In the last several years, the process of buying Bitcoin has gone through an evolution of sorts, as exchange platforms look to make the process both easier and cheaper than ever before.
Now, instead of Bitcoin mining, most investors first get their hands on BTC by purchasing it from an exchange.
With that said, depending on both how you trade, and where you trade, you will need to pay some sort of fee—on top of the price of the Bitcoin itself.
Three things to know about Bitcoin exchange fees
Although a fee is inevitable, exactly how much you pay typically depends on the quantity of Bitcoin you purchase, and the exchange platform you use.
This fee will typically be higher when purchasing Bitcoin with a bank account, debit or credit card, and usually much lower if buying Bitcoin with another cryptocurrency—known simply as exchanging. Buying Bitcoin with another cryptocurrency is usually the preferred method for those that want to avoid forking over their personal information as part of the purchase process.
With that said, there are several things you will want to be aware of when it comes to exchange fees.
Ability to reduce fees
Although you will need to pay a fee regardless of where you buy your Bitcoin, a good fraction of cryptocurrency exchanges offer ways to minimize this amount.
One of the most common ways exchange platforms allow traders to reduce their fees is through volume-based fee discounts. These discounts are provided to what the platform considers to be “high-volume traders,”—those that trade above a particular volume threshold.
For example, Bitfinex begins offering fee discounts to anybody trading in excess of $500,000 worth of digital currency per 30 days. Likewise, Bitstamp provides at least a 50% discount for anybody trading more than $10,000 worth of cryptocurrency per 30 day period.
Beyond this, some platforms also have their own utility token which can be held to reduce fees, including Huobi Global with its Huobi Token (HT). As it stands, HT holders can receive a discount of between 10 to 65% depending on the total number of tokens held.
Similarly, platforms like Binance employ a combination of both methods, providing a fee discount for higher volume traders that hold its native utility token—the Binance Coin (BNB).
Different fees for different order types
As we previously touched on, the fee you are charged when purchasing Bitcoin can differ based on the payment method you use or the order type you use. Typically, the most expensive way to purchase Bitcoin is with a bank account, debit card or credit card, since this often incurs additional fees—potentially including deposit and wire processing fees.
For those looking to purchase Bitcoin using another cryptocurrency on the spot markets, you will be charged a maker fee if you add liquidity to the market, or a taker fee if you take liquidity from the market. In essence, trades that are immediately executed and filled are subject to a taker fee, whereas those that are added to the order book (e.g. limit orders) to be filled later are subject to a maker fee.
The taker fee is higher than the maker fee on most exchange platforms, including Binance and Kraken, whereas Bitstamp charges a flat fee irrespective of the order type. Conversely, a handful of platforms provide a small rebate to market makers to help encourage traders to provide liquidity. For example, both BitMEX and Deribit provide market makers with an up to 0.025% rebate for each trade.
Multiple commission models
Before selecting the platform you will use to buy Bitcoin, you will likely want to familiarize yourself with the different commission models different exchanges use.
In most cases, Bitcoin exchanges will charge a fixed percentage fee, which relates to the current Bitcoin price at the time of purchase. This tends to be in the range of 1 to 5%, but can be more or less depending on the platform. For example, if you are looking to purchase one Bitcoin at a price of $10,000, and the exchange charges a 5% fee, then the transaction will cost $50.
Other exchanges, like Coinbase and many Bitcoin ATMs instead charge a fixed dollar fee, which usually increases with the amount of Bitcoin purchased. This makes calculating your fees a much simpler task, but can also be more expensive—particularly for those buying a small amount of Bitcoin.
Comparison of trading fees on popular Bitcoin exchanges
Launched in 2017 following a sell-out ICO, Binance quickly rose to become by far the most dominant Bitcoin spot exchange platform. Owed to its user-friendly interface, extreme liquidity, and low fees, Binance is one of the most popular exchange choices for those looking to buy Bitcoins.
When it comes to trading fees, Binance employs a volume-based fee schedule which starts at a 0.1% maker and 0.1% taker fee, but reduces to as low as 0.02% maker and 0.04% taker fees for the highest volume traders (VIP 9). As it stands, volume-based discounts start for anybody trading more than 50 BTC per 30-day period.
Beyond this, Binance was also among the first platforms to introduce its own utility token that can be held to provide further discounts. BNB holders can receive a further 25% fee discount, but each VIP tier needs to hold more than the previous tier to benefit from a fee reduction.
