A lot of people go after popular exchanges which include: Coinbase, Coinmama, Kraken, etc. due to their design, beginner-friendly interface, and ease of use: A major reason why these exchanges charge higher fees; though, few services will provide these functions free.
Fees charged per service depends on both the different coin pairs you are exchanging and the exact amount you are dealing with. It’s highly necessary to compare a range of services before concluding on which one you want to make a trade with. It is also advised you stick to one kind of service due to the volatile nature of the market.
The total cost of buying Bitcoin doesn’t depend on just trading fees, but also its deposit, conversion and withdrawal fees; this can hinder you from knowing the true cost. There’s, therefore, a method that helps in measuring the true cost of transactions known as complete cost index (CCI). It’s a viable tool that aids the understanding of your total transaction cost so that your assessment isn’t based on trade fees alone.
All exchanges at some point struggle to keep up with user demands, even with no fees at all like Paxful; so when platforms with the lowest fee are down for some time, and the need to buy Bitcoin arises, it’s advisable to pay a slightly higher fee to acquire the coins, rather than miss out due to waiting patiently for a lower fee.
The trading activity of traders determine the fees for trading, which could be topped with an extra small fee or no fee at all. Trading fees have a variation of a taker fee or a maker fee. Fees that are paid when liquidity is added to the order book by putting a limit above the ticker price for sale and below the ticker price for sale are known as maker fees. Taker fees are paid when your liquidity is removed from your order book, by setting any order that is implemented against an order on the order book. The taker fee will be paid if a market order is used to buy or sell because market order removes liquidity from the order book. A taker fee will always be paid if a hidden order is placed, while a maker fee will be paid if a limit order placed matches a hidden order.
Below are some of the platforms that give you easy access to buying Bitcoin.
Bitwala’s Fees vary based on partners policies; there is a 5% fee of the transaction cost with a minimum amount of 10$. On Bitwala, the partner simply charges all prices and service fees. Cash Advance Fee is imposed on Bitcoin purchase subject to further charges enacted by your bank. Additional fees are charged from customers who buy Bitcoin by utilizing a credit card; this is done by some issuing banks that see buying Bitcoin as a “money order.” Regardless of market instability between the time when your purchase is completed and the time Bitcoin is received, the price received is locked in at that time when Bitcoin is bought. The price can be unstable; by locking in the price, you always know precisely the Bitcoin that is paid for.
This is another platform, very affordable and utilized to sell, buy, store, trade and use Bitcoin. The fee structure is very transparent and accountable. In situations where costs are incurred to receive your funds, Luno levies a fee for local currency. A small fee may be charged, when local currency is withdrawn from Luno to your bank account. Regardless of the transaction’s size, Luno charges a nominal fee for Bitcoin to receive transactions. It also makes use of the maker-taker model whereby market makers pay no fees while market takers pay a nominal fee. When Bitcoin is sent, a fee is charged to make sure transactions are quickly processed.
This trading platform also utilizes the maker-taker model just like Bitwala and Luno. It encourages market liquidity by awarding makers with lower fees. This motivates makers to outbid each other. The last thirty days of trading volume determines the calculation of the fees. On Poloniex, deposits and withdrawals are free. The trading fee on this platform ranges from 0.0-0.25%. The maker and the taker fee for Poloneix are 0.15% and 0.25% per trade volume of 600 BTC.
Coinbase not only charges the lowest fees, but it also has the easiest interface. It charges 1.49% fee for purchases and withdrawals made directly from bank accounts and 3.99% for purchases made through credit/debit cards and withdrawals through PayPal.
GDAX- Global Digital Asset Exchange has the lowest fee but difficult to adapt to their interface. It’s recommended for the immediate professional level. It works with Coinbase, but its fees are 0.25% of 1% of the total amount involved. It also utilizes a maker-taker model, whereby users place bids on the order book, and by so doing get discount on their trading fee. Maker’s fees are 0%, while the taker’s fee is between the range of 0.3% and 0.1% which is determined by the trade volume. For crypto, ACH, and SEPA, deposits are completely free.
BitStamp charges nothing for deposits, but for SEPA withdrawals, it charges 0.90 pounds. Its trade fee schedule runs from 0.50% to 0.20%
CEX.IO makes use of FIAT currencies such as Euros and US dollars to make deposits before Bitcoin can be bought. This platform comes with an instant buy feature at 7% transaction fees charged at 0-0.25% for trading. If you make use of currencies not supported, you will be charged by your bank for currency conversion.
Fees for Buying Bitcoin have become less of a problem for beginners because:
- Several platforms aid their transaction rather than transferring funds from their bank accounts to purchase Bitcoin, and they are also user-friendly.
- Bitcoins transaction fee was considerably high which led to its crisis, but lately, there have been reductions in fees. Fees charged by most platforms for buying Bitcoin are low and for some, absolutely free.
- It is transparent and based on the amount of funds to be transferred and not on the amount of data moved.
- Finally, there’s hope of a new payment method known as Lightning. It is located on top of the Bitcoin network, therefore, acting as a second layer. It will in the future, help to expand the capacity of the Bitcoin’s network, thereby making transactions very easy.