Learning the friendly way

Got Bitcoin and wondering how to turn it into spendable money? You're not alone. Whether you're looking to realize your profits, pay for goods and services, or simply diversify your investment portfolio, cashing out Bitcoin can be a straightforward process with the right guidance.

This guide breaks down everything you need to know about converting your digital currency into cold, hard cash (or cold digital cash, if you prefer).

How to cash out Bitcoin

There are a few options available to you - all with varying degrees of accessibility and complexities. We’ll run through them below, see which one most resonates with your preferences.

1. Online exchanges 

Online exchanges are probably the simplest option here, depending on the platform. When selecting a cryptocurrency exchange to cash out your Bitcoin, consider factors like security measures, user reviews, trading volume, and withdrawal fees. Look for exchanges that offer a seamless user experience and prioritise the safety of your funds.

While crypto exchanges will charge a small fee, they also allow you to: 

• Sell Bitcoin directly
• Transfer money to your bank account
• Track your transactions easily

Using Tap as an example, the process would be to download the app, create an account, complete the quick identity verification process (<5 minutes) and then transfer your BTC to your unique BTC wallet.

To sell it, simply select Sell, confirm the transaction and choose which currency you would like to receive the funds in. These funds will then be deposited into the relevant wallet in the app, which you can use to pay bills, send to your fiat bank account, spend using your Tap card or withdraw from an ATM. 

Transaction costs: usually 0.5% - 1.5%

2. Bitcoin ATMs

Bitcoin ATMs are darted around countries (see here for specifics) and allow users to withdraw the local currency for Bitcoin. Note that this route is notorious for higher fees, so take note when confirming the transaction. 

The advantages of Bitcoin ATMs:

• Instantly converts Bitcoin to cash
• Get money right on the spot
• Available in many major cities

Transaction costs: 5% - 10%

3. Direct peer-to-peer selling

Kind of like selling something on Gumtree, but for Bitcoin. These websites connect you directly with buyers who want Bitcoin and have varying degrees of security and features. 

Be sure to use verified platforms with good reviews as scams can be rife. Some of these platforms offer escrow services, meaning that they hold the BTC until the payment clears, after which they release the funds. Look at options like LocalBitcoins.

Transaction costs: Varies

Steps to ensure security

Before cashing out Bitcoin, here are a few steps to take to ensure the safety of your funds:

• Use reputable platforms that are licensed and regulated.
• Use strong passwords and enable two-factor authentication for added security.
• Regularly update your wallet/app software to protect against potential vulnerabilities.
• Avoid sharing your sensitive information or private keys with anyone to prevent unauthorised access.
• Consider diversifying your funds across multiple wallets for added protection. 

Tax implications of cashing out Bitcoin

When you sell Bitcoin for cash in the UK, it’s important to understand the potential tax implications. HMRC treats cryptocurrency transactions as taxable events, meaning you may need to report and pay Capital Gains Tax on any profits from the sale.

Consulting a tax professional or accountant can help you understand your obligations and navigate the often complex waters of cryptocurrency taxation. They can ensure you comply with current UK tax laws and provide guidance specific to your situation.

It’s also very important to keep an accurate record of all your crypto transactions. Make sure to document the date of purchase, the sale price, and any associated fees, as these records will make it easier to calculate and report your gains or losses when filing your tax return. (Side note: you can download your statements directly from the Tap app). 

For more information, explore HMRC's guidelines on cryptocurrency taxation. Staying informed and organised will help you manage your tax responsibilities smoothly and avoid potential penalties.

Verification requirements

When cashing out Bitcoin on an exchange, verifying your identity is an important step to ensure the security of your transaction and compliance with regulations. If a platform doesn’t ask for this verification: red flag. 

Overview of the verification process

Exchanges need to complete this verification step to prevent fraud and follow legal requirements. You’ll typically need to provide:

• A valid ID for identity verification
• Proof of address, such as a utility bill
• Sometimes, a selfie for facial recognition

The specific requirements can vary based on the exchange and the amount of Bitcoin you’re selling.

Tips for a smooth verification process

• Have all your documents ready before starting to avoid delays.
• Double-check the accuracy of the information you provide to prevent verification issues.
• Follow the exchange’s instructions carefully to ensure the process is quick and secure.

Security considerations

When submitting personal information, always use a trusted exchange with a strong reputation for security. Look for platforms known for protecting user data to reduce the risk of breaches.

