No one can deny that the evolution of the crypto ecosystem is, in many ways, fueled and shaped by hype. The pervasive ‘get-rich-quick’ scheming, speculation, scaremongering, and scamming often leave crypto beginners in a fog of war that prevents seeing a balanced approach to the space.
One frequent question that comes up in support, social media threads, and searches is ‘how do I cash out’? Most new users are unfamiliar with the crypto market and the state of crypto regulation. (To be fair, given the lack of clarity with regulation agencies, even experts can have difficulty defining the current state of things.) Having received some tokens in an Ethereum wallet, it’s quite natural to think: “Well, this is nice! Free cryptographic money – now how do I get it in hand?” In reality, it can be somewhat complicated and not always worth the effort, but it’s a reasonable question that deserves a reasonably clear answer, so here we go.
Is the token worth anything?
First things first – not all tokens are worth anything at all, for now. They may rise in value in the future as the project develops, or the project may never get off the ground. Most tokens that are airdropped into wallets (when they appear there without your knowledge) don’t have any value yet.
You can check current token price on Coinmarketcap. Ethereum block explorers like Etherscan also show prices, but that information is not always up to date. If the token price is extremely low, or the coin is not even listed, trying to swap it may not be worth the time or gas fee for the transaction.
That’s right, you need to pay gas for any transaction on the Ethereum blockchain, so before you can move any tokens, you need some ETH in your wallet. Just a little (0.001 ETH or less, check Ethgasstation for the most current prices) should be plenty to cover a few transactions, but it’s your call whether those tokens are worth the investment.
Get ETH for tokens
Probably the simplest way to convert ERC20 tokens to a currency of more enduring value is to swap them for ETH.
If using MEW, go to the Swap page in the wallet dashboard, select the token on the left and ETH on the right. (If you can’t see the token balance in the wallet, you need to add it as a custom token first.)
If any of the MEW partner exchanges support the swap, you’ll be able to select one on the bottom of the screen and proceed with the transaction, putting the same Ethereum wallet address in the ‘To’ field to send it to yourself.
If the swap is not available in the wallet, you will need to research which exchange supports your token. Then you can make an account on that exchange, send the tokens to the appropriate token address (you should be able to obtain this information in your exchange account dashboard), and, if you choose, send the received ETH back to your preferred Ethereum wallet.
If using wallets other than MEW, look at the relevant support documentation, but the process will be similar: either you’ll be able to swap in wallet, or you’ll need to send out to another exchange for the swap, and then send the ETH back to your wallet.
Get BTC for tokens
The procedure for getting Bitcoin for your tokens is quite similar to the one with ETH, but you need to keep in mind that you need to have a Bitcoin wallet ready before swapping.
Bitcoin is a different blockchain than Ethereum, and you need different wallets to hold these currencies. Whether it’s an address in a multi-currency wallet like Coinbase, or a wallet created with a client-side solution like MEW or Blockchain.com, make sure you are sending BTC to a Bitcoin address and ETH to an Ethereum address.
Once you have a Bitcoin wallet, you can follow the same steps as with ETH on the MEW Swap page, but put the Bitcoin address in the ‘To’ field. If the swap is not supported in MEW, then send out to an exchange, swap, and send the BTC back to your Bitcoin wallet. With select tokens, you will be able to swap directly to BTC. In other cases, you may need to swap the token to ETH first, and then ETH to BTC.
Get cash in hand
Compared to swapping for other cryptocurrencies, cashing out to fiat involves an extra step and, possibly, a KYC procedure. If your goal is to get from a token (or any cryptocurrency, for that matter) to actual cash in your hands, you’ll have to deal with a traditional bank. Most of the time, this means providing information to verify your identity.
For cashing out to Euro or Swiss Francs, you can take advantage of Bity’s exit-to-fiat gateway. If using MEW, you can do this right inside the wallet dashboard. This tool is KYC-less, in that you won’t need to upload your ID and wait to be approved, but you will need to provide your banking details and your phone number (to receive a verification code). Only BTC or ETH can be exchanged for fiat with Bity, so you will need to swap your tokens for one of these cryptocurrencies first.
To get US dollars, first you would need to set up an account with a crypto exchange, like Coinbase, which supports linking your bank account. This approach will require full KYC, with uploading your ID and providing your contact details. After getting approved (which may take a few days or longer), you’ll be able to swap out your Ether or Bitcoin for USD and deposit that money into your bank account.
For other national currencies, you’ll have to do the research to see if any crypto exchanges support them. Surely, Coinbase and Bity are not the only platforms that provide exit-to-fiat services. Wherever you are, you should consult your financial adviser for information about any taxes that may apply when selling crypto for fiat. Although, as mentioned before, regulations are far from clear at the moment.
Alternatives to cashing out
No matter how you got your tokens in the first place – through an ICO, a deliberate purchase, a gift, or an airdrop – now that you’re here, it’s worth looking into the project behind the token. If you think it has value in the space and a chance of succeeding, you may want to hold the coins and see if their value will rise.
The crypto market is still young, which is why many influencers and industry experts advise to ‘HODL’ – Hold On for Dear Life to your crypto in the expectation that value will increase considerably in the next few years. Hodling, as opposed to speculating, also helps stabilize the market for everyone.
If you are unhappy with just having your crypto sit there, consider exploring DeFi instruments, like MakerDAO Multi-Collateral Dai and Aave protocols integrated in the MEW wallet. That way, you get value out of your cryptocurrency without selling it for fiat.
A final note to keep in mind: If you started out in crypto with a client-side, noncustodial wallet like MEW, you are using a decentralized solution and retaining full control of your funds. Exchanges that implement KYC procedures and traditional banks where the fiat will be deposited are centralized entities. That means they can share your information with third parties and take some of the control over your assets away from you. Only you can judge how important decentralization is to you, and what role it will play in your financial future.