Widely regarded as one of the simplest Bitcoin exchange platforms, Coinbase has grown to become a prominent name in the cryptocurrency industry since its launch in 2012. The platform is now one of the most popular on-ramps for those buying Bitcoin for the first time, while its mobile Bitcoin wallet is suitable for those first getting to grips with Bitcoin and other cryptocurrencies.
For buy/sell transactions on the Coinbase platform, customers are charged a spread of 0.5% of the order price. In addition to this, customers are charged a ‘Coinbase fee‘ which is either a flat fee or a variable percentage set by region. The flat fee can be as low as $0.99 or as high as $2.99 depending on the order amount.
The variable fee depends on the region and payment method used. For example, credit card and debit card buys in most countries incurs a 3.99% fee, whereas bank transfer buys are mostly free. Customers are charged whichever fee is higher out of the flat fee and variable fees.
If you’re considering to use Coinbase, make sure to check out our list of Coinbase alternatives first.
Bitstamp is one of the oldest names in the cryptocurrency exchange industry and is also one of the most well-reputed platforms around. The exchange features a highly liquid spot trading platform and allows users to buy cryptocurrencies with several different payment methods.
Part of the reason Bitstamp is so popular is due to its extremely simple fee schedule. Currently, most trades made via the Bitstamp trading platform are subject to a flat 0.50% fee. However, users that trade more than $10,000 worth of Bitcoin or any other cryptocurrency per 30 days will pay a lower fee.
The trading fee reduces to 0.25% for the first discount tier and can go to as low as 0% for traders achieving more than $10 billion in 30-day trade volume. As such, Bitstamp is one of the most attractive exchanges for high volume traders.
However, those looking to buy Bitcoin using a credit card will be subject to a flat 5% fee.
As one of the three largest cryptocurrency exchanges by trade volume, Bitfinex is practically a household name in the industry. This success can be attributed to its extraordinary resilience, clever business model and impressive liquidity.
Bitfinex fees start at a 0.1% maker and 0.2% taker fee for the lowest volume traders. However, those trading more than $500,000 worth of cryptocurrency per 30 days will receive a fee discount. This cuts fees to as low as 0.08% and 0.2% respectively for makers and takers the first discount bracket, down to as little as 0% and 0.055% for those trading more than $30 billion per 30 days.
Beyond this, like Binance, Bitfinex allows traders to further reduce their trading fees by holding its native utility token—Unus Sed LEO (LEO). Currently, anybody holding at least 1 LEO will receive a 15% taker fee discount, but this can be reduced to up to 25% + 0.06% for those holding in excess of 10,000 LEO.
Currently regarded as the second-largest exchange by trading activity and the largest exchange for euro/crypto trading pairs, Kraken is nothing short of a behemoth. The platform features only a restricted range of assets, ensuring excellent liquidity and freedom from market manipulation.
Those looking to trade Bitcoin on Kraken will need to be aware of its volume-based maker/taker fee structure. At the highest end of the scale, those trading between $0 to $50,000 worth of Bitcoin or any other cryptocurrency will be subject to a 0.16% maker and 0.26% taker fee.
For those trading in excess of $50,000 per 30-days, Kraken charges a lower fee, starting at a 0.14% maker and 0.24% taker fee, but reducing to as low as a 0% maker and 0.10% fee for those exceeding $10 million in 30-day trade volume.
Members of WallStreetBets Forum Alleged in Telegram Crypto Scam Stealing $2M in BNB and ETH
Members of the popular WallStreetBets Reddit forum were suspected of a presumable cryptocurrency fraud that could have caused losses of no less than $2 million. By creating a designated Telegram group, they duped investors by guaranteeing remarkable returns through capitalizing on the recent crypto market rally.
The Core of the Hoax
Per a report by Bloomberg, alleged members of the WallStreetBets Reddit Forum used the Telegram messaging service to execute a blatant scam. A particular account by the name of ”WallStreetBets – Crypto Pumps” presented users the chance to purchase a new token certified as WSB Finance before it was listed on crypto exchanges. The operation is known as a pre-mine sale.
The essence of the fraud was connected to the recent cryptocurrency boom as bitcoin and most altcoins skyrocketed in value lately. With some of the digital assets reaching 1,000% gains, the targeted WSB members conned investors into sending money without asking questions and with the potential of netting huge profits.