Understanding fees when cashing out Bitcoin

Cashing out Bitcoin usually comes with some costs, so it’s good to know what to expect.

Exchange Fees

Most crypto exchanges charge a trading fee when you sell Bitcoin. The fee varies depending on the exchange and the size of your transaction.

Withdrawal Fees

If you transfer your funds to a bank account or payment method, the exchange might charge a withdrawal fee. These fees can be higher for larger transactions.

Network Fees

Bitcoin transactions also include network fees (or mining fees), which go to miners for verifying and processing your transaction on the blockchain.

To reduce fees, look for exchanges with low rates, choose slower transaction speeds to save on network fees, and compare withdrawal options to find the cheapest one.

Timing considerations traders might pay attention to

Timing can play a big role in deciding when to sell your Bitcoin. Here are some key factors traders often look out for:

Market conditions

Traders recommend staying updated on crypto news and keeping an eye on price trends and market conditions.

Withdrawal limits

Traders advise knowing the withdrawal limits of the exchange before completing their cash out so as to plan their cash-out strategy and avoid delays.

Funds transfer time

Traders plan ahead, knowing that it can take a few business days for funds to transfer after selling Bitcoin (depending on which avenue you took) allows them to manage their finances more efficiently.

Other potential roadblocks

When cashing out Bitcoin, keep an eye out for potential roadblocks, like minimum withdrawal amounts, which could affect how much you can withdraw at once. 

Be prepared for account verification requirements, as exchanges often need you to verify your identity before processing transactions. On some platforms this can take days - not ideal if you’re trying to take advantage of price surges. 

You might also have to deal with geographic restrictions that limit access to certain exchanges based on your location. Be sure to check this before signing up with a platform.

Conclusion

Here we’ve covered the essentials of cashing out Bitcoin, from selecting an exchange to understanding taxes. If you’re new to cryptocurrency, take the time to learn about the process before selling, and remember that what works for one person might not work for another. Being prepared will help you make better decisions and avoid mistakes.

Tip: Start small, learn as you go, and don't be afraid to ask for help! Our friendly Tap support staff are there to help 24/7. 

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We’re excited to share that XTP trading is officially back online in the Tap app!

Following the successful integration of ProBit, a trusted exchange that continues to support XTP, users can now trade seamlessly within the app once again. This marks an important step in restoring access and strengthening the trading experience for our community

We know that waiting isn’t always easy, and we want to sincerely thank you for your patience and continued support throughout this transition. Your trust drives everything we do.

As always, we’re working behind the scenes to bring you more ways to access and use XTP, stay tuned for what’s next.

The Tap team.

If you’re new around here, yes, memecoins are a real thing. It might sound facetious, but memecoins have become a significant part of the crypto landscape. Let's dive in and understand what they're all about.

What are memecoins?

A memecoin is a type of cryptocurrency that's inspired by internet memes, jokes, or popular culture references. Unlike more serious cryptocurrencies like Bitcoin or Ethereum, which were created with specific technological goals in mind, memecoins often start as a joke or a light-hearted project with little utility, if any.

The term "meme" refers to an idea, behaviour, or style that spreads quickly within a culture, often through social media. Similarly, memecoins spread through online communities, gaining popularity and sometimes value along the way. Like their more serious counterparts, they can be traded on an exchange and are measured by their market cap.

The birth of memecoins

The concept of memecoins began in 2013 with the creation of Dogecoin. It was inspired by the popular "Doge" meme featuring a Shiba Inu dog. What started as a joke quickly gained a following and, surprisingly to many, actual monetary value. Dogecoin currently has one of the top 10 biggest market caps in the industry. 

Since then, numerous other memecoins have appeared, with names and themes often based on internet culture, celebrities, or even other cryptocurrencies.

How memecoins work

Technically, memecoins work similarly to other cryptocurrencies. They use blockchain technology and can be bought, sold, and traded on various cryptocurrency exchanges. However, there are some key differences that investors should take note of:

• Purpose

While many cryptocurrencies aim to solve real-world problems or improve existing systems, memecoins often lack a serious purpose beyond entertainment and speculation.

• Supply

Memecoins often have a much larger supply than traditional cryptocurrencies. For example, while Bitcoin has a maximum supply of 21 million coins, Dogecoin has no supply limit at all.

