Crypto Exchanges: Fiat on/off ramps (Part 1)

in #bitcoin2 years ago (edited)


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In these current dark days of low crypto prices across the board, I figured it might be an opportune time to share my experiences with the various crypto-currency exchanges that exist and that I have made use of. When prices are this extreme and suffering under a long term correction from the crazy media hyped highs of the beginning of the year, there will be people that will be either looking to enter the system, or conversely, looking to exit the system. I have no particular moral judgement either way, but I have recently been heading deeper into the ecosystem... time will tell if that was a good choice or not!

I have noticed in my time here on Steemit that there have been many people who have joined that have not come from the crypto route that I took, but were instead attracted by the blogging platform with the crypto being a side show. So, there are many things that I may have taken for granted and understood, that have not always been the case. This is what had inspired me to write the occasional piece on the basics of the crypto world. The last piece was quite some time ago, but I thought that it was high time that I returned to it!

The Classic Investment Reminder: Don't invest more than you can lose, and after investing consider it lost! Crypto is still in it's baby stages, it is likely most projects will fail, and possible that nothing will succeed. Everything is still a risky long shot at best! If it succeeds, then it is a unexpected and lucky bonus, but don't count on it!


This first post (of two posts), deals with what are known as fiat on and off ramps. The second will deal with alt-coin exchanges. Please note that all the links that I provide to the exchanges will be using my own referral links, if you don't want to use them then you will need to go direct to the exchanges via your preferred search engine.

Fiat Gateways


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Like it or not, the world of fiat (normal everyday government backed currency like USD, AUD or Euro) is still the king, and is likely to be for the foreseeable future. Thus, to enter the world of crypto, you will need to convert some of that fiat into currencies/tokens that are able to be used in the crypto world.

Fiat on/off ramps play the facilitator for this exchange of fiat to crypto. In general, they need to deal with banks (sometimes money orders), and thus they need to have a more regulated system than the altcoin exchanges which deal ONLY in crypto. This will mean that you are going to need to link your real world persona (or your fake one, if you have one or two to spare!) and some sort of banking payment system (IBAN/SWIFT, Credit card or money order). Of course, there are ways to buy into the crypto system that don't need these identifications, but these methods are not generally something that I would recommend to anyone.

These Fiat exchanges will accept your fiat, and then give you access to one or more types of crypto (Usually Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) or Ripple (XRP)) which will give you your first foothold into the crypto ecosystem.

Below, I will detail three of the fiat exchanges that I use (Coinbase, Bitstamp and Coinjar, and my personal experiences and hints for anyone who might be interested. It is taken for granted that all of these exchanges have well implemented user security with multiple ways of enabling two factor authentication. If possible, you should NOT be relying on username/password only, and email/SMS authentication is also not so safe either...

Coinbase


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Coinbase is the largest of all the fiat on/off ramps and has chosen the route of being the most eager to play by the governmental regulations (as far as they exist in this space). This means, that you will need to be able to prove your identity (Know Your Customer (KYC)) with some sort of Passport or Driver's Licence identification. In addition, you will need to provide address details (but not phone number) and also a linked bank account (although you can also use a credit card, but this incurs higher fees).

Take note that the name and address details from the bank account needs to match up with the details that you provide, otherwise you will be in for a lengthy relationship with customer support.

Payment via the SWIFT banking system normally takes a few days whilst credit card purchases are instant, but attract a much higher fee. After depositing and receipt of your preferred fiat in one of these supported countries, you will be able to purchase crypto directly on the spot market. Supported currencies at this time are: Ethereum (ETH), Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum Classic (ETC) and Litecoin (LTC).

Take Note!

It is best NOT to purchase crypto directly on Coinbase! Instead, you should transfer your fiat balance to Coinbase Pro (formerly known as Gdax), where you will pay much less in fees, even if you buy at the spot price and are not going to use the market tools. Sign up is linked directly to your Coinbase account, and the transfer to and from Coinbase to Coinbase Pro is fee-less.

My Experience

I found Coinbase to be a good introduction for people who are first coming to crypto system. The tools and interface is clear and simple, with apps available for phones/tablets in addition to the website. The fees are a touch on the high side, but they can be side stepped by using Coinbase Pro (Gdax). Timing of the SWIFT transfers can be a little annoying (especially given that a few days is an eternity on the blockchain!), but it just means you need to be prepared and have a little bit of fiat ready to go!

I have had to deal with their customer support only once, due to the mismatch of the names with my banking details. Oddly enough, this only became an issue during the huge bull market at Christmas last year... before that, it was never a problem!

The fact that this exchange is playing very close to the rules and regulations as they understand it, means that it can be a bit slow to move with respect to listing new coins or things like that and it also means that they can be compelled to release records of transactions. However, I think that for most people, this is an acceptable price to pay for the security of a trusted exchange.

Bitstamp


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Bitstamp was the exchange that I have mostly migrated to. During the bull run of last year, I began to have trouble with the Coinbase account (due to slightly mismatched names between the Coinbase account and my bank details) which took too long to resolve. Thus, I started up an account here on Bitstamp, and have done most of my on and off boarding from here!

