Summary
- As monetary policies keep progressing, currency in Bitcoin seems to have a bright future.
- With many efficient advantages, it is no wonder why investors find Bitcoin investment-worthy, mostly because all transactions can be made anywhere and anytime.
- There are many ways how Bitcoin can be converted to a fiat currency, such as withdrawing cash from a special Bitcoin ATM, selling Bitcoin on the cryptocurrency exchange market and similarly.
- Australia is one of the countries where disposing of a cryptocurrency is regulated by law, where users need to pay for GST if gaining profit from a cryptocurrency.
Bitcoin was introduced as a different way of exchanging money. It is innovative because transactions are finalised within a few minutes, at a low cost. No banks or governments can control Bitcoin (and any cryptocurrency in general), which is very important for most of its consumers.
There is a belief that fiat currencies will no longer be needed in the future, hence many shareholders make investments into Bitcoin, the future of currency.
However, paying in Bitcoins is still relatively new and has not been broadly accepted in most stores so it is no wonder that some consumers want to make use of their Bitcoin units and convert it to cash.
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One more reason that seems to be important to the crypto investors when it comes to cash converting is when the Bitcoin market is in decline. If the market keeps falling in its value, many will probably decide that is time for converting to a real currency.
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Bitcoin can be accessed on any Android or iOS mobile device. With a two-step verification, users can easily sell their cryptocurrency or purchase any goods. Unlike regular banking apps that require signing up, typing in PINs, or swiping a card, Bitcoin allows it users to use a generated QR code in the wallet, or just using an NFC technology for transfers.
All cryptocurrency technologies, especially Bitcoin, use a high protection that could be compared to a military cryptography. If the wallet and its personal key are well protected and stored in a safe place, there is almost no way that user’s data can be illegally obtained.
The Bitcoin software works 24/7 so the consumers can make transactions during any part of the day, without any time zone limit.
Overseas payments have never been cheaper and easier, as Bitcoin offers no fees for international unit transfer, and no limits on amount being either sent or received.
When receiving a Bitcoin, the user does not to pay for any additional fees. Small charges apply when purchasing a Bitcoin, but that amount is completely up to the user. Fees are not affected by the transferred amount.
In some Bitcoin transfers, it is possible to maintain a complete privacy. There are no numbers that can identify Bitcoin users; however, every consumer should protect his/her own data.
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Some financial markets like Coinbase allow selling Bitcoin. Trading cryptocurrencies on those markets might be the easiest option in case consumers want to see money directly in their bank accounts.
Also read; What is a cryptocurrency and how to use it?
However, there are some downsides to this method.
Firstly, users need to make sure that brokers will respect money laundering laws by using the same bank account consumers used for depositing. Secondly, the mentioned method is not very quick, as it could take 4-6 days to see the money on the account, depending on the country. Still, this is considered as a safe and simple method.
- The first step would be signing up to the financial market (the most popular is Coinbase) and verify consumer’s identity.
- After signing up and verification, users can deposit Bitcoin into their new account.
- Bitcoin cryptocurrency can then be transferred into fiat currency using bank transfers or, in some cases, PayPal.
- There are almost 5,000 cryptocurrency ATMs, where crypto users can either sell their Bitcoin or withdraw a fiat currency in 76 countries across the world. On a special website, all the ATM locations are publicly shown to its users. Unfortunately for them, not all machines are the same and withdrawal fees are very high, usually between 7 and 12% of a desired amount. Also, there are withdrawal limits for most ATMs.
- Recently, Bitcoin users have been enabled to order a physical card (debit or credit) that is operated by Mastercard or VISA, after selling Bitcoin. They work online and offline so consumers can use them anywhere, from regular stores to airplanes. Another advantage of a Bitcoin physical card is a card withdrawal from any ATM that supports Mastercard and VISA credit and debit cards.
- For those consumers that want to maintain their anonymity, they can use popularly called peer-to-peer platforms for crypto transactions. More than a million people use this system because of its safety and no or low transfer fees. When using those platforms, crypto users can choose the desired payment system, which can be either:
- Asking the buyer to make a cash deposit into the user’s bank account (safety measures recommendable, such as asking for identity identification), OR
- Asking the buyer to transfer money into a bank account and after the payment is visible, send the Bitcoin to the buyer.
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Even though Bitcoin is still considered as a new way of paying, many countries are starting to regulate it. That is why those nations think Bitcoin users need to pay taxes on cryptocurrency profits. It would not be smart to try avoiding paying tax for Bitcoin earnings, as accountants could easily check if there are any.
And as previously mentioned, there are several fees for different kinds of Bitcoin transactions, from ATM withdrawals to bank transfer fees.
Australia is one of the countries that regulated cryptocurrency profits.
Australian Taxation Office (ATO) has put crypto benefits into control, stating that users need to pay capital gains tax (CGT) when:
- The cryptocurrency is either being sold or even gifted
- After exchanging cryptocurrency
- After converting crypto to fiat (real) currency, and
- After users purchase products or services using cryptocurrency
As individuals, users can be either partially or completely taxed for their crypto disposal. If cryptocurrency is used within a business in Australia, the profits would be treated as a regular income and not a capital gain.
According to the ATO, every cryptocurrency is a different GST asset.
DO READ: Australian Taxation Office Targets The Crypto Gains Tax Evaders