The world of cryptocurrencies is really appealing; however, exchanges and all the related fees are quite in front of your eyes. You might find it hard to understand what is the cheapest way to buy crypto. Fear not, intrepid investor! This guide will break down how to acquire your favorite digital assets in the most cost-effective ways.
Contents
What are Crypto Acquisition Fees
Before we get into that, let’s clarify some different possible fees:
- Trading Fees: These are the fees that the cryptocurrencies are traded under, in case of the buying or selling of the currency. Normally imposed by exchanges, they stand at a percentage of the amount traded.
- Deposit Fees: In most cases, exchanges have a charge when you make a deposit or add fiat currency to your account. This depends on the method of deposit, from bank transfer to credit/debit card, etc.
- Fees for Withdrawal: The same as for deposit, these fees will be charged when moving your crypto from an account with the exchange to a personal wallet.
Ensuring the Least Expensive Way to Purchase Cryptocurrency
Now that you have had a basic introduction to the fee landscape, let me walk you through the cheapest ways to buy crypto:
1. Exchanges:
These are what one can say: “Centralized Cryptocurrency Exchanges.” It’s the way most individuals can buy crypto. They always have an orientation toward the user and include a large number of cryptocurrencies available. Safe options for storage are offered, but be warned: the charged fees can, in fact, be vastly different. So, this is an important decision.
Here are some of the factors to consider:
- Trading Fees: Watch out for a few exchanges that charge very low trading fees. Most times, the fees are usually a fraction of a percent for every trade. Some exchanges come with a tiered fee structure in which the fees decrease as the trading volume increases.
- Deposit Fees: Bank transfers generally amount to the cheapest way of depositing. Credit and debit card deposit fees are generally around 3-5% of the amount being deposited. A peer-to-peer platform may connect you directly with sellers to avoid deposit fees altogether.
Top Exchanges with Lowest Fees:
- Kraken: Very low trading fees, typically around 0.1%, and a good selection of cryptocurrencies.
- Coinbase: User-friendly; but it has a somewhat more competitive structure for fees (about 1-3%) to support that user-friendliness for beginner ease.
- Gemini: Emphasizes security while offering very competitive trading fees of only around 0.25%-1%.
- Bisq: A decentralized exchange where users transact directly with one another, without relying on an intermediary between them, and possibly having reduced associated fees. At the same time, a DEX can be less user-friendly and exhibit worse liquidity than centralized exchanges—that is, fewer buyers and sellers.
2. Peer-to-Peer Market
That’s in contrast to the P2P platforms that match you directly with buyers and sellers, thereby allowing you to negotiate fees and potentially avoid exchange markups. Most of these platforms do actually support a wide range of payment methods, including cash deposits and bank transfers, which could be quite easily cheaper than the credit or debit card purchases on the exchanges.
Top P2P Platforms:
- LocalBitcoins: The world’s largest P2P trading platform.
- Paxful: Offers a range of payment methods, with the added assurance of an escrow service for secure P2P transactions.
3. Crypto ATMs
Crypto ATMs will provide just another avenue for purchasing cryptocurrencies with cash. But inevitably, convenience will come with a premium attached to it. The charges on crypto ATMs can go through the roof and users can lose anywhere between 5% and 10% in a single transaction.
4. Crypto Rewards Apps
There are some mobile apps that reward users with cryptos based on some small, daily activities, including shopping or just watching something. That may not be any serious way to build a crypto portfolio, but, heck, having fun with crypto is free. With that, one may just laugh all the way to the bank.
5. Earning Crypto by Using Interest
Another one of their facilities is the earning of interest on your crypto holdings. This can obviously be a way of accruing crypto out of doing nothing and not suffering from the transaction fees that trading normally would incur. However, the rates being offered may vary depending on the platform or the cryptocurrency itself.
Remember
In your case, you should always do some research beforehand to settle on the exchange or P2P platform of your choice. Look for reviews, compare fees, and find out if the platform is reputable and secure.
- Start small, more so if this is your first investment in cryptocurrencies. The crypto market is very volatile, so it is only right to invest with caution and grow your portfolio incrementally over time.
- One of the really big concerns is security. Store your cryptos in a hardware wallet, and look out for phishing scams and other security threats.
With these tips, you now know how to successfully buy crypto with the cheapest means, which in return boosts your confidence and allows you to maneuver better into what’s ahead. Remember though: the best strategy to use is the one that allows your unique needs and priorities to be met. Happy trading!