This exchange came heavily recommended by my friend, and they have a detailed FAQ here. The interface is pretty functional and not as simple and pretty as the Coinbase interface, but by this stage, I needed something that worked and I wasn't so interested in the way it looked. I was also quite familiar with the systems involved on the market and crypto in general, so the bare bones nature of the interface didn't bother me.

Again, being a regulated fiat exchange, you will need to provide proof of address and identity as well as some form of payment system. For this you will be able to use International Wire transfers in addition to the bank (SEPA) and Credit card options that were available at Coinbase. The ability to use International Wire Transfers opens up this exchange to users from all around the world, instead of the national limits of the Coinbase solutions.

Unlike the Coinbase experience, you are dropped straight into a market and trading platform, so there is no trick to switch to a different account. Just deposit and get trading! The fee structure can be found here, and the available currencies are: Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Bitcoin Cash (BCH) and Litecoin (LTC).

My Experience

Again, with the SEPA payments (and withdrawals) there is a bit of a lag, generally about a couple of days to clear. So, it is best to have some fiat in and ready to go if you are serious about trying to catch discounts in a hurry! On the other, if you just drip a little bit in each month/week then it isn't such a big deal to have the lag, as you are just averaging out the losses/gains over time anyway and not trying to catch market at any particular part of the cycle.

The interface is a bit spartan, but that is something that is more a personal taste issue, it doesn't bother me, but it could be a bit bewildering if you aren't already comfortable with this sort of market interface. It could also do with a dark theme....

The biggest downside to this exchange is the pretty poor app that they have on the Android side of things. Quite honestly, it is terrible, and you are better off just opening up and using your mobile browser if you absolutely HAVE TO trade right now. I prefer to wait till I get home...

Coinjar


Coinjar Logo from Finder.com

Coinjar is the last of the fiat exchanges that I use. As you may have noticed if you follow my blog, I am Australian (but living in Netherlands). This means I wanted to have an exchange that was able to take deposits in Australia (and my Coinbase was already linked to my European accounts among other reasons for not linking there).

I had asked around the community for recommendations for an Australian on/off ramp and Coinjar was suggested to me. The methods of depositing fiat are detailed here, but it requires that you make a BPAY (or Blueshyft) payment for depositing Australian Dollars. Now, I believe that Coinjar serves other countries worldwide, but I have no experience with that and so I will not write about that side of things!

Again, verification of Identity is required, however, there is no need to verify address. That was handy, but I think I was lucky as I still held an Australian Driver's Licence which already contained an address. From memory, you will also need an Australian mobile number to be verified.

BPAY tends to take some time to clear (generally a working day or two), whereas the Blueshyft (which I haven't used) is quicker but with higher fees. Just like Coinbase, Coinjar has a market trading area (Coinjar Exchange) which will incur lower fees than buying straight from the retail area. Like Coinbase, Coinjar has a slick interface and a highly usable app (for Android at least!). The currently supported crypto-currencies are: Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Ripple (XRP) and ZCash (ZEC) and their fee structure can be found here.

Take Note!

In addition to the cheaper market side (Coinjar Exchange) that was already explained in the Coinbase section (up top). Coinjar has a rather annoying "feature" that protects you from fraud by locking up recent deposits for 7 days. During that time, you can trade and buy/sell crypto/fiat within the Coinjar system, but you can not transfer outside the system until the 7 day waiting period is cleared. I guess this is a sort of an effective method of fraud protection, by making sure that people can't easily drain your bank accounts, but it does really put a crimp in your activities if you want to move money internationally via the crypto system (7 days is an eternity in crypto land) or if you want to bounce some cash out to an alt-coin exchange.

My Experience

I have no particular problems with this exchange, as long as you are NOT in a hurry. The fraud protection feature is quite annoying, but I understand the rationale for it. Again, if you aren't planning on moving money internationally in a hurry or if you aren't planning on bouncing BTC out to an alt-coin exchange to catch a dip, it doesn't really matter too much.

The Android app is really a big thing here though. It is slick and easy to use, and allows you to easily pay (if the other party will accept) in crypto to either a crypto address or to another Coinjar user.

Wrap Up

All three of these exchanges, I have had good experiences with and am thus happy to recommend (at this time) to others. Be aware that none of these exchanges are anonymous and that is something that you will need to keep in mind in the near future as governments try and figure out how to deal with crypto assets in both taxation and regulation. On the other hand, I do recommend that people try and keep all their crypto holdings above board, declare and pay tax on them (if your country has figured out what to do with them) otherwise you might be in for a big unwelcome surprise in the future.

As another reminder to newcomers in the crypto world, the exchanges (however well backed and trustworthy they might appear) are NOT good places to hold your digital assets. In principle, they are functioning as more of an IOU, and unless you hold the private keys to the actual assets/wallets, you do NOT own the them. Which is okay, when everything is okay, but if there is fraud or financial disaster, then you are NOT protected. In that case, you should be learning about hardware wallets like a Ledger or Trezor device.