• Price

Memecoin prices are typically much lower per unit than mainstream cryptocurrencies, often fractions of a cent.

• Volatility

Memecoins can be extremely volatile, with prices potentially skyrocketing or plummeting based on social media trends, celebrity mentions, or community activities. As is the case with Elon Musk and Dogecoin, a mere mention creating hype and sending the currency price soaring.

The appeal of memecoins

Despite their seemingly frivolous nature, memecoins have gained significant popularity for several reasons. Many people are drawn to the fun factor, enjoying the playful, community-driven aspect of these cryptocurrencies. Their accessibility is another key appeal, the typically low price per coin makes memecoins feel more attainable to newcomers in the crypto space. 

The potential for dramatic gains has also attracted many speculators, as some memecoins have seen explosive price increases, fueling hopes for quick profits. But perhaps most importantly, memecoins often foster strong online communities, giving holders a sense of belonging and shared purpose. This community aspect can create a powerful network effect, further driving interest and engagement in the memecoin ecosystem.

Risks and considerations

While memecoins can be fun and exciting, they come with significant risks:

• High volatility: Prices can change dramatically in short periods, potentially leading to significant losses.
• Lack of fundamentals: Unlike more established cryptocurrencies, memecoins often lack solid technological foundations or real-world use cases.
• Pump and dump schemes: Some people manipulate memecoin prices for personal gain, leaving others with losses.
• Regulatory concerns: As cryptocurrencies face increasing scrutiny, memecoins might be particularly vulnerable to regulatory actions.

The most famous memecoins

While there are many memecoins, a few have gained significant attention:

Dogecoin (DOGE)

The original memecoin, which has gained a large following and celebrity endorsements.

Shiba Inu (SHIB)

Inspired by Dogecoin, it's become one of the most popular memecoins, currently in the top 15 biggest cryptocurrencies. 

Pepe (PEPE)

Based on the popular Pepe the Frog meme, this coin gained rapid attention in 2023 for its explosive growth and cultural resonance. At the time of writing, it was the 3rd biggest memecoin on the market.

Conclusion

Memecoins represent a unique and controversial aspect of the cryptocurrency world. While they can be fun and potentially profitable, they also carry significant risks. If you're considering investing in memecoins, it's crucial to do thorough research, understand the risks, and never invest more than you can afford to lose.

Remember, the cryptocurrency market is already volatile, and memecoins often amplify this volatility. Approach them with caution, and consider them more as a fun experiment rather than a serious investment asset.

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What is a stablecoin?

A stablecoin is a cryptocurrency that aims to keep its value consistent with a specific asset or group of assets, in other words, its value is pegged to the underlying asset. Unlike volatile cryptocurrencies such as Bitcoin or Ethereum, stablecoins aim to provide the benefits of digital currencies without the wild price fluctuations. Most commonly, stablecoins are pegged to fiat currencies like the US dollar, with one coin typically equaling one dollar.

How do stablecoins maintain their value?

Stablecoins use various mechanisms to maintain their peg:

1. Collateralised stablecoins

These are backed by reserves of the pegged asset. For every stablecoin issued, there should be an equivalent amount of the asset held in reserve (in a bank). Examples include USDC and USDT.

2. Algorithmic stablecoins

These use smart contracts and algorithms to automatically adjust supply based on demand, theoretically maintaining the peg. An example was TerraUSD (UST) before its collapse.

3. Hybrid models

Some stablecoins combine collateral backing with algorithmic mechanisms.

Maintaining the peg often involves continuous market operations, such as minting new coins when demand increases or burning excess supply when demand decreases.

What does it mean when a stablecoin depegs?

When a stablecoin "depegs," it means its value has deviated significantly from its intended peg. For instance, if a USD-pegged stablecoin trades at $0.95 or $1.05 instead of $1.00, it's considered depegged. Minor fluctuations are normal, but substantial or prolonged deviations indicate a problem.

Why does this happen?

Stablecoins can depeg for several reasons:

1. Market pressure: Extreme market conditions can lead to massive sell-offs, overwhelming the stabilising mechanisms.
2. Loss of confidence: If users doubt the stablecoin's backing or the issuer's credibility, they may rush to sell, causing a depeg.
3. Insufficient collateral: If a stablecoin isn't adequately backed by reserves, it may struggle to maintain its peg during high-stress periods.
4. Algorithm failures: For algorithmic stablecoins, flaws in the stabilising mechanism can lead to depegging.
5. Regulatory issues: Legal challenges or regulatory crackdowns can shake confidence in a stablecoin.
6. Liquidity crises: If there's not enough liquidity in the market, it can be difficult to maintain the peg.
7. External economic factors: Major economic events or changes in monetary policy can affect a stablecoin's stability.

