Cryptocurrency Exchanges - Jumping in with Sharks

When Bitcoin spiked to almost $20,000 (USD) this past December, the fear of missing out was running rampant online. Reading reports of people making a lot of money, made me realize I WANTED IN. After the experiences I went through to get set up, verified, transfer money to actively trading, I decided to detail out my circuitous route in a series of blog posts so others might have more information to avoid the frustrations and the self-inflicting wounds I endured due to my lack of research.

Part 1 - Exchanges

I didn't know anything about investing in Bitcoin or cryptocurrencies or anyone who was already investing so I had to turn to the internet for more information. As we all know, there is a great deal of information online but there is also a lot of trash along the way. I found half-truths, lies, hard to follow instructions, and lots of suggestions to get started. One thing was clear though, it seemed like everything started with Coinbase.

So, like many before me, I started by creating an account on Coinbase. It was obvious I was jumping in without thinking it all the way through or even marginally understanding what I was doing. I didn't know anything about fees, transfer times, or the need to have accounts at different exchanges or wallets. I just wanted an account so the money would start rolling in.

Thankfully or not, I was forced to start off slowly. The verification process on Coinbase took some time, in my case about 2 weeks. During which I did "some" research but obviously not enough. Part of what I discovered was the need for 2-Factor Authentication. This adds a 2nd layer of protection by requiring users to not only log in with their username and password but also use an authenticator to verify the right person is getting access to an account. I found Google Authenticator to be perfect for this job.

By the time my account was ready to go, I decided to start with a modest amount and learn the ends and outs before jumping in completely. So when I decided to make my first BTC purchase, I bought exactly $100 (USD). This didn't exactly put me in position for the millions I had dreamt of but just enough to start my education by losing almost all of it.

What was funny was how upset I would get when I couldn't understand the mechanics of it all. "After" I transferred my $100 (USD) over to Coinbase, I found out it cost me $2.99 (USD) in fees. That left me $97.01 worth of BTC in my account. Remember, this was when the price of BTC was at $17,265 (YIKES). But, it took over 10 days for my USD to clear my bank and transfer to Coinbase and by that time the price had already dropped to $16,749. This is twice what it is today by the way. Still, my BTC was there and I wanted to get going and start trading.

What I found on Coinbase were limited options. I could only buy Bitcoin Cash (BCH), Ethereum (ETH) or Litecoin (LTC) with my precious BTC, but they too were expensive and I wanted to get a lot of coins for my $97 (USD). That was when I found I would need other accounts on other exchanges.

My first stop when looking for a new exchange was Bitstamp. I didn't have a good reason to go to Bitstamp other than I found it by searching for what I wanted to buy. There I could trade my BTC for Ripple (XRP). During the spike last December. XRP had jumped up to $3.79 (USD) and it seems like everyone was talking about it. But, if I had really looked, I might have noticed that other than XRP, Bitstamp lists the same Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH) or Litecoin (LTC) that I was already able to buy on Coinbase. Luckily, the verification time on Bitstamp was even worse than on Coinbase. In fact, I am still waiting almost a month after signing up.

While waiting for Bitstamp, I decided to open another account on Poloniex. My reasoning was it had more options and it had one coin specifically I could get immediately, Stellar Lumens (XLM). I had continued to research the new world I found myself in and had read a comparison between XRP and XLM. But, it was not the technology or project behind XLM that attracted me to it. It was the price. Like I said, XRP was trading around $2-$3 at that time but XLM was only $0.65 each. Again, this was when XLM was trading much higher than today. Even still, I could get "MORE" of something, so I wanted it.

Now I had to get my BTC to Poloniex from Coinbase. So, I had to go to Poloniex figure out how to find the BTC address to make the deposit, then go back to Coinbase and fill out the transfer order. But, right before I was going to click submit, I noticed the transfer fee. It was $16.99. My god, are you kidding me? I couldn't believe it. My $100 (USD) which had already taken a hit and been reduced to $97.01 due to the Coinbase fee to get my USD in the game was now going to take another hit. This would only leave me $80.02 (USD). I mean WTF, I was furious. I hadn't really done anything and I was going to lose more money. Still, FOMO was calling, and I was still excited and had waited over 3 weeks at this point and I wanted to get me some XLM. So, as my finger hovered over my mouse to submit my request, I thought to myself, there has got to be a better way so I clicked cancel instead.

The next day is when I found out about GDAX. For those of you who have not heard about GDAX, let me tell you, you need to have an account there. It is owned by Coinbase so once you create an account, transfer fees from Coinbase to GDAX are $0. Yes, that is right, free. It is also free to go from GDAX to other exchanges. I could not believe, it. My $97.01 was secure. GDAX and Coinbase are the same company but fees are not dealt with in the same way. I am guessing that Coinbase knows most new investors start there and count on us newbies not finding out about GDAX. It seems a little predatory to me but nonetheless, I found it. So, once I created an account on GDAX, I transferred my BTC to Poloniex and bought 71 XLM leaving some of my precious BTC to buy other coins. After my first purchase, I went straight to my balance sheet to see that I truly owned 71 XLM. But to my surprise I didn't, in fact, have 71 XLM. I only had 70.8225 lumens. It took some time to realize I had paid 0.17775 XLM in fees. I could not believe, it I mean WOW, I had just lost some of those things I really wanted. I was again angry, why would someone take something from me. FEES, FEES, FEES. It was later I calculated that 0.17775 XLM was only $0.06 (USD).

So, there you have it, I had just over 70 XLM. I was rich. I was on my way to being a millionaire. Seems funny now but at the time, I truly had thoughts it would skyrocket over the next couple of days and I would pull out 10 times what I put in. As anyone looking at the market knows, this obviously didn't happen. I did a few more trades on Poloniex before looking for another exchange with wider options.

I had transferred additional funds through Coinbase/ GDAX and had been doing a lot more research for projects that really seemed to have value and long-term goals. That is when I found Binance. I really like Binance, other than most recently when their site was down for a few days, but all is good now. They have a lot of coins that present some true opportunities and transferring funds from GDAX is really straightforward. I do wish they would accept USD but for now, the only issue with transferring from GDAX is the time it takes my BTC to get there.

So, that was the start of it all. I now have accounts on several exchanges, 2FA setup for each and have learned a great deal about getting started. I also learned that the fear of missing out FOMO is very strong and needs to be kept in check. I still have a long way to go in understanding what I need to know but I am excited about Bitcoin and other cryptocurrencies. I spend a lot of time now researching projects, their teams, and goals. I have made additional purchases and plan on holding them for the long term even as the market goes up and down wildly. It was an experience getting started and I am sure it will continue to be so for the future. I feel certain this space is on the forefront and I definitely want to be a part of it. Just a lot slower than I had envisioned.

Next up will be wallets. I have very little invested to date but want to be sure I understand and have access to the best wallets for the coins/ tokens I own. Like Exchanges, there is not a one size fits all for wallets. I have already been doing a lot of research so I am well down the path but there is still more to do. This is just the beginning.