In 2013, I bought a few Bit­coins from a dude in a cof­fee shop, pay­ing with hundred-dollar bill­s. Later that year I sold enough to get my mon­ey back. Then I for­got about them, Bitcoin’s price gy­ra­tions oc­ca­sion­al­ly reg­is­ter­ing in a cor­ner of my mind. But ear­li­er this month I de­cid­ed to find out if the re­main­der could be turned in­to re­al ac­tu­al mon­ey, and it turned out they could. Here’s how.

Im­por­tant note: This nar­ra­tive ap­plies specif­i­cal­ly to ex­chang­ing BTC for Cana­di­an dol­lars, in Cana­da. Some lessons may ap­ply in oth­er ju­ris­dic­tion­s.

How I did it · There are a lot of peo­ple out there on the Net who are ea­ger to sell you Bit­coin­s, but when you want to sell them back for hard cold cash, the of­fer­ings seem to thin out. If you’re in the States and go pok­ing around, Coin­base of­ten seems to come up top of the list. And in fac­t, when I pub­li­cized the fact that I was look­ing to sel­l, a few peo­ple point­ed me at Coin­base.

Hav­ing said that, a lot of the names that would have turned up if you’d done the same re­search three years ago have left the stage, some in col­or­ful cir­cum­stances, of­ten leav­ing stakeholders’ dig­i­tal wal­lets emp­ty. So you want to be care­ful.

When I orig­i­nal­ly bought my dig­i­tal cash, the Bitcoin-community dude who took my hundred-dollar bills rec­om­mend­ed Blockchain.in­fo as an on­line wal­let provider, and I sec­ond the rec­om­men­da­tion. They nev­er sur­prised nor dis­ap­point­ed me, and I was pret­ty im­pressed with the qual­i­ty of their clients and the se­ri­ous­ness of their se­cu­ri­ty pos­ture. In the un­like­ly event that I de­cide to go back in­to cryp­tocur­ren­cy, I’d use them again.

I quick­ly dis­cov­ered that the most vis­i­ble US buy/sell ser­vices don’t re­al­ly ex­tend across the 49th par­al­lel. I was cast­ing about, look­ing at Cana­di­an op­er­a­tors, and get­ting kind of de­pressed be­cause the whole ter­ri­to­ry is more than a bit on the sketchy side, and ob­jec­tive ev­i­dence that This Will Work For You is hard to come by. Then, one day at work, I over­heard a con­ver­sa­tion in­volv­ing Jonathan, a col­league who’s buy­ing a house, and he said “Yeah, I cashed in my Bit­coins to help with the down payment.” Which got my at­ten­tion right away; I asked him how and who ex­act­ly, and he said he’d used Coin­square.

Tl;­dr: It worked. And here’s what I think is an im­por­tant lesson: What­ev­er your cryp­tocur­ren­cy cir­cum­stances may be, if they in­volve re­al mon­ey, the best thing you can do is find some­one you know per­son­al­ly who has done what­ev­er you’re try­ing to do, and fol­low a well-blazed trail. And, I’d ad­d, fol­low it quick­ly; be­cause while it might work to­day, in the world of Bit­coin, who can say whether it’ll work to­mor­row?

De­tails · When I want to try some­thing new, I ap­pre­ci­ate a step-by-step guide, so here you go:

  1. I set up a Coin­square ac­coun­t. Other op­er­a­tors I’d in­ves­ti­gat­ed had elab­o­rate and painful set­up re­quire­ments, in­clud­ing FAXes and no­taries and so on. Coin­square of­fered “instant approval” and when I gave them a bunch of salient facts about my­self, they came back af­ter a cou­ple seconds’ la­ten­cy and said “OK, you’re approved.”

  2. I ini­tial­ly fund­ed the Coin­square ac­count with a $100 bank trans­fer. I just want­ed to ver­i­fy to my sat­is­fac­tion that my bank and Coin­square could talk to each oth­er. A re­peat­ing pat­tern first be­came ob­vi­ous here: My $100 showed up in Coin­square as $95. On this and ev­ery sub­se­quent trans­ac­tion, the in­ter­me­di­aries leaned in and took a cut.

  3. I trans­ferred 0.1BTC from Blockchain.in­fo over to Coin­square; the BTC-ecosystem charge for this was tiny and felt ap­pro­pri­ate, and they showed up in my ac­count at Coin­square way faster than I ex­pect­ed.

