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Bitcoin purchase and trading fees: The Basics

Guest Post

Most people starting out with cryptocurrencies for the first time have exactly the same question in mind,

How much does it cost to buy Bitcoin and trade cryptocurrency online?

Truth is, Bitcoin is an asset like any other – sold to generate a profit by those dealing with it. Unfortunately, paying certain fees and charges when purchasing Bitcoin is an inevitability. Those selling it need to turn a profit, so you can expect fees or premiums to some extent when you buy Bitcoin.

By contrast, trading Bitcoin online 100% free of charge is perfectly possible.  Trading platforms like Evonax are both simplifying the trading process for investors at all levels and making it more affordable than ever before to trade cryptocurrency online.

In any case, it is important to build an awareness of the types of fees you can expect to pay when purchasing Bitcoin, along with the extent to which minimizing these costs is possible with a strategic approach.

Types of fees that apply when buying Bitcoin

Of all the potential fees that may apply when buying Bitcoin, these are the most typical and difficult to avoid,

Funding and Withdrawal Fees on Exchanges

With some online exchanges, set fees (or percentage-based commissions) apply when you want to send or receive money. Whether dealing in cryptocurrencies or traditional currencies, you may be liable for a “deposit fee” or a “funding fee” at the time of the transaction. If you are charged for the transfer of funds to an external account or wallet, it is flagged as a “withdrawal fee”.

Trading Fees

Most trading platforms (with the exception of platforms like Evonax) impose small commissions on each and every trade you make. This will typically be limited to around 0.2% or even 0.1%, which on the surface does not seem like a great deal. However, these small commissions – usually labeled “maker fees” and “taker fees” gradually accumulate over time. They can also result in relatively high payments when conducting high-value trade online. Always look for a trading platform with minimal fees or zero fees payable on trades. 

Premiums

Many sellers dealing in cryptocurrency will stake claim to attaching zero fees to the services they provide and no commissions on any transactions performed.  However, they still want to make a profit and will therefore usually sell Bitcoin (and other cryptocurrencies) at a marked-up price. If on the day of the purchase the official value of a Bitcoin is $27,000, they may mark it up to $28,000 or thereabouts to generate a profit when selling it.

Transaction Fees (Mining Fees)

Where transaction fees are payable, these are the costs that go directly to the miner (or mining group) that added your transaction to the blockchain. These are also commonly referred to as mining fees or network fees, which must be paid in order to take full ownership of the cryptocurrency you purchase