The craze of Bitcoin continues, and everyone is trying to understand how to get some skin in the cryptocurrency game.
To buy bitcoin and other cryptocurrencies, you need to join an exchange.
Relatively speaking, I am a fan of Coinbase and refer it to my followers if they ask where to get started.
Before I explain why Coinbase isn't the only option to consider, let me give it some praise
Reasons to Love Coinbase
Coinbase has a lot to like...
1. It has a massive user base and has proven to be reliable in a market flooded with skeptics.
The site has over 10 million customers and supports exchanges in 32 countries. If you know someone who has bought or sold crypto in the past, it is very likely they have used Coinbase at one point in time.
Coinbase has also received positive feedback from major news publications like The New York Times, The Huffington Post and TIME Magaizine.
2. It's very user friendly (relatively speaking).
Some exchanges can be extremely overwhelming to new users. Coinbase doesn't try to do more than it needs to.
Its main purpose is to provide users with a safe and easy way to buy four of the biggest coins. ETH (Etherium), LTC (Litecoin), BCH (Bitcoin Cash) and of course, BTC (Bitcoin).
3. Its fees are reasonable.
I said reasonable, not low. You are still going to pay between 1.49% and 3.99% depending on where you're purchasing and how your purchasing.
Here are what the fees look like for US users like myself...
Reasons to Consider Platforms Beyond Coinbase
First, I want to remind you that you don't have to use just one platform. You are welcome to use as many as you'd like.
I use Coinbase and other exchanges/platforms to buy sell and trade my cryptocurrency.
Here is why Coinbase isn't a perfect, all in one solution.
1. You have buy limits
Now, these buy limits are perfectly reasonable. It would be unethical for Coinbase to allow new users to make massive purchases on day one.
Coinbase increases users limits over time and while this is perfectly reasonable, some larger investors want to be able to buy more than the low (again, relatively speaking) initial limits.
The limit is adjusted every day depending on when you last made a purchase.
For example, if you have a $500 weekly credit card limit and you spend $100, it will take 7 days for your limit to go back to $500. The limits are "in flux" and reflect each individual buy rather.
I have been a user of Coinbase since May of 2017 and here are what my limits look like now.
These are relatively high limits and I had to jump through some hoops to increase them to what they are. The $100,000 sell limit for example required an approval process that wasn't difficult but certainly wouldn't have been approved without me actively requesting it.
My portfolio is now at a point where I am more focused on trading my existing investment than I am with investing more fiat dollars to get more.
2. You can (currently) only buy ETH, LTC, BTC and BCH
If you want alt coins (of which there are hundreds) you will need to transfer these coins to another exchange like Binance (there are dozens of other exchanges as well).
These are 4 solid coins (although I'm not a huge fan of BCH) but if you want to diversify your portfolio, you'll need more than just Coinbase to do it.
3. Coinbase experiences a lot of down time and maintenance due to massive amounts of traffic
The world of buying and selling cryptocurrency moves extremely fast. You shouldn't count on one exchange always being up and having alternatives in place is a smart choice.
I must admit, I am very skeptical of the timing of Coinbase's outages. Many times, when a coin is tanking the service shuts down trades. I have no evidence to support that this is planned and I could very well just be paranoid but, it's worth noting.
Considerations for Choosing an Exchange
In a second I'm going to share with you some of the Coinbase alternatives, but first, let me explain some things before you apply for any of these.
First, there are limitations and restrictions. You won't be able to use all of these exchanges.
The biggest limiting factor is geographical location.
While Bitcoin is growing in popularity, exchanges are still highly regulated and only exist where countries allow for them to conduct business. If you live in the United States, there are some exchanges that will not allow you to use their exchange.
Some exchanges are even restricted at the state level (I can't currently use Coinmama since I live in Ohio for example).
Most exchanges will tell you right away at sign up that your country is prohibited from using the service. If you do not see any language during signup, you should look at terms and conditions just to make sure that you will be able to conduct an exchange. In some cases, you may deposit and be unable to withdraw because of where you live.
While not all exchanges operate this way, you should verify any problems with your country and the exchange by conducting a search and reading customer reviews.
Method of Payment Limitations
Whenever investing in cryptocurrency, customers must do research beforehand and that includes how will you get paid.
Ultimately, that is the goal of investing in digital currency, so it should be very plain on the exchange how you get back the money that you invest.
Most exchanges offer wire transfers. However, they may have a fee attached for certain types of transfers or a PayPal fee if you choose to sell to your PayPal address.
There are some fees to watch out for including conversion fees that range from 0.5% to 5%, Maker or Taker Fees, which can range up to 0.5% and Network or Miner fees which cost about 0.00001 Bitcoin (BTC). These fees should not be greater than these percentages. If so, you are likely being ripped off.
Supported Coin Limitations
Bitcoin is not the only digital currency out there that has become lucrative.
As you start to look into cryptocurrencies, you will find many are very new and may not have the clout of the original Bitcoin.
For investors new to cryptocurrency, most are looking to purchase Bitcoin, as it is almost half of the entire digital currency market. There are hundreds of legitimate cryptocurrencies to choose from (depending on when you're reading this, there could be thousands).