  4. I con­vert­ed al­most all the BTC to Cana­di­an Dol­lars (CAD). I was a lit­tle trou­bled when Coin­square re­ject­ed my 0.09BTC trans­ac­tion as “too large”, but it ac­cept­ed an 0.05BTC sale im­me­di­ate­ly fol­lowed by an­oth­er of 0.04BTC.

  5. I re­quest­ed a trans­fer of most of the out­put (rough­ly C$2,000) to my bank ac­coun­t, to es­tab­lish that chan­nel worked. Any­one who has trans­ferred mon­ey be­tween fi­nan­cial in­sti­tu­tions knows the drill: The funds van­ish from your ac­count with­in mi­crosec­onds of you press­ing “Confirm”, then the send­ing in­sti­tu­tion sits on them for as long as they’re legal­ly al­lowed to, then they do the ac­tu­al trans­fer which takes an­oth­er mi­crosec­ond or two, then the re­ceiv­ing in­sti­tu­tion sits on them for as long as they’re legal­ly al­lowed to, and then, some days lat­er, the mon­ey lands in your ac­coun­t, of­ten small­er than when you sent it, be­cause “Service Charges”. In this case, my C$2K turned in­to C$1980. Dam­n, have I men­tioned how much I love the fi­nance in­dus­try?

  6. I poked around on Coin­square and dis­cov­ered their “wealth management” ser­vice, ap­par­ent­ly aimed at high roller­s, which had an at­tached email ad­dress, so I sent them a note say­ing “I want to sell quite a bit more than 0.1BTC for CAD, can you ac­tu­al­ly do this?” Al­most im­me­di­ate­ly, the “concierge service” got back to me, say­ing “Transfer in the Bit­coin and we’ll give you a quote that’s good for ten minutes.” So I did, and they did (at sev­er­al per­cent­age points off the then-advertised price of Bit­coin), and I took it, and al­most in­stant­ly, Coin­square in­formed me that my ac­count there con­tained a pleas­ing num­ber of Cana­di­an dol­lars.

  7. I fired off an­oth­er wire-transfer re­quest, and af­ter the usu­al multi-day de­lay, and with the usu­al slight diminu­tion in val­ue, I had sub­stan­tial­ly left be­hind the role of “cryptocurrency investor”.

Elapsed time: About ten days.

Ob­vi­ous­ly, I was some­what an­noyed by the suc­ces­sion of grasp­ing dig­i­tal hands that reached in­to my dig­i­tal wal­let to ex­tract their dig­i­tal per­cent­age ev­ery time I asked them to up­date a cou­ple of fields in a database some­where. But on the oth­er hand, since I was sell­ing the BTC for rough­ly sixty-four times my ac­qui­si­tion price, and I re­al­ly want­ed to get out of the mar­ket, I de­cid­ed to go with the flow, as in the flow of dol­lars out of my crypto-pocket.

But I have to say, buy­ing and sell­ing cryp­tocur­ren­cies is a good busi­ness to be in; I haven’t added up the num­ber­s, but Coin­square and my bank both got paid pret­ty well for do­ing some rou­tine database up­dates.

Why I did it · I love Bit­coin. It is one of the most in­tel­lec­tu­al­ly el­e­gant con­structs I have en­coun­tered in my decades in the com­put­ing pro­fes­sion. The sys­tem has mul­ti­ple mov­ing parts that work to­geth­er, do­ing mul­ti­ple dif­fer­ent dif­fi­cult things, to ac­com­plish an ef­fect that looks like it ought to be very use­ful. Who­ev­er Satoshi is or was, I hope he she or they are still alive, sit­ting on a beach some­where and en­joy­ing their craftily-gotten gain­s.

But Bit­coin has de­scend­ed in­to bad crazi­ness. You can’t ac­tu­al­ly use it as mon­ey, be­cause mon­ey needs to have a some­what sta­ble and pre­dictable val­ue. Al­so, its cur­rent glob­al blockchain can on­ly do a few trans­ac­tions per sec­ond, so it ob­vi­ous­ly can’t un­der­lie more than a tiny sliv­er of any com­mer­cial ecosys­tem.

Those who cur­rent­ly buy it are mak­ing the clas­sic “Greater Fool” bet, i.e. that it’ll keep go­ing up be­cause it’s been go­ing up, and some greater fool will come along and take it off their hand­s. This kind of bet can run much longer than any­one thinks is rea­son­able, but then some­day the mu­sic stops and most play­ers won’t find a chair to sit on.

Al­so, the con­cen­tra­tion of Bit­coin own­er­ship is wor­ry­ing: Check out this sto­ry, and ac­com­pa­ny­ing graph, over at ZeroHedge. You can bet that if (I mean when) Bit­coin de­flates, the loss is go­ing to be most­ly soaked up by the peo­ple who’ve bought in re­cent­ly, the 95%-plus of hold­ers who col­lec­tive­ly own less than 5% of BTC. What the graph doesn’t il­lus­trate is the pro­por­tion of re­al non-crypto mon­ey that the 95% have in­ject­ed in­to the mar­ket, and stands to be lost. I bet the an­swer is “most of it”.

To go all nerdy, I think that cryp­tocur­ren­cies have a bright fu­ture, when trans­ac­tions are based on some­thing more scal­able than proof-of-work, and when they are driv­en by a killer app that does some­thing use­ful out of the box. One ex­am­ple might be Rip­ple.

Clos­ing thoughts · I’m go­ing to have to pay tax on this. For­tu­nate­ly, since it’s a cap­i­tal gain, the Cana­di­an tax treat­ment should be fa­vor­able. But there may be bu­reau­crat­ic dif­fi­cul­ties, I have no idea how com­fy the Cana­di­an tax­man is with this sort of thing.

If you’re in Bit­coin, now’s a good time to take mon­ey off the table. Yeah, who knows, it might go up a whole lot more, but then again it might not, and it would be to­tal­ly un­sur­pris­ing if there were a catas­troph­ic de­fla­tion next Tues­day. And I’ve rarely met any­one who re­al­ly re­gret­ted sell­ing fi­nan­cial as­sets at a sub­stan­tial prof­it.

Here’s the sec­ond im­por­tant lesson: You can prob­a­bly sell your Bit­coin­s, but you prob­a­bly can’t sell them fast. So now might be a good time to start.



Contributions

Comment feed for ongoing:Comments feed

From: Gord Wait (Dec 19 2017, at 23:55)

Interesting up to the point when bitcoin calculations started to use as much electricity as a small country.. that part is not so clever..

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From: Dave Pawson (Dec 20 2017, at 00:33)

Thanks Tim, good piece. I thought it like going into a bookies when you bought. More like a detective story when you came out.

Your number 5 make me smile, the financial sharks - seems we can't do without them.

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From: JeromE (Dec 20 2017, at 05:26)

Arithpedantic: 0.09BTC <> 0.5BTC + 0.4BTC

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From: David Megginson (Dec 20 2017, at 09:26)

I wonder what percentage of BitCoin's nominal value is simply a consequence of asymmetry between the ease of buying and selling. That's the kind of situation that should result in a bubble followed by an almost-instant collapse (when the panic spreads, people start to accept lower and lower prices just to get clear).

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From: Chris Swan (Dec 20 2017, at 09:35)

Did you also clear out your Bitcoin Cash that was generated from the August fork (I'm guessing yes since the Blockchain.info wallets make it visible, but then I'm surprised that you didn't mention it)?

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From: Sylvie Davies (Dec 20 2017, at 13:35)

> my C$2K turned in­to C$1980

Wire transfers typically cost the sender at least $10 (if not a lot more), and typically cost the receiver $10. Obviously a company that does a tonne of wire transfers is going to negotiate a better rate with their bank, but it's still going to be something.

Sadly, that's just the way wire transfers are. So going from $2K to $1980 seems pretty reasonable to me.

https://www.hsbc.ca/1/PA_ES_Content_Mgmt/content/canada4/pdfs/personal/wire-transfer-service-fees.pdf

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From: Matt (Dec 20 2017, at 15:54)

I sold off some LTC and ETH by using Quadrigacx. I had the cash out and in my canadian credit union account with 3 days.

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From: Nicola Larosa (Dec 21 2017, at 03:37)

> One ex­am­ple might be Rip­ple.

Probably not. A better example, built on reasons quite similar to the ones you state, might be Decred: https://www.decred.org/

Here are the reasons: https://www.reddit.com/r/decred/wiki/index#wiki_background_and_historical_perspective

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From: Paul Boddie (Dec 21 2017, at 07:47)

Your thoughts on the distribution of rewards reminded me of these people:

https://en.wikipedia.org/wiki/T5PC

I think you skilfully avoided mentioning either the p-word or the P-word in that section.

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From: elaine (Dec 22 2017, at 20:14)

i was under the impression one could sell their bitcoin at an ATM, provided the amount was small. I have a couple hundred dollars in BTC and I was going to try and redeem it for CAD cash at an ATM up the street. Is that the wrong way to do it?

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