Crypto enthusiasts may be looking for how to swap one token for the other without having to jump through hoops. For example, they may be seeking for how to convert ETH to BTC in the cryptocurrency market. The process of converting a token to another cryptocurrency is called trading or swapping. If the user converts their Ethereum (ETH) to Bitcoin (BTC) or any other crypto, they are doing a swap transaction. To convert tokens, the enthusiast may utilize centralized or decentralized exchanges and pay the requisite trading fees before the transaction is completed. It is wise to opt for exchanges with a high level of security and the best rates. This article will analyze how to convert Ethereum to Bitcoin.
What is A Crypto Swap?
A crypto swap is a process of exchanging one coin for the other. It could be done by peer-to-peer, for example, bringing both buyers and sellers of coins at the best rates in exchange platforms. In P2P exchange platforms, the swapping process is done when a buyer of a coin like BTC enters into a transaction with the seller of the coin. Usually, this type of bitcoin exchange has an escrow service or a multi-sig wallet to offer security to the participants. To exchange, they have to pay network fees. Another type of swap process occurs in AMM exchanges and centralized exchanges.
Why should I convert my Ethereum to Bitcoin?
People convert ETH to BTC for different reasons. Before a conversion process can occur in exchange platforms, trading fees must be paid. If a user is swapping ETH or any coin to BTC, it is wise to check the bitcoin conversation rate to know the number of coins that they will get from the transaction, as well as the fees they will pay.
Profit reasons
A trader may swap ETH to BTC because they feel that the transaction will earn them profit immediately or in the future. Usually, they do technical analysis by studying charts, reading the news, and doing similar activities before they make their decision.
If they check the BTC chart, and they feel that if they start trading Bitcoin during that period, the value of their portfolio may increase, they may decide to sell Ether and buy Bitcoin.
Earning opportunities
A trader may decide to sell their BTC for another cryptocurrency like an ERC20 token to earn passive income. Some coins allow their holders to stake or delegate them to validators and earn APY. In some platforms, their native tokens can be used in yield farming programs to earn passive income.
Diversification
The crypto market, like any other investment, is risky, and people may decide to convert one token for the other, as a way of hedging the risks. This means that they purchase multiple coins with different risk factors based on the data they possess, as a way of spreading their risk.
Like every investment or transaction in the financial space, there are risks to trading cryptocurrencies, and it is wise to do your research before making any decisions.
How to convert ETH to BTC
There are different ways that a coin holder can convert ETH to BTC or any other trades crypto in existence. People opt for an option based on what they intend to achieve by exchanging their cryptocurrencies.
Decentralized Exchanges
Decentralized exchanges were created as an alternative to centralized exchanges to solve the issues noticed in the latter. Centralized exchanges are custodial, meaning that the coins and funds are being held by the exchange. History has shown cases of traders losing their funds because of a hack attempt on a centralized exchange. It could be that the hot wallet of the custodial exchange was attacked, and the cryptocurrencies of users were drained.
To solve the aforementioned issues, decentralized exchanges were birthed to allow traders to buy and sell their coins without worrying about a centralized body holding their funds.
Decentralized exchanges usually do not ask their clients to carry out an identity verification process before they can utilize their features. An example is our exchange, Whalesheaven.
Many DEXs are peer to peer exchanges, where the buyer interacts directly with the seller to fulfil a transaction. Usually, there are safety protocols put in place like a multisig wallet to shield both participants from fraud.
On a decentralized exchange, the user can exchange their Ethereum for Bitcoin and other cryptocurrencies anonymously. To buttress this, an example of a decentralized exchange will be used.
Our Decentralized exchange, WhalesHeaven is designed to allow users to swap their tokens for other coins like convert ETH to BTC, and so on. As an optimal trading platform, traders have access to a wide array of coins like gaming coins, ETH, BTC, AVAX, stablecoins, and much more. Cryptocurrencies enthusiasts enjoy the highest possible deal protection whether they are trading small volumes or large ones.
It is the poster child of p2p exchanges, as it acts as a bridge between buyers and sellers of crypto at the best rates, while offering them protection with a multi-sig wallet.
For those that looking for how to convert ETH to BTC on a decentralized exchange like Whalesheaven, they can start by setting their volume and adding their offer to the platform. Potential buyers that are interested in the sales offer will respond to it, notifying the seller that an offer has been made. Both parties carry out their trading obligations and the transaction ends.
OTCs
OTCs or Over-the-counter exchanges are trading platforms that latch onto centralized exchanges through APIs, allowing users to swap their tokens without worrying about technical analysis or charts of any type. Though this may be an easy way to swap coins, it is not transparent, as the user may not know the final conversion rate used in the transaction.
Using OTC comes with a high transaction fee, which is worked into the conversion rate charged to traders. Their rates are higher than what is obtainable on decentralized and centralized exchanges.
Centralized Exchanges
For users that are looking for how to convert ETH to BTC, a centralized exchange may come in handy. Centralized exchanges are custodial trading platforms, meaning that they hold the funds for their users. Before any exchange can occur on the platform, the user must move their coins from their private wallets to the exchange’s wallet.
A buyer or seller has to enter into a transaction with the exchanging platform, where they can swap one token for the others. Centralized exchanges have been around before the coming of DEXs.
Some of these exchanges have a poor user interface, making it difficult for a new or average crypto enthusiast to navigate through them. While using a centralized exchange, the crypto enthusiast may get lost in elements like orders, graphs and indicators. Transaction fees may not be affordable, as users pay when they deposit funds, convert their crypto and even withdraw the tokens. An example of a centralized exchange is Binance.
Binance has a wide array of tokens for their users to choose from while swapping their coins. With the recent change in policy, everyone must pass through the KYC compliance process before they can use the platform, which includes submitting a valid ID card, proof of residence and taking a picture of oneself. As a centralized exchange, the funds are held by Binance and they can be transferred to one’s personal wallet after the transaction.
Can Ether be converted to cash?
On an exchange, converting one coin to the other is not the only transaction that occurs there. Some exchanges offer only swaps from one token to another, while others also offer the fiat currency option. The latter allows their users to exchange Ethereum for BTC and other cryptocurrencies while offering a second option, where the user can swap their ETH for fiat currency.
In this case, the buyer may purchase the ETH with fiat currency, and the seller swaps their ETH for the cash from the buyer. The same thing can happen for other cryptocurrencies available on the trading platform.
Can you swap ETH to BTC directly?
Some exchanges have the trading pair of ETH/BTC which makes it easy to swap their Ethereum to BTC directly, without having to change their ETH to a stablecoin, before exchanging it to Bitcoin. Others may allow you to exchange any crypto that you deposit on their platform to another token, as long as it is listed. As popular cryptocurrencies, it is common to see trading ecosystems that allow their users to trade Ethereum to Bitcoin directly.
Conclusion
When opting for a trading platform to swap your ETH to BTC, vice versa or any type of crypto swap, it is crucial to consider some elements. Safety of funds is a big issue, especially with the incidents of hacks in centralized exchanges. What is the trading fee? Some exchanges have a high trading fee and other fees that the user must pay when they deposit, swap or withdraw tokens. You should also consider if they have the best rates in the market when you are thinking of how to convert ETH to BTC.