21 Dec, 2018 at 21:58pm
The world of cryptocurrency is ever-growing, and as such it continually attracts new buyers. Whether you are one of the new traders or a long-time investor, chances are you are looking for the cheapest way to buy bitcoin. However, there are too many different variables that you need to consider before determining what seller best suits you. While some sellers excel in a specific area, they might be trailing behind in another.
For example, you might be merely interested in sellers that offer the lowest bitcoins fees, but that specific seller might not be providing the payment method that is most convenient for you. For that reason, the most important aspects to pay attention to are:
That said, let’s dive into discussing these three fundamental aspects that you should take into consideration when buying BTC.
Clearly, the most important thing to take into consideration is finding a seller that offers the lowest fees when buying bitcoin, but keep in mind that different fees apply to different payment methods. If you are buying bitcoin with other cryptocurrencies, you should be looking for a platform that offers cryptocurrency exchange with the lowest fees. Another method is buying bitcoin by using fiat currencies, whether it’s paying with real cash or with a credit card. Whilst it’s the most convenient way, buying BTC with credit cards is not the cheapest one.
By now you must be wondering whether there is a no-fee bitcoin exchanging method, and the answer to that is yes, there is. The method is known as peer-to-peer and the way it works is that websites like LocalBitcoins or Paxful will look for a seller near you willing to sell BTC. This method might be considered as the least secure as it would require you to meet the seller in person while carrying cash or some other payment method you previously agreed upon. If it comes to that, our advice would be meeting in a public place or buying from sellers that already have a good reputation on the website.
A somewhat less popular option includes buying and selling bitcoin via bitcoin ATMs. However, we must point out that it would be ill-advised to purchase bitcoin using this method. Although they offer great means to protect your identity and your privacy, the service will cost you an additional 7-10% fee.
The cheapest bitcoin exchange is not always the way to go. The best way to illustrate this can be seen in the example where you are buying different amounts of BTC as the fees can drastically change the amount you are paying. Namely, different websites ask for different fees, and some of them are percentage based whilst others ask for a flat amount. It’s recommended that you opt in for a fixed fee if you are looking to buy BTC in bulk, whereas choosing a percentage-based fee is a better option if you are buying smaller amounts.
The third major aspect to consider when looking for the cheapest ways to buy bitcoin is the location. The Bitcoin Price Index, referred to as BPI, is defined as an average of bitcoin prices across leading global exchanges and shows the real value of one BTC. Every seller has a different asking price which is displayed as a deviation from the BPI. In a nutshell, you can put it like this; the lower the deviation, the smaller the fee that you are paying.
Does that mean that you can disregard everything we’ve mentioned so far and merely opt in for the seller asking for the lowest fee? Well, not really. That’s where the location part comes into play because trying to buy BTC with your national currency or converting your national currency into the one that you want to buy BTC with may and often will include additional fees. Let’s take the US and UK and European exchange market as an example.
The two leading exchanges in the US are Coinbase and Kraken. For Wire Transfer, Kraken charges $5, while Coinbase asks for a 1.49% fee. If you are buying bitcoin via PayPal or a credit card on Coinbase, you’re expected to pay a 3.99% fee. Coinbase Pro offers even lower fees than Coinbase. Coinbase Pro has no fees for withdrawing or depositing funds, but it charges 0.1% to 0.3% for trading fees. If you already have an account on Coinbase, you can use it to buy BTC on Coinbase Pro.
When it comes to the cheapest exchange to buy bitcoin using the peer-to-peer method, the best options in the US are LocalBitcoins and Wall of Coins as they charge sellers only.
As far as European exchanges are concerned, the answer is quite similar; Coinbase Pro is the way to go because they offer bitcoin exchanges with the lowest fees, or even no fee if your country falls under SEPA (Single Euro Payments Area).
Countries that support SEPA transfers are: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lichtenstein, Lithuania, Luxembourg, Malta, Monaco, Netherlands, Norway, Poland, Portugal, Romania, Slovenia, Slovakia, Spain, Sweden, Switzerland and the United Kingdom.
However, it gets a bit tricky with the UK as they use GBP as their currency, rather than EUR. Some exchanges like Bitstamp and Kraken don’t accept deposits in GBP, so you would have to convert GBP to EUR instead. The banks do that automatically for you, but at poor exchange rates though, which can potentially cost you a lot of funds. On top of that, some banks even have hidden fees and charge for sending EUR even when using a SEPA transfer.
Luckily, there is a simple workaround for Brits looking for a low fee bitcoin exchange thanks to the Bitstamp and Revolut method that allows you to convert GBP to EUR within Revolut at the actual exchange rate.
Coinbase has a simple and easy-to-use platform and, as such, is an ideal choice for newcomers into the world of cryptocurrency. The complex platform of Coinbase Pro suits experienced traders as it offers better deals.
As we’ve mentioned before, the cheapest way to buy bitcoin doesn’t actually exist as it is all relative and it can depend on so many things, such as your country of residence and your currency, your bank or even how much you value your anonymity.
However, if you treat our article as guidelines to follow and take the major aspects we mentioned into consideration, you are guaranteed to find the lowest bitcoin trading fees and get yourself the best deal.
If you're under 18 then you may want to check out Altpocket's article on how to get cryptocurrency when being underage.
Image Sources - Business Insider, Nordea, Coinbase and CEX.IO