The biggest drawback to bitcoin and potentially the greatest barrier to its widespread adoption is the difficulty in converting cryptocurrencies into cash.

That can be a real problem because most of us still need cash occasionally.

Cash is still the most frequently used payment instrument, a study by the Federal Reserve Bank of San Francisco found. Around 32% of all retail transactions in the United States still involved cash. More importantly, cash is still the preferred means of payment for small value transactions, those involving less than $20.

Even in today’s world of credit cards, altcoins, debit cards and mobile payment apps there are still many places where you have cash. Some retailers; particularly in small towns and working-class neighborhoods, still operate on an all-cash basis. Many others place minimums on credit or debit card purchases; usually $5.

Beyond retail there are still lots of settings where you have to use cash; for example at garage sales, estate sales, kids’ lemonade stands, hot-dog stands, paying tips at some businesses, or putting money on the church collection plate.

That means cash is going to be with us for a long time to come, so all bitcoin users need to know how to convert digital cash to paper money.

Best Ways to Convert Bitcoin into Cash

Since having a few bucks in your pocket can be a real life saver – it is always a good idea to know how to convert bitcoin into cash. Some popular means of converting cryptocurrencies into cash include:

  • Bitcoin exchanges. This is still the best method because the proceeds of bitcoin sales on a major cryptocurrency exchange can be quickly transferred to bank accounts for cash withdrawal. There are some bitcoin exchanges such as CEX.IO that allows for free bank transfers via ACH or wire. However, to convert  bitcoin to cash at an exchange, you need to have a verified account with the exchange ( a process that takes days to get verified and is quite invasive of your privacy) and a bank account to link to the account.
  • Bitcoin debit cards such as that from Bitpay, and the new TenX card. These can be used for cash withdrawals from ATMs and some retail businesses; such as grocery stores, if they come with a pin number if they are associated with a popular brand such as Visa or MasterCard.  Tenx is an interesting solution because you can put Bitcoin and many other altcoins on it while spending these directly at any merchants who accept Mastercard. You can even withdraw cash from an ATM. Tenx also does NOT charge you any fees other than what the crypto currency exchanges charge (minimal — cheaper than credit cards fees for sure)
  • Bitcoin ATMs. These exist in some cities and at some retail stores. They can be hard to find, and are usually only located in out of the way businesses in big cities. Websites such as Bitcoin ATM Radar can help you locate a machine. Bitcoin ATM’s do charge you a hefty, hefty fee though (5-10 percent!).
  • Bitcoin brokerages. These are businesses that will let you sell cryptocurrencies for cash in a physical location. Such brokerages are rarer than ATMs and can be harder to find. Currently in North America, they are concentrated in a few big cities such as Toronto, Montreal and Las Vegas. Two popular ones are Satoshi Counter and Bit Access.
  • Wire transfer. Some bitcoin brokers and exchanges including CEX.IO will let you wire money via services such as MoneyGram and Western Union. The advantage to these is that you can get them in cash. The disadvantage is the cost; CEX.IO usually charges a $10 fee for each transfer.
  • Friends and family. You simply send bitcoin to a friend or family member you trust and he or she hands you some cash in exchange. The big drawbacks to this method are that the person has to have the cash, and will be willing to fork it over.
  • Localbitcoins.com. A popular website that connects local sellers in your area with local buyers. Transactions can be made direclty in person or via escrow on the website. Fees are involved, but it’s a fast, convenient and somewhat cheaper method of trading bitcoin for cash.

Some Problems to Bitcoin Cash Conversion that You Should be Aware of

There are some serious problems, costs and even dangers associated with bitcoin cash conversion that you must be aware of. Some of the biggest risks to be concerned about with bitcoin cash conversion include:

  • Conversion losses. If you convert $100 in bitcoin to dollars, and the value of the dollar drops by 10%. You will lose 10% of your buying power. Such losses can really add up; if you convert funds to weaker currencies, such as the Canadian dollar.
  • The fees associated with bitcoin conversion can be rough. Some bitcoin cash cards charge a very expensive bitcoin to cash conversion fee (FYI, Tenx charges nothing however); the average bitcoin ATM fee is between 3% and 5%, and some of them charge up to 7.5%.
  • Inconvenience and time. If you live in most places in the United States or Canada you will have to travel for several hours or even days just to reach a broker or ATM. Then you will have to pay a high fee for the “privilege” of withdrawing your own money from your own account.
  • Physical danger. Many bitcoin ATMs and brokerages are located in some pretty bad neighborhoods. Coming out of a business that pays out large sums of cash in such a place; is a great way to attract the attention of criminals.
  • Permanent loss. Something that many people forget is that if cash gets lost, destroyed or stolen it is often impossible to replace. Large sums of cash in your pocket or your car are not as secure as money in a bitcoin wallet. Any pickpocket or thug with a gun can take it from you. Money in a bank account will be insured by the CDIC in Canada, or the FDIC in the United States. Credit and debit cards can be cancelled with one phone call to the provider.
  • Cash simply is not as secure as other methods of storing money such as cryptocurrencies and bank accounts.
  • Tracking if you go to a physical location to get bitcoin; you can put under surveillance by authorities – or worse by criminals. There might be permanent records of your transactions or even surveillance footage of you in such places. Another risk is that a crook might follow you home and try to rob or burgle your house.

At the end of the day the best way for most bitcoin users will be to sell some of their coin and transfer the money to an old-fashioned bank account. That way you can get the small sums of cash you need without great, hassle, cost or risk. Something to remember is that most banks offer free ATM withdrawal from their accounts.