The notorious account also urged users to transfer popular cryptocurrencies such as Binance Coin (BNB) and Ethereum (ETH) to a designated crypto wallet and then to reach its ”token bot” to gain WSB Finance coins.
However, the perpetrators never dispatched those coins. Furthermore, another message on Telegram revealed that the people who had already issued a payment had to send an equivalent amount again or they would risk losing their initial investment.
After executing the hoax, more than 3,451 Binance Coins were withdrawn on Tuesday (May, 4th) from the wallet inside the Crypto Pumps messages.
Since the price of BNB at that point was approximately $625, the fraud caused losses of more than $2.1 million. Following the scam, thousands of people expressed their frustration and tried to expose the individuals behind the account. Moreover, the quantity of the other cryptocurrency – ether – still remains a mystery.
Two weeks ago WSB admins warned about offers that might try to take advantage of the forum’s name in order to allure the crypto audience. The ”WallStreetBets – Crypto Pumps” account has been removed from Telegram but whoever managed it left a message that might stun the affected victims:
”Buying Lambo now.”
South Korean Crypto Exchange Accused Of $1.5 Billion Scam
The South Korean cryptocurrency exchange platform V Global was accused of luring 40,000 people into illicit multi-level deceit. The entire scheme amounts to more than 1.7 million won, which equals $1.5 billion.
As reported by the Korean officials, the police raided many places in the country related to a virtual cryptocurrency exchange, and its notorious CEO – known as LEE – alleged to fundraising without regulatory permission. The authorities blocked the exchange’s cash deposits as a part of the investigation.
In total, the Gyeonggy Nambu Police Agency reported that it searched the exchange’s headquarters in southern Seoul along with 21 other places and froze more than $214 million left in the account.
Another report from today shed more light on the developments. According to Yonhap News, the name of the organization is V Global. The Korean police are examining the accusations against them for fraud under the Certain Economic Crimes Weighted Penalty Act, the Similar Receiving Act, and the door-to-door sales business.
The main accusation against the exchange is gaining a deposit of 1.7 trillion won ($1.5 billion) from 40,000 members in the period between August 2020 and January 2021. The announcement revealed that most of the people were elderly or housewives with no experience in cryptocurrency trading.
Too Good To Be True
The investigation revealed that the exchange urged investors to entrust their funds to an account and lured the members that the expected return would be three times higher than the initial investment. According to the authorities, there was a pyramid element in the scam as the exchange promised to grant an introduction fee of 1.2 million won ($1,065) for every newly recruited member.
The report affirmed that the trading venue paid some members in the form of a block. Therefore, people who signed up earlier received funds from individuals who entered the exchange later.
Moreover, the Korean police seem confident to deal with the fraud case as it revealed its intention to confiscate 240 billion won ($214 million) left in the V Global account as of the 15th last month, even before the prosecution process.
Georgia’s central bank is exploring ‘Digital Gel’ CBDC
The National Bank of Georgia said that it is considering launching a central bank digital currency.
In an announcement today, the central bank hinted at the issuance of a central bank digital currency, or CBDC, in an effort “to enhance efficiencies of the domestic payment system and financial inclusion.” The National Bank of Georgia, or NBG, said it would be inviting fintech firms and other financial institutions to participate in the project, named Digital Gel after the symbol for the country’s fiat currency, the lari.
“CBDC holds the promise to unlock the tremendous value of innovative business models for the benefit of society,” said the announcement. “The introduction of CBDC could increase financial intermediation efficiency, help introduce new financial technologies, facilitate financial inclusion, and reach previously unbanked populations.”
However, the bank mentioned the possibility of risks in the launch of a CBDC in the Republic of Georgia given the “new and potentially disruptive technology.” The NBG said it may conduct extensive testing of the CBDC in a controlled environment to ensure a smooth rollout, but did not provide any details regarding a timeline for launch.
With a population of roughly 4 million and a gross domestic product of approximately $15 billion, a nation like Georgia falls at the smaller end of countries exploring CBDCs. The Bahamas officially rolled out its Sand Dollar central bank digital currency in October, while China has been piloting its digital yuan in select cities prior to a full-scale launch. In the United States, Fortune 500 company Accenture announced this week it would be partnering with the Digital Dollar Foundation to conduct CBDC trials.
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