by the KYC process, which requires you to upload a government-issued identification document and get yourself photographed.

Step 2: Transfer Bitcoin to the exchange wallet

• Transfer Bitcoin from the external wallet to the exchange’s wallet address. An external wallet is a separate wallet — usually a hardware or software wallet — that you control independently.
• To access the address, click the “Deposit” button in the top-right row, as shown in the below picture.

• A pop-up window titled “Fund Your Wallet” will appear, with a button titled “Deposit Crypto” on the left. Tap the button.

• Thereafter, click “Deposit Crypto” in the left menu.

• Pick BTC from the drop-down menu and choose the correct blockchain network. The exchange will display the address.

• Transfer Bitcoin from your external wallet to this address.
• Once the Bitcoin reaches your Binance wallet, you’ll need to move it to your funding wallet within Binance to enable the transfer process.

Step 3: Set up withdrawal

• Click “Withdraw fiat” on the left menu. 
• Set up details like currency and preferred withdrawal method.

Did you know? Only 21 million Bitcoin will ever exist, making it a scarce digital asset. Once they’re all mined, no more can be created!

Step 4: Set up the P2P platform

• Click the “Deposit” button at the top-right menu. Then, select “P2P Trading.” Alternatively, you could hover your mouse over “Trade” at the top menu and then click “P2P” from the drop-down menu.

• The P2P platform will appear on the screen. 
• At this point, you need to set up your preferences, such as​​ whether you want to buy or sell cryptocurrency, your chosen fiat currency, etc. You can make these choices using a string of controls on the top, including several toggle, text and drop-down buttons.
• The screen also displays a list of advertisers and useful information, such as the number of orders it has completed, the percentage rate of completion, the price it is offering, the available/order limit and the payment method chosen. You can have an overview of the advertisers and then select “Sell BTC”.

Step 5: Sell Bitcoin

• The next screen shows all the necessary details about an advertiser, including payment time limits and average payment time. On Binance, an “advertiser” is the potential buyer of your Bitcoin.
• The right side of the screen allows you to specify the Bitcoin you want to sell. It also displays the amount you’ll be receiving.
• If you want to add more Bitcoin to your funding wallet before you sell it, you can use the “Add” button.
• Click “Sell BTC.” A new screen will appear, requiring you to confirm the buyer’s payment. Once the payment arrives in your bank account, confirm it, and Binance will transfer the crypto to the buyer’s wallet.

Selling Bitcoin on a crypto exchange

On several exchanges, you can sell your Bitcoin for fiat currency directly to the crypto exchange itself. The crypto exchange then transfers the fiat currency to your bank account using your preferred method. This process is usually quick, often taking just a few minutes.

These exchanges operate on an order book model to manage these transactions. The order book is a real-time, continually updated list of buy and sell orders for cryptocurrencies, which helps determine the prices at which transactions are executed.

Notwithstanding the convenience factor, “direct” selling of Bitcoin to crypto exchanges isn’t universally available due to geo-specific regulations. For example, in India, exchanges like CoinDCX initially allowed users to sell their Bitcoin instantly but had to stop offering this service due to new regulatory guidelines. This shows how varying regulations can impact the availability of certain crypto services.

Did you know? Bitcoin was created by an anonymous person or group known as Satoshi Nakamoto. To this day, no one knows who they really are.

Selling Bitcoin on Bitcoin ATM

Selling Bitcoin using a Bitcoin ATM is simple. You must locate a nearby Bitcoin ATM, and there are several methods of doing so:

• Websites like CoinATMRadar or CoinFlip offer comprehensive maps and directories of Bitcoin ATMs. Additionally, mobile apps such as Bitcoin ATM Map provide convenient access to this information.
• Cryptocurrency exchanges often list affiliated Bitcoin ATMs, making it easy to find one near you.
• You can also search for local listings of Bitcoin ATMs using popular search engines or local business directories.
• Online communities, forums and social media groups dedicated to Bitcoin often discuss ATM locations and user experiences.

Crypto ATMs usually require you to verify your identity before cashing out Bitcoin. 

You need to go through the following steps to understand Bitcoin to bank account process:

• Enter your phone number: You’ll receive a verification code via SMS.
• Select “Sell”: Choose this option on the ATM screen.
• Enter the amount: Specify how much Bitcoin you want to sell.
• Send Bitcoin: Scan the QR code on the ATM with your wallet app and transfer the Bitcoin.
• Collect cash: The ATM will dispense the equivalent cash amount. Some machines may require you to tap a “Redeem” button.

You can then deposit the cash in your bank account using a bank cash deposit machine or visit a branch.

The specific steps to sell Bitcoin might vary slightly between different Bitcoin ATM operators. Verification might not be necessary for smaller transactions.

Bitcoin withdrawal to bank account: How the future may unfold

As cryptocurrency becomes more integrated with mainstream finance, withdrawing Bitcoin to your bank account may become more convenient. As cryptocurrencies gain wider acceptance, more banks and financial institutions are likely to form partnerships with crypto platforms.

With this trend, instant withdrawals, lower fees and better exchange rates could become common. Over time, as regulatory frameworks solidify, users will likely feel more confident converting Bitcoin into cash. 

Additionally, as blockchain technology continues to evolve and merge with traditional banking systems, the reliance on conventional bank withdrawals may decrease. Blockchain offers more direct and efficient ways to access funds and facilitates smoother transactions across various platforms.