Most exchanges have restrictions on how much you can buy or sell at a time.
Some of these limitations are loosened over time (older accounts earn larger limits). You should choose platforms depending on how much you are wanting to buy and how much you want to be able to sell at one time.
Here are the alternatives that will allow you to purchase cryptocurrencies with fiat money.
Coinmama has been around since 2013 and has created a reputation for being a more reliable cryptocurrency exchange. This bitcoin exchange was founded in Slovakia (which unfortunately scares away some users here in the US, for reasons I don't know).
There are also limitations to what states in American are allowed to use this Coinbase alternative. Only 17 states are allowed to access the exchange. This is a major drawback as other exchanges are still allowing transactions from any part of the US.
The ease of entry into this exchange is optimal for new buyers.
If you plan to only purchase $150 in Bitcoin, this exchange’s verification and total purchase time is about one hour.
However, the bitcoin exchange does tack on a 5% credit card fee charged through Simplex. This also means that you are not purchase $150 in BTC but actually $142.50.
Exchange rates are also different. You can expect to pay less for your bitcoins through Coinbase than this exchange. On average, customers are paying 11% more to purchase a bitcoin through this Coinbase alternative.
Pros of Coinmama
Cons of Coinmama
When I recommend using Coinmama. Coinmama should be used by investors who are needing to purchase more than their Coinbase limits allow them to. It should be treated as a supplement to other exchanges rather than a perfect alternative due to its higher fees and limited coins.
LocalBitcoins is like the CraigsList of the bitcoin world and has been touted as one of the best private ways to purchase bitcoins.
This is because other companies may track your activities while you exchange, but that is not the case with LocalBitcoins. The exchange has a fast process, and it is easy to set up with no ID verification required to use.
With headquarters in Helsinki, Finland, LocalBitcoins offers excellent security with no prior hacks as of 2018. You can only trade in Bitcoin, which is one of the major drawbacks to using this service if you want to get started with other cryptocurrencies. However, it is the largest peer-to-peer exchange that helps match buyers and sellers all over the world in real-time. The platform allows for face-to-face online transactions so you feel your transactions are more reliable and less likely to be a scam than with other exchanges.
There are some trading fees to be wary of including a 1% trading fee. However, there are no withdrawal fees, and you can choose to be paid in a variety of currencies. In addition, LocalBitcoins employers an escrow service to ensure that all trades are safe and secure.
Pros of LocalBitcoins
Cons of LocalBitcoins
Are you a fan of alt coins and all types of cryptocurrencies? LiveCoin.net is a good place for you to trade. Based in London, LiveCoin.net provides fast deposit processes and withdrawals. You can also trade in Bitcoin, Ethereum, Ethereum Classic, Doge, Litecoin, Zcash, Augur, Factom, Ripple, Monero, Dash, DAO, Iconomi, Stellar, and many others.
While trading volume is low, there are no trading fees. LiveCoin.Net makes its money through deposit and withdrawal fees, however.
You should be careful when using this exchange daily as these fees can add up over time.
Pros of LiveCoin.Net
Cons of LiveCoin.Net
#4 Independent Reserve
Independent Research was founded in 2013 in Sydney, Australia and offers a very open cryptocurrency exchange that supports Bitcoin and Ethereum.
The verification process is reasonably quick. You can create an account, verify through your ID, and deposit funds almost immediately and start trading into different currencies.
You can work within Australian, New Zealand, and US dollars only. You can also directly deposit Bitcons, Bitcoin Cash, and Ethereum. You do have to provide a wallet address in order to withdraw, but you can transfer straight into your bank.
In addition, this exchange allows for customers from all countries to purchase and sell. Payment methods are not as robust as some of the other exchanges. You can choose from POLi if in Australia, EFT in Australia, or SWIFT for all other countries. This means that if you want to exchange, you will need a SWIFT account.
There are also some fees to consider, including 0.1% to 0.5% made commissions depending on how much you trade within a 30-day window. while EFT deposits of AUD 100 and above are free, smaller deposits also have a $0.99 processing fee. Other deposit and withdrawal fees also apply. International withdrawals have a hefty fee of $20.
Pros of Independent Reserve
Cons of Independent Reserve
Want to buy bitcoins on a reputable exchange? Located in Delaware, Paxful boats over 8,000 daily transactions. As a peer-to-peer exchange, they also provide a number of payment methods, which gives some customers more access than others who are used to working with PayPal and credit cards. You can also request payment in the form of a gift card.
One drawback is the 1% fee tacked on to any transactions that you conduct with Paxful. Customers report that the transactions and verification process are very fast, allowing you to set up an account and purchase or sell quickly.
The site also provides 24/7 live chat and a support forum to help out novice bitcoin traders. While the service is very reputable, the trading volume is low and only provides an exchange for Bitcoin. There are very little fees with this exchange, so you can only expect to pay if you are using an unusual payment method.
Paxful is rather new, just founded in 2015. However, the website boasts excellent security and ease of use with a short verification process. If you are looking for something very simple, Paxful also has a wide variety of payment methods and currencies accepted so you can quickly sell and get paid.
Pros of Paxful
Cons of Paxful