Ledger Nano S - The secure hardware wallet



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Posted from my blog with SteemPress : http://www.gamerjokerbreadder.com/2018/09/14/crypto-exchanges-fiat-on-off-ramps-part-1/

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I usually do a direct P2P transfer via BitBargain or LocalBitcoins, because otherwise, being in the UK, I get hit by steep transfer fees from Swift, and that's really what I started using crypto to avoid. Obviously the trader adds commission, but I still find that it generally works out more cost-effective, and easier. I've done several of these transfers and have had no problems, as the security of these two exchanges is tight.
However I did almost run into problems when buying Litecoin through Cryptomate, which I think is a new exchange. I noticed that their security seemed very lax. The first transfer went through with no problems, but with the second, the seller did not send my coins for over an hour. Luckily when I contacted customer service the coins came through immediately, but I wouldn't use them again unless they improve their security a lot.
I avoid Bitcoin these days, as it's so slow and the transfer fees are expensive. Recently I've been using Litecoin and Loafwallet, which is delightfully quick, easy and cheap.

The steep transfer fees I was referring to are the commission fees for transferring from dollars or Euros to Sterling, as I don't know of any exchanges that transfer directly from LTC to GBP (only the P2P ones). They're not massively steep, but steep enough to eat significantly into any value you make from the trade.
There are risks with the P2P methods, and I wouldn't transfer large sums of cash this way.

Have a check at the Coinjar exchange, I think (I'm not 100 percent sure), that they offer GBP account against the main Crytpos. However, if you are planning on bouncing out quickly, be careful, there is a 7 day lock up. So I would only suggest buying to crypto after the lockup has expired.

Ok - thanks for the tip!

I didn't realise UK transfers connected a fee? You aren't linked into the SEPA system for banking?

Anyway, thanks for pointing out the P2P methods of buying. I knew of them, but have been quite hesitant to trust them. Glad that they have worked out well for you and that your problem was worked out quickly.

I can see that the speed and cost of BTC transfers would be a problem in these P2P situations, but it is much less of a problem when buying on an exchange. That said, the congestion is pretty low these days, so the speed and cost are pretty low, and the second layer (lightning) solutions are very promising. Also, the BTC is pretty much required for trading on altcoin exchanges. I'm too lazy to convert LTC to BTC before trading... Although, I was doing that when the congestion was high earlier in the year!

Excellent info for anyone wanting to enter the crypto space.

Namaste, JaiChai

Thanks! I will try write another for the altcoin exchanges later in the week!

This is a valuable blog. If I'm ever tempted to buy, this will be my guide. I do believe, besides the clear road map you provide, the best piece of advice is:

after investing consider it lost

Some people can't get their minds around that. Best to let it go and be surprised if you make money.

A really good blog, @bengy. I am going to resteem (not something I do often) because I think people can use this information.

Thanks for the resteem and glad you found it useful for others to see! In a few days I will try to get another post up about the altcoin exchanges and some other stuff...

Yes, the money sunk into here is really long shot bets. Something (probably only a handful at best) might go to the moon, but it is impossible to see what it might be. It might be bitcoin or something completely left field... It might be something for a user case that we never imagined.... We never had any idea in the old bulletin board days of the internet what was going to come of networking computers together!

I am one who fits this line

attracted by the blogging platform with the crypto being a side show

So this was a very informative post for me thanks for sharing

Ha ha! You'll know what to do with your hard earned Steem, if you ever want to go further into (or out of) crypto!

I was the opposite, I got drawn in because of the crypto, but I'm kicking myself for not doing it even I first heard of Steem...

Yes I have the same regret i heard about steemit early on but was a bit dubious so it was a year later I finally joined wish I had got in earlier

Thanks for this detailed and helpful guide! I appreciate you sharing your accounts and experiences with the different exchanges.

No problem, I hope it is of use to people!

Nice post. I only know some of this ways. I do not know if "buy steemmonstercards with fiat and sell them and get steem" is a good way from fiat to crypto. But it is also a way.

For me BItpanda is the bridge I use. You have no experience of them?

Ha ha, I didn't think of the Steem monster route!

I haven't used Bit panda, it seems like they give a slightly less good exchange rate compared to Bitstamp? But it is a bit more friendly, and they seem to have more options for fiat.

They have a lot of fiatoptions. I pay with Neteller (higher fee) but I like that way. Absolutely userfriendly.

I started on coinbase and have stuck with them even though they charge a few pounds each time I upload money. I'm also on coinbase pro and did a bit of trading with them until I discovered binance and I've been with them ever since. These two do everything I need and as I don't want to complicate things I'm sticking with them for now. This is a good article, I always like to know things like this to see if there is anything better than what I know right now, thanks...

Coinbase shouldn't be charging you for a SEPA deposit! On the other hand, if you use a credit card that's different.

I will be writing another post about the altcoins exchanges (like Binance) that I use. Mostly Binance is the biggest and most reliable, but there are things that are not listed there yet!

On coinbase I buy ether straight from the bank and for every 100 they charge me 4

Would you save on those fees if you deposited via SEPA, moved the fiat balance to coinbase pro, then purchased your crypto there?

I'll have to ask my son about that; but, I may have put in all the money I'm going to now. I've got a third now of what my all my money in fiat

Probably more than enough! Risky business this is....

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