If you are completely new to crypto, perhaps, at his point, you have already read (at least with a blink of an eye) my intro preface and FAQ. If not, maybe it would be a good starting point to read them (at least that FAQ). If you just want to get that Bitcoin already, skip the links and let’s get down to bussiness!
Oh yes, sorry, one more thing! Let’s get this one thing straight first. I assume you are reading this article because you decided to invest some “real” hard-earned money in cryptocurrency or learn how to do so. The title of this article talks about buying Bitcoin (BTC), however, that does not mean it is the only base cryptocurrency that you can start with – you can choose Ethereum (ETH), Litecoin (LTC) and, at the time you are reading this article, maybe a few others. The same walktrough, that is written in this article, applies to all of them. BUT *I raise my big bad index finger* I believe your first purchase really should be BTC. I believe you are here because you either heard the news about Bitcoin’s unstoppable rise or really just want to take a part in a revolution. One way or another, welcome aboard!
- 1. So, where to buy that Bitcoin? Coinbase!
- 2. Why use Coinbase if there is GDAX which has lower fees?
- 3. How to get my money (USD/EURO/GBP) to Coinbase?
- 4. What fees does Coinbase charge me?
- 5. I have money in my Coinbase wallet and/or I activated a credit card payment method, my fingers are itchy, I want to make a purchase! How?
- 6. Now what?
1. So, where to buy that Bitcoin? Coinbase!
The most accessible method for me, was Coinbase. A very convenient door to the crypto world. Here’s the register link for the impatient. The walkthrough follows after the link.
After clicking that link, you will be greeted with the registration screen. You must register first – this is one of the few times I will say this – be sure to write your real ID details here as Coinbase will require you to verify yourself later on. You would not want to fail right at the register screen and lose one mail address. You cannot enter one mail address in multiple Coinbase accounts. So, if you spoil the first one, you will have to ask Coinbase to remove your account or you will have to make another mail address and register that! After these first register details, you will have to enter your telephone number. Coinbase will use Two-Factor Authentication – sending SMS with a code to your phone – so you will be asked to enter this code whenever you try to change important details in your Coinbase account. You can also add another layer of security by using Google Authenticator app, more HERE.
You need to verify your details so that you are allowed to buy BTC for fiat currency. As Coinbase allows you to use your “real” money to trade, it must verify you are a real person. This verification requires that you upload a photo of your ID whether it is your personal ID card, driver’s licence or similar. For each ID you decide to upload, you have to upload 2 photos – front side and back side of your ID. What do you need to do this? In order to make these photos of your ID, Coinbase allows you to use:
- Coinbase smartphone app to upload the photos – I did not do this, I do not like when companies ask me to install their app just to upload something,
- PC camera (if you have it), when you click this option, you will be asked to enable your camera in your browser – I tried this, but my camera had an image with a resolution of a 1960’s photo, so this option did not work out for me,
- Smartphone but without the app – Coinbase has one more way of uploading your ID which also requires your phone – you will receive an SMS on your authorized (registered) phone number. This SMS contains a link that, when clicked, will open an a website where you can upload a photo from your gallery. I recommend using this method, you have my blessings.
Once you upload that photo/photos, the verification process wil start and may take some time. Unfortunately, in order to verify yourself quickly, you will either need a good PC-camera or a smartphone.
Wow, you verified yourself already? Good job! However, even after your first verification, you will probably still be limited by smaller amounts that you can buy/sell on Coinbase – your LIMITs. Also you cannot yet enter and trade on GDAX platform – a fiat-crypto exchange from the same company that is behind Coinbase. And trust me, you want to join GDAX, all the fun is there. In order to withdraw larger sums of money on Coinbase, you will have to verify yourself with one more ID document. Once this verification is done, you will also be allowed to enter GDAX. GDAX and Coinbase use the same login information so you do not need two accounts. The best thing about GDAX is the interface and its fees which are lower than those on Coinbase. I talk about GDAX and other exchanges in the articles HERE.
Based on your country, you will be allowed to trade BTC for either USD (US Dollars), EUR (Euro) or GBP (British Pound). As I am from Europe, I was not allowed to buy BTC for USD, even though I would probably prefer that. Nevertheless, you will have to operate with the currency that Coinbase assigns to your account based on your registration (and verification).
Now that you have a proper account, it is time to get your “real” money to Coinbase somehow. Hold on, hold on, hold on! I think you may be asking yourself the question below.
2. Why use Coinbase if there is GDAX which has lower fees?
As I said already, Coinbase really has a bit higher fees on trading when compared to GDAX! I think you should move to GDAX right after your first purchase on Coinbase. So why still make that first purchase on Coinbase? Is there someting fishy? Well, you guessed it, it is not that straightforward, but there is still profit!
Here are my calculations. For 100 US Dollar purchase, I noticed the difference in BTC price between Coinbase and GDAX to be about 0.5%. This number may change a bit based on current level of volatility. So you buy Bitcoin on Coinbase for a price that may be 0.5% higher than the actual price on GDAX. On 100 USD, this percentage is 0.5 USD difference. You also have to add the fee that Coinbase applies every time you buy crypto there – this would be about 1.49% (when paying with your Coinbase wallet, not credit card!) of your sum – so about 1.5 USD. There are also conversion fees if you do not use USD, but they add only about 1% to your sum. This means, if you purchase 100 USD worth of crypto, you gain a bonus of around 6 to 8 USD worth of crypto. You get an amount closer to 8 USD when you use USD!
If you buy for MORE than 100 USD on Coinbase, the bonus may quickly get lost in fees. This is why you should move to GDAX right after!