What are the consequences of a stablecoin depegging?

The consequences of a stablecoin depegging can be severe and far-reaching:

Loss of user funds

Investors holding the stablecoin may face significant losses if the value drops substantially.

Market volatility

A major stablecoin depegging can trigger broader crypto market sell-offs and instability.

Loss of trust

Depegging events can erode confidence in the entire stablecoin market and the specific project.

Regulatory scrutiny

Such events often lead to increased regulatory attention on stablecoins and the broader crypto industry.

Disruption of crypto ecosystems

Many DeFi protocols rely on stablecoins; a depeg can disrupt these systems. And as stablecoins are often used as collateral, depegging can trigger mass liquidations and potential system-wide instability.

Project failure

In extreme cases, like with Terra/LUNA, a stablecoin depeg can lead to the complete collapse of the associated project and ecosystem.

Understanding the mechanisms behind stablecoins and the risks of depegging is crucial for anyone involved in the cryptocurrency space. While stablecoins play a vital role in the crypto ecosystem, providing a bridge between traditional finance and the volatile world of digital assets, they are not without risks. Be sure to always do your own research before engaging in the crypto space.

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Sitting among the 30 biggest cryptocurrencies by market cap, Stellar is focused on bridging the gap between the business of blockchain and the traditional financial institutions. The platform provides a means for users to send assets and money through the blockchain, utilising a decentralised network of authenticators.

Redefining the financial landscape, Steller presents a digital transformation on the traditional services users have become accustomed to. Merging innovation with a practical application, the network is able to help users around the world, as well as financial industries, achieve a more streamlined service. Let's explore what Stellar is.

What is Stellar (XLM)?

Before we dive into the "what", let's first stipulate that one stellar is known as a lumen and uses the ticker XLM. Stellar launched in July 2014 and soon afterwards changed its strategy to be more focused on integrating blockchain technology into financial institutions. 

The concept behind Stellar is to provide a space in which users can transfer everything from traditional crypto and fiat currencies to tokens representing new and existing assets, increasing their transaction performance by using lumens.

Similar to the Ripple XRP network, Stellar is designed to cater to both payment providers and financial institutions, building a bridge between the blockchain and traditional financial sector. Developing on the Ripple concept, Stellar has also positioned itself as an exchange as its ledger has an inbuilt order book that keeps track of all the assets on the network. 

Who Created Stellar?

The founders of Stellar are Jed McCaleb and Joyce Kim, both previously employees at Ripple. McCaleb, who founded and was acting CTO of Ripple, and lawyer Joyce Kim, decided to create Stellar after they left the Ripple team in 2013 following a disagreement on the direction that Ripple was taking. McCaleb is also credited with creating the first successful Bitcoin exchange, Mt Gox. 

McCaleb described Stellar's aim as giving people a means of moving their fiat into crypto and more seamlessly conducting international payments. The network provides cross border transactions with low transaction fees and fast executions. With leading technology and innovative problem solving, the network has made a healthy impression on both institutions and investors alike.

How Does Stellar Work?

Stellar is a hard fork off of the Ripple network with several similarities in design and functionality, however, the platform set itself apart by building in several key features. The platform is secured through the Stellar Consensus Protocol which revolves around these core business concepts: decentralised control, flexible trust, low latency, and asymptotic security.

The biggest upgrade launch came in 2015 when the platform replaced its consensus mechanism with a concept called federated Byzantine agreement. This required nodes to vote on transactions until quorums are reached. Anyone is able to join the consensus, and there are measures in place to inhibit bad actors operating with ill intent on the network.

The software behind the platform is called Stellar Core and can be altered to adhere to the needs of the operation using it. The nodes making up the network can be created to function as either Watchers, Archivers, Basic Validators or Full Validators. For example, watchers can only submit transactions while Full Validators can vote on which transactions are valid and maintain a ledger of all node activity.

Another element to the network is the Stellar Anchors. These gateways are responsible for accepting deposits of currencies and assets and issuing depictions of these on Stellar.

