Despite what some people think converting cash into cryptocurrencies, such as bitcoin, is actually fairly easy. There are a number of effective methods for turning either Canadian or U.S. dollars into altcoins available to most people.
There are a number of effective methods for turning either Canadian or U.S. dollars into altcoins available to most people.
There are a few important things that you must know about such conversion before you begin.
Vital knowledge you need to know about cryptocurrency conversion includes:
- It will cost you: almost every broker, exchange, ATM, and digital wallet charges at least a small fee for converting government or fiat currency to altcoins.
- Always make sure you know what the conversion fees are because they can quickly add up and eat up your profits. There have been some horror stories in the media about investors who ended up paying more in fees than they did for the coins.
- You can lose money in the process. If you invest $1,000 in litecoin; and litecoin loses 10% of its value – you will lose $100.
- Make sure you know what the price of the cryptocurrency is before you buy it. Fortunately, there are many places where you can learn the current price of bitcoin and other forms of digital cash. Coinbase tracks Litecoin, Ethereum, and bitcoin and gives their real time value in US dollars. There are sites like bitbuy.ca that will tell you the price of bitcoin in Canadian dollars.
- Make sure that you purchase bitcoin. Bitcoin is currently the only cryptocurrency widely accepted by online and brick and mortar retailers.
Methods of Converting Cash (Fiat) into Bitcoin
Here are some of the best methods of converting cash into bitcoin available in the United States and Canada.
- Bank transfer. This is the best, cheapest and often fastest method. Simply put your cash into a bank account and do a transfer from it. through a bitcoin exchange. The big advantage to this method is that there are some exchanges, including CEX.IO, that offers free deposits from banks for large transactions. CEX.IO offers this because it makes most of its money from trading. This means you will not have to go the trouble of withdrawing cash and accruing additional fees if you receive your salary; or government benefit, payment via automatic deposit. Another advantage is that you can simply deposit the cash at your local bank branch or ATM rather than drive a long distance to a special outlet.
- Reloadable debit cards. Reloadable cards with the Visa and MasterCard brand name on them will work just like credit cards at websites like Coinbase. You will have to pay a fee, but some retailers sell cards you can use. Simply follow the site’s instructions for credit card payment to take advantage of this method.
- Gift Cards. The Visa and MasterCard gift cards sold at retailers such as Walmart will work at many bitcoin sales outlets. Be careful because some of these cards with high fees. You will also have the hassle of going to the store and buying the gift cards.
- Flexepin Vouchers. Canadians can buy these at some merchants and use them to purchase bitcoin online from websites such as Bitcoin Outlet . Unfortunately, they are not available in the United States. A list of merchants that sell them is found at this website.
- Brick and Mortar cryptocurrency brokers. These retail establishments which sell bitcoin and other altcoins directly to the public for cash and credit cards. Unfortunately they are few and far between and more common in Canada than the United States. Many of these businesses are listed at Buy Bitcoins Worldwide. A big drawback to brokerages is that they are only found in big cities, small-town residents may have to travel hundreds of miles just to find one.
- Bitcoin ATMs. Teller machines that convert cash into bitcoin have received a lot of media publicity but they are actually pretty rare. Generally they are located in questionable businesses such as check-cashing outlets and marijuana stores in bad neighborhoods in big cities. The fees they charge for conversion can be very high. Coin ATM Radar has maps showing the locations and addresses of many but not all bitcoin ATMs.
- Digital wallets such as Android Pay and PayPal. Most of these cannot be used for direct bitcoin purchases, but you can use PayPal’s reloadable MasterCard debit cards for altcoin transactions. Note: this might change because several new digital wallets designed for cryptocurrency such as TenX are coming to market. The big drawback to these is that you will to deposit the cash into a bank account then transfer it to wallet.
- Wire Transfers. Some wallets and exchanges will accept wire transfers. That means you can wire money to them via MoneyGram or Western Union. The problem with this solution is that it is expensive. You will have to pay a fee for the transfer and often another fee to the providers. Another problem is that not every bitcoin seller will accept wire transfers.
Some Problems with Using Cash to buy Bitcoin
There are some drawbacks and even dangers to using cash for bitcoin purchases you should be aware of. You should understand these dangers before you put yourself and your money at risk.
Big drawbacks and dangers to bitcoin purchases with cash include:
- The risk of robbery. Many bitcoin ATMs are located in questionable businesses in bad neighborhoods. Do you really want to go such a place with large amounts of cash? Remember crooks might be waiting for you in such a neighborhood.
- Permanent loss of money. The big advantage to bank accounts is that they are insured by the Federal Deposit Insurance Corporation (FDIC) in the United States; and the Canadian Deposit Insurance Corporation (CDIC) in Canada. That means you will get your money back if something goes wrong. Credit and debit cards can be canceled and reissued if necessary. If paper money gets lost, stolen or destroyed it is lost forever.
- The hassle. If you want to make direct cash purchases of bitcoin, you will have to find a broker or ATM travel to it, and spend time buying the coin. If you use a credit card or bank transfer you can make the transaction from any computer or your phone sitting on your couch.