All in all, you still profit from those 10 USD bonus (that you get for 100 USD purchase) when you register over the invitation link.
Unfortunately, trading on GDAX also requires an extended verification so you will probably have to upload one more ID document to be allowed there. Until you do that, you will have to use Coinbase. But after you register on Coinbase, make your first 100 USD purchase and verify yourself, I would move from Coinbase directly to GDAX as the fees are indeed lower!
I talked about USD here, if you use EURO, the price of your first purchase has to be equal to 100 USD – in EURO, this will be currently around 85 EURO (as of 9th December 2017, if reading this at a different time, you have to find the current USD/EUR exchange rate yourself).
Now you know why, so let’s get back to Coinbase!
3. How to get my money (USD/EURO/GBP) to Coinbase?
European customers can deposit “real” (fiat) funds into their wallet one way only, by using a SEPA bank transfer. When depositing funds to your wallet, you are basically filling your wallet on Coinbase with real money, these funds can then be used instantly to buy crypto. You can either use all of your wallet’s balance or only a fraction of it. The best thing about charging your wallet is the possibility to later transfer the fiat funds from your wallet on Coinbase to your wallet on GDAX. For every SEPA bank transfer from your bank account to your Coinbase wallet you pay a fee of 0.15 EURO.
US customers have more options to deposit funds into their wallet. I did not test these options but the information can be found HERE.
All customers can also INSTANTLY purchase using a credit card. All credit cards from the usual credit card vendors are supported. Purchasing using a credit card is different from depositing to a wallet, because your funds are taken directly from your credit card’s bank account and are instantly turned to cryptocurrency. You cannot charge your fiat currency wallet (e.g. EURO wallet) on Coinbase with a credit card! Unfortunately, because of this, you cannot use your credit card to charge your GDAX wallet with fiat currency! Credit cards are only for instant purchases. I am talking about this because I wanted to do exactly that. There is just one problem with credit cards, you can only use credit cards with 3D Secure functionality. When you would like to use a credit card, 2 important points below.
- You will be able to register your credit card even if it does not have 3D Secure activated, it just will not work (purchase will always fail)!
- Also there is quite a FEE to using a credit card – 3.99% of your purchase. So, when purchasing for 100 USD, you pay 96.01 USD (this also includes other fees, so you purchase for even less) for crypto and 3.99 USD is the fee for using a credit card! There is always a fee when using credit cards, it is not just Coinbase – Coinbase just pays the credit card vendors this fee. Just remember, you can avoid it by charging your wallet on Coinbase beforehand with a bank account transfer.
If you want to add a credit card as a method of payment, you can see its button placement on the next screenshot. Also, while we are looking at that page, US customers can link their bank accounts to Coinbase using the same button.
European customers cannot use this method to register their bank account. Instead, they have to make a SEPA transfer. If you are looking for information to make a bank account transfer, here they are on Coinbase. Yup, next screenshot.
When clicking the “Deposit” button, a new mini-window will open with the deposit instructions – first instruction will be to remember your reference number. You have to copy it into your bank transfer – it identifies your Coinbase account. After clicking “Continue” button, you will see your account’s name and, under it, there will be a WARNING text reading “This name must match the bank account name. Coinbase cannot process deposits for accounts that have different names.“. At this point I kind of panicked, my bank account has certain redundant information in its title and I was not sure if the payment would process.
So, what did I do? I improvised! I completely verified my account so I had an access to GDAX and found the information to fill my wallet there. There is not such a requirement on GDAX! Interesting. See the next screenshot on where to find information about GDAX bank transfers.
Oh yeah, and here’s the link to GDAX itself.
Ok, now this might have been kind of strange and certainly not as straightforward as I expected. Perhaps Coinbase would still accept my payment even if my bank account’s name was not completely equal to my Coinbase account’s name, but I did not want to take the chances.
4. What fees does Coinbase charge me?
I already talked about fees, but you should take a look yourself. There is actually a whole page about them. Fees differ in different countries and there are also conversion fees applied. You can find more about Coinbase fees HERE.
5. I have money in my Coinbase wallet and/or I activated a credit card payment method, my fingers are itchy, I want to make a purchase! How?
If you have not seen it already, Coinbase has a very simple interface for beginner buyers. You can see everything on the next screenshot.
6. Now what?
Now that you have your first BTC (or a fraction of it) in your Coinbase wallet, it is time to continue your journey. As you got this far, you probably already know what to do with your investment. But if you do not, well, here is what I would do. Trading BTC every day for EURO/USD/GBP may sometimes be a good idea, but I do not recommend it – only if you sit at the computer the whole day or if you trade with several thousands at a time! When you suspect that Bitcoin starts falling and you sell, you might feel happy for some time. A bit later, you watch how the price gets higher by hundreds of USD, do you feel happy now? Of course not, you just lost (“lost” is not the right word, “missed” is much better) those hundreds. My experience is – everytime I bought, the price got lower, everytime I sold, the price got higher. So now I mostly hold BTC, invest it into other cryptocurrencies and trade with those – I do trade with BTC once in a while, but I buy much more than I sell.
Here are your options.
If you bought Bitcoin to hold it (you want to invest in BTC long-term), in other words, you just purchased and want to put those coins somewhere safe and wait for the price to get to million USD, you should consider getting a private wallet. Article link below! I really recommend doing this at some point, it feels much safer to have your funds under your own protection.
If you want to start trading, purchase some Altcoins, learn about charts, orders or get a list of exchanges that I use, then choose the link below this paragraph.
Not now! Back to the HUB!
Me tired! Me back later!