What Is XLM?

Known as lumens, XLM is the native cryptocurrency to the Stellar platform. XLM acts as an intermediary currency for transactions taking place on the network. With cost-effective experience priorities, every transaction on the Stellar network costs 0.00001 XLM, a fraction of a dollar (at the time of writing). 

When the platform launched in 2014, 100 billion lumens were minted, programmed to increase by 1% annually until the total supply reached 105 billion. Five years later the Stellar uses voted to end this process. 

That same year, in 2019, the Stellar Development Foundation (a non-profit organisation) reduced its share of XLM in order to regulate the Stellar economy. This brought the total supply down to 50 billion. At the time of writing, roughly 49% of this total supply is in circulation. 

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When it comes to navigating the cryptocurrency markets, staying informed and staying away from FUD can oftentimes be more complicated than one might imagine. In this article, we're going to guide you through how to recognize FUD in the blockchain space and how to avoid it. 

Since Bitcoin entered the scene in 2009, the crypto markets have seen their fair share of ups and downs. Although it's true that each market downturn has been followed by a recovery and considerable development, experienced and novice traders alike may find that times of decline are difficult to navigate. Particularly with the rise in FUD.

Before we cover the tools of the trade to recognize and avoid FUD, let's first cover what FUD is exactly.

What is FUD?

FUD in the cryptocurrency realm stands for Fear, Uncertainty and Doubt. This term is used to refer to inaccurate information released by people who wish to manipulate the markets. Releasing FUD content is intended to influence a trader to make decisions that might affect the cryptocurrency's price or their holdings in some way (usually encouraging them to sell).

While commonly used against Bitcoin, Ethereum and other cryptocurrencies are also targeted. FUD typically leads to investors selling off their coins, leading to a panic sell which snowballs and results in a significant loss in value for the coin. 

Often mentioned alongside FUD is the term FOMO, Fear Of Missing Out. FOMO is centered around the fear of people missing out on profits, leading them to make quick decisions that aren't necessarily the best ones. While FUD tends to instigate selling an asset, FOMO tends to drive traders to buy an asset. Essentially, these two terms are designed to tap into human emotions that lead to quick decisions. 

FUD is typically released through a rumor published on a well-respected website, a negative news item, or a well-known figure expressing concerns about a certain asset (commonly done over Twitter ). Content surrounding FUD and FOMO tend to be from organizations or individuals that have something to gain from the intended action. The content is designed to strongly influence the reader. 

FUD and FOMO aren't strictly related to the crypto market, such tactics have also been witnessed in the stock market and other commodity trading spaces. The jargon has become synonymous with trading. 

How to recognise FUD

The crypto community might seem tight-knit but there are often ill-actors that gain access to the trusted space and infiltrate it with bad news. This is often seen when people use a commonly discussed topic, such as regulation, to build a narrative that isn't necessarily true to influence traders. 
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Here are several tips to ensure that you don’t fall victim to FUD:

Establish a trading goal 

Before you enter the crypto market ensure that you have definitive goals, with accompanying timelines. When faced with FUD or FOMO information, consider if the resulting actions of this news will move you closer to your goal or further away. If you stay focused on your goal you are less likely to be swayed by market sentiment. 

Build a trading strategy before entering a trade

A trading strategy generally involves determining a stop loss, entry point, target sell point, and amount of capital. By establishing this before entering the trade, you will have clear objectives to follow and be less likely to fall victim to FUD-centered misinformation. 

Stay informed, but verify sources

Keeping an eye on the crypto markets and staying informed is imperative for any trader, especially day traders. Ensure that the places that you acquire your information from are reputable and legitimate, and if something sounds suspicious, verify it through a number of other sources. 

Be patient and consistent

Engaging in crypto trading involves making well-informed decisions based on market trends and supporting technology. Rather than seeking rapid financial gains, it's important to maintain patience and consistency in working toward your goals, while staying focused on your intended path.

Navigating FUD

Despite this sounding difficult, FUD is easily avoidable if you stick to these tips above and only seek information from reliable news sources. While Twitter may have quick tips, it's also hard to determine what the author's intentions are.

Consider whether something sounds accurate or not, and always conduct your own research when considering involvement in a new project. From a financial standpoint, participating in digital currency can be a profitable endeavor, so be sure to act responsibly and observe market trends with a critical perspective.

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