- Extra cost. If you drive or take the bus or train to a broker or ATM you will have cost of gas or ticket and possibly parking in many cities. Once you get there you will probably have to pay extra fees to cover the cost of the broker’s store and employees or the ATM. Remember the broker has rent or mortgage on his or her shop, plus insurance and employees that probably like to be paid. The companies that manufacture and service ATMS make their money by charging fees.
- Time and potential profits. You might have to wait days or weeks to get time to go to the broker or ATM. During that time you might miss out on profits from bitcoin appreciation. Bitcoin’s price increased by 21.69% or $808 in the eight days between August 1 and August 8, 2017, according to our friends at Coinbase.
- You might lose other opportunities. The time you spend travelling to the ATM or broker and back might be better spent elsewhere. For example at work making money or with your family.
- Recordkeeping can be tough. If you use a credit card or your bank account for bitcoin purchases keeping track of them is simple. All you have to do is look at your statement online. With cash you’ll have to keep written records or receipts which can be a real hassle. Another advantage is that bank and credit card accounts automatically calculate amounts. You’ll have to do the math yourself or use a calculator with cash.
- You will not be able to cancel or contest suspicious or improper transactions. One of the biggest advantages to using a credit or debit card is that you can easily contest suspicious transactions. You might have no recourse if you use a brokerage or an ATM.
Some Great Alternatives to Cash for Bitcoin Buyers
As you can see the potential problems associated with using cash to buy bitcoin can be great. Fortunately there are a lot of really good alternatives to cash for anybody interested in purchasing bitcoin.
Some of the best cash alternatives for cryptocurrency users include:
- Bank transfers – As noted above this is usually the cheapest method. It is almost instant and can be free if you use some of the larger exchanges such as CEX.IO. The big advantage here is that funds never leave the banking system until the purchase is made so they will be insured. A disadvantage is that they can be tracked.
- Credit Cards – Most of the bitcoin brokers, wallets and exchanges found online will take MasterCard and Visa payments. Credit cards have several advantages including the ability to contest payments, online statements and ease of use. Some providers; like Coinbase will accept credit card payments from countries like Canada, even though they refuse bank transfers from those nations. Another advantage is that you can use your credit card balance to buy bitcoin if you wish.
- Debit Cards – Almost any website that will take MasterCard and Visa will accept debit cards from those brands. This means that you can use your bank debit card, a reloadable debit card or a PayPal debit card to make bitcoin purchases – as long as it has a Visa or MasterCard logo on it.
- Gift Cards – Wallets and brokerages that accept MasterCard and Visa credit and debit cards should accept gift cards from those brands. The advantage to these is you can purchase them for cash at many brick and mortar stores.
- Altcoins – Almost all the bitcoin sellers online will accept bitcoin payments. Some of them also accept ethereum and litecoin payments. The advantage to this method is that it is usually the cheapest. The disadvantage is that you will have to have cryptocurrencies to buy crypto currencies.
Will Altcoin take the Place of Paper Cash?
An interesting question raised by the advent of bitcoin is; will digital currencies like bitcoin take the place of paper money? The answer to this question is maybe.
Digital currencies certainly have some advantages to paper, they are easier to keep secure and insure. Digital cash is also far easier to replace if it gets lost stolen.
Other big advantages include storage; cryptocurrencies can be kept in the cloud, or in small pocketed sized devices known as bitcoin hardware wallets. Hardware wallets; such as the TREZOR, can store thousands or even hundreds of thousands of dollars’ worth of currency in a gadget that is smaller than a pocket calculator.
The cost of moving altcoins around is almost nonexistent once you own them. Cryptocurrency is also very to move you can shift it around with the press of an app on your phone if necessary.
Other advantages include the potential to add documentation including contracts to currencies such as ethereum, and easy verification of payments. Another tremendous advantage is protection from inflation, and government tampering with money.
How Cash could Disappear Overnight
The people of India learned how undependable paper money really is when their Prime Minister Narenda Modi declared most of the cash in the country worthless on November 8, 2016. Modi simply went on television and told his people that their two largest bills the 500 and 1,000 rupee notes were no longer legal money, The New York Times reported.
That meant 80% of the cash in India, including all the money had in their wallets or under the mattress was not worth the paper it was printed upon. One result of that was a panic in which people rushed to ATMs to get bills they could spend.
Disturbingly there has been pressure from economists, law enforcement, and others to get rid of large bills in other countries. The European Union stopped printing its largest bill the 500 Euro note because it was favored by gangsters in May 2016, The New York Times reported.
Some “experts” want to go farther, Kenneth S. Rogoff; a former chief economist for the International Monetary Fund, wants to abolish all paper money. Rogoff even wrote a book called The Curse of Cash which recommends that curse of action last year.
Therefore converting cash to bitcoin might be short-lived thing. There might come a time when you make all your purchases with cryptocurrency and paper money is nothing but a memory.