What’s The Cheapest Way To Buy Bitcoin?

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What’s The Cheapest Way To Buy Bitcoin?

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With a market cap exceeding $149 billion, Bitcoin is, by far, the most significant and valuable cryptocurrency in existence. This digital currency offers a variety of uses. For some, Bitcoin is a convenient payment method, whereas to others, it is an investable asset which can provide a genuine return. Whatever your reason for wanting to buy Bitcoin, it is always a good idea to buy it for a cheaper price. This guide will show you how to do that.

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Why is Finding the Cheapest Way to Buy Bitcoin Important?

The sale price of Bitcoin can vary, sometimes significantly, depending on which platform you buy it from. In many cases, the overall cost of the cryptocurrency also varies depending on the payment method you have selected to pay with. The difference in cost might seem insignificant at first, especially if you are seeing its value in fiat currency.

However, you need to remember that Bitcoin’s price is extremely volatile, and a difference of a few dollars today can result in hundreds of dollars in the future. If you have trouble understanding this, imagine that you bought Bitcoin in July 2016, when the coin’s price hovered around $600. Overpaying for Bitcoin by just $1 would translate in December 2017, as an overpayment of almost $33 per coin.

Now, imagine repeating this over-payment across several different trades and with larger volumes. You’d end up losing hundreds of dollars simply because you didn’t buy Bitcoin in the cheapest way.

What Costs are there When Buying Bitcoin?

bitcoin spreads

Generally, there are four primary costs linked to buying Bitcoin on an exchange platform:

  1. Trading fees
  2. Payment method fees
  3. Spreads
  4. Instant-buy fees

Trading fees and spreads are charged by most exchanges and it is difficult to get away from them. However, you can opt to use a payment method which does not incur additional fees, such as a bank transfer over using credit cards. You should also resist the temptation to request instant-buys.

Why is Bitcoin Cheaper on Some Platforms?

Since Bitcoin is a decentralised cryptocurrency it does not depend on any central authority for its value. Instead, the coin’s price is a result of the market’s demand and supply ratio. This ratio is, similarly, not calculated across the world. Instead, it is calculated on every exchange. In addition to this ratio, the platform’s owner would add a cost to cover its overheads, which can include security, functionality, and profit.

It is, therefore, not uncommon to find new cryptocurrency exchanges offering Bitcoin at a considerably lower price than established platforms.

Cheap Bitcoin Assets vs Fee Savings

When considering where to buy your Bitcoin from, you mustn’t only look at the coin’s current price. Have a look at the fees charged by the particular platform, and calculate whether you will truly be saving money by using it over an alternative platform.

For example, imagine that you are buying 1 Bitcoin with a 10% additional cost. Immediately, the value of your purchase has decreased to 0.9 BTC. In a similar scenario, consider an alternative platform which only charges 0.5% additional costs. Now, your 1 Bitcoin investment is still worth 0.995.

When viewing this, calculating over just one transaction it may not seem significant. However, if you buy and sell Bitcoin more frequently, the charges can quickly start to add up.

Is it Possible to get Bitcoin for Free?

A common question by crypto traders is whether it is still possible to get Bitcoin for free. Perhaps surprisingly, this is still possible, however, it does involve some effort from your end. One of the best ways to get Bitcoin for free is to use a BTC faucet, which is a portal that rewards you with a fraction of a coin when you watch an advertisement or fill in a survey.

Another way to get your hands on Bitcoin for free is to participate in Bounty Programs, where you earn the cryptocurrency after completing certain tasks, such as content creation or photo editing.

Be Vigilant for these Risks

bitcoin safety

While fees and rates should help you choose the cheapest way to buy Bitcoin, you should keep in mind the following risks.

Security

A growing number of cryptocurrency exchanges are licenced or regulated in various jurisdictions. These and others invest in security features which protect their network, their users and their funds. All of this costs money, which the platform needs to recover from its users through fees. You should, therefore view exchanges which state to charge little or no fees for buying Bitcoin will scepticism. It might be possible, but how secure is it?