Some Great Alternatives to Cash for Bitcoin Users

Fortunately there are some really good alternatives to cash for bitcoin users. Most people will be better off using these for the majority of transactions.

The best cash alternatives for bitcoin users include:

  1. Get a debit card account that converts bitcoin to fiat currencies such as the Canadian dollar or US dollar. There are number of these out there including the Bitpay Visa, and the TenX Visa or MasterCard. These cards are designed to automatically convert cryptocurrencies in a wallet to dollars, Euros or pounds whenever you swipe your card. If you get such an account make sure it is in Visa or MasterCard so you can use at most retailers.
  2. Buy gift cards with bitcoin. Websites like Gyft and eGifter accept bitcoin payment and sell gift cards that can be used a wide variety of brick and mortar retailers including Lowe’s and Walmart. Some mobile cards that can be loaded onto your phone are available. eGifter, accepts bitcoin payment for gift cards that you can at Target, Best Buy and many other popular retailers. eGifter also sells gift cards for some popular restaurants including Dunk’ Donuts. Gyft sells Amazon gift cards.
  3. There are some major retailers that accept bitcoin payment. This includes websites such as Overstock.com, eGifter, Newegg, Shopify, Dell, Microsoft, AMC Movie theaters and Dish Network. You cannot use bitcoin directly at Walmart or Amazon, but eGifter and Gyft sell gift cards for those retailers through their websites.
  4. Use direct bitcoin payment, bitcoin gift cards or bitcoin debit cards when available and set aside some of your cash from other transactions for smaller purchases. Remember most purchases will not require more than around $20 in cash. For example only withdraw cash when you think you might have a specific need for it such as a garage sale.
  5. Mobile-Payment Apps such as Apple Pay, Android Pay, Alipay, Walmart Pay and Samsung Pay. To use these you will have to have a credit card, debit card or bank account that will support them. Then you will be able to make payments at the tap of an app. Be advised that you cannot pay with bitcoin through these now, although a number of companies including TenX and Plutus are testing mobile bitcoin conversion apps.
  6. There are a number of payment apps that are designed to enable bitcoin or ethereum payment at retail stores. One example of such an app is Omise which is designed to create a network of retailers that accept ethereum pay in Asia. Omise is working with one of the world’s most popular mobile payment apps Alipay from Ant Financial. Unfortunately apps like Omise are far from mainstream acceptance.
  7. Bitcoin hardware wallets. These wallets are small electronic devices that you can use to store large amounts of cryptocurrency offline. Some of the popular models such as the TREZOR or Nano Ledger S are small enough to fit in your pocket or be shipped via the mail. Unfortunately, there are no devices on the market that allow for direct bitcoin payment or cash-conversion yet.

The Future of Bitcoin to Cash Conversion

Bitcoin cash conversion is tough and somewhat rare these days because most governments do not recognize cryptocurrencies as “legal tender.” Among other things that means you cannot deposit them in CDIC and FDIC insured accounts so banks will not touch them.

It also makes major credit card providers such as American Express, Visa, MasterCard and Discovery leery of altcoins. TenX and Bitpay try to get around this by converting altcoins into regular currency then depositing it in a debit card account.

The gold standard of cryptocurrency debit cards; which TenX claims to have, would be a card or app that instantly convert altcoin to fiat currencies. If TenX is successful expect to see a number of such products appear and at some point companies like American Express might start issuing altcoin products.

The most likely scenario is that governments will not start accepting cryptocurrencies until they can tax them. It will probably take one government, such as that in Australia; which has recognized bitcoin as currency, to start collecting tax in bitcoin for others to follow.

When Will Bitcoin Conversion go Mainstream?

Another scenario is that a government will start making benefit payments to citizens in crypto currency. Several governments including that of the People’s Republic of China are experimenting with cryptocurrencies. One reason why governments would use cryptocurrency to distribute welfare or other payments is that it would be cheaper and more secure than traditional methods.

Direct bank transfer payment because popular in the United States after Social Security; the federal basic income program for the elderly and disabled, adopted it. Today most of the 61 million Social Security recipients in the United States their payments via fund transfer.

If that many people were to start using cryptocurrency every business would accept it and you would be able to convert bitcoin to cash everywhere. The best outcome would be to be able to convert bitcoin into fiat currencies and withdraw the cash at any ATM, bank branch or cash register.

How much Bitcoin should you convert into Cash?

The best answer to the above question is as little as possible. The big advantage to cryptocurrencies is that they are very private and highly secure cash is not.

Something else that everybody should remember is that the future value of cash is not ensured. If you are over 10 years of age you probably remember a time when you were able to buy more with a dollar. Many of us can still remember a time when items like comic books, cans of soda and cups of coffee cost less than a dollar.

The reason for that is inflation which slowly destroys the value of money. Inflation’s ability to destroy money is incredible. $1 in currency from 1980 would be worth $3.15 in 2017 currency, Dollar Times calculated. That means the longer you hold money in fiat currencies such as the US dollar or the Canadian dollar the more value you will lose.

This means it is always a good idea to only hold those funds you plan to spend right away in cash. If you don’t plan to spend money right away it is always a good idea to convert it to something capable of gaining value at a much higher rate such as bitcoin.

Cash is still very useful, but you can make a lot more with altcoins such as bitcoin or ethereum. If you have extra funds in bitcoin consider using them to buy other cryptocurrencies instead of cashing out. You will be less vulnerable to inflation and might make more money.