This tutorial is for beginner crypto enthusiasts who’ve just started his or her journey with the cryptocurrency ecosystem.
Exchanging your coins and tokens is the basics 101 of cryptocurrencies. You should know how it works and how you can do it when you need to.
Recently, Dogecoin skyrocketed to as high as $0.68, which was pretty absurd. I sent an email to my subscribers, educating them on the risks involved. What did I do?
I exchanged my DOGE for ETH. Not entirely, but only the capital gains and the principal.
For example, if I purchased a DOGE worth $5,000, and now it’s valued at $27,000, I will cash out $22,000. Because I understand the risk involved.
For other coins, such as ETH, it’s the other way around. Following the same numbers above, I cash out $5,000 and let the $22,000 grow.
However, if I cash out my crypto gains in Fiat currency and withdraw them to my bank account, I’ll need to pay taxes.
Instead, what I’d do is swap them.
When DOGE rose to a certain level above $.50, I swapped most of my Dogecoins for other Altcoins.
So, it’s essential to know a few quick and easy ways to convert cryptocurrencies.
Use an Exchange
An exchange is a marketplace where you sell, anything. Such as commodities, stocks, ETFs. Just like the stock market, there is an exchange for cryptocurrencies as well.
This is where you buy and sell coins and other crypto tokens.
Exchanges are essential for trading cryptocurrencies. And an exchange also allows you to convert your coins from one another.
I have used more than 15 crypto exchanges, maybe more as a few of them went off. I’ll recommend what I’ve used and continue to do so, which is Binance. In India, I seldom purchase via WazirX.
Binance is the only exchange that allows you to convert coins from one to another. Kraken and WazirX are good to buy from, but they don’t have this feature, as Kraken only supports ETH conversion as of now.
So, how do you exchange crypto on Binance?
Let’s say you buy 1 Bitcoin by paying USD. You can go to the Convert section of Binance, and convert the BTC to other supported cryptocurrencies in one click.
This is probably the best way to convert your coins if you don’t want to dilute your coins with conversion fees. Because the next method is pretty conversion fee-hungry.
Use a Wallet
To convert your crypto using Exodus:
- Download the Exodus wallet on your smartphone (I don’t recommend desktop apps).
- Setup your Exodus wallet – write down the secret phrase and keep them safe, secure.
- Transfer your coins to your Exodus wallet
- Click on the convert option and exchange the coin.
Now when you buy coins or tokens that are highly volatile, such as DOGE itself, you can safely store them off the exchange while making sure you can cash out by converting them to a more stable coin.
You’d also like to read – Can you avoid paying crypto gains tax?