In between the hundreds of professional and reputable exchanges, there are a few which are simply covers for major scams. By offering special offers or unbelievably low Bitcoin prices, they hope to lure their victims to transfer cash without receiving anything in return.

Surprise Fees

There are several ways in which cryptocurrency exchanges can suddenly slap you with surprise or hidden fees. Before you process a transaction, make sure that the price is final and that the platform didn’t include any sneaky charges

You should also consider that while a platform might not charge you any surprise fees, it might be making money off you, by selling your data to third parties. While users in the EU should have GDPR protection in this respect, users from other jurisdictions are less protected.

Accessibility

The price that an exchange charges you to buy Bitcoin may also depend on the level of service it intends to offer you. Brokerage platforms tend to charge higher fees but are the simplest and most convenient method for novice traders to buy Bitcoin. Once you gain some experience, it might be a good idea to move on to professional platforms which offer lower fees, but also less handholding.

Top 3 Platforms to Use

Based on extensive research and testing, the following cryptocurrency exchanges have been identified as offering some of the lowest Bitcoin prices combined with a trustworthy platform.

eToro

eToro is a very popular online trading platform and exchange with users in 140+ countries. When you use eToro to buy Bitcoin you are presented with a user-friendly platform which does not charge any fees for deposits, even when using PayPal. The platform supports a variety of currencies, including USD, EUR, and CHF, and a comprehensive list of payment methods.

eToro generates income from its spreads, with secondary income channelled through withdrawals, which are subject to a fixed, $25 fee. The platform does not charge any trading fees but nevertheless generates sufficient revenue to provide a highly secure and versatile trading platform.

Coinbase

Preferred and used by millions of users across the world, Coinbase offers a fast, easy and convenient way to buy Bitcoin online. Its range of cryptocurrencies coupled with its awesome user interface and customer support team make Coinbase one of the most popular exchanges ever.

Just like the majority of cryptocurrency exchanges, Coinbase charges a deposit fee of 3.99% when you use a credit or debit card. You should, therefore, try to avoid this method and instead deposit your funds via bank transfer. The platform charges a fixed, 1.49% trading fee on all trades, allowing you to easily calculate your trading costs. Furthermore, Coinbase also charges withdrawal fees, once again based on the payment method selected.

If you are a high volume trader you might also want to consider Coinbase Pro, which offers discounted trading fees. These discounts are only available if you trade upwards of $10,000 over 30 days, with the best prices reserved to those who trade more than $50,000.

CEX

CEX is a versatile cryptocurrency exchange which offers a range of services to both its novice users and its experienced traders. The platform, which is registered in the UK and is licenced as a Money Service Business (MSB), accepts a variety of fiat currencies, including EUR, GBP, and USD. Since its establishment in 2013, CEX has proven to be a user-friendly and safe exchange platform.

Across the board, CEX offers a competitive fee structure. For starters, the platform does not charge any withdrawal fees, which is highly unusual and certainly popular. Trading fees can be as low as 0.25%, although if you opt to use the Instant Buy fee you will be charged an additional 7%.

CEX accepts a variety of convenient payment methods, including debit and credit cards and bank transfers. As with most exchanges, depositing with a Visa or Mastercard will result in an additional deposit fee of 3.5%. You can, however, opt to deposit via bank transfer, which is absolutely free.

Consider using a P2P Platform

P2P platforms allow you to buy and sell Bitcoin directly from other users, without dealing with the platform’s owner. In exchange for a percentage commission, the platform allows sales between parties to be negotiated online before a transaction is processed.

LocalBitcoins is one such P2P platform, and it allows users to trade Bitcoin paying a fixed, 1% fee. Since the parties of the transaction are dealing directly with each other, LocalBitcoins does not need to provide resources to carry out the transaction or ensure that payments are safe. This considerably lowers the platform’s overhead costs, allowing it to charge simple and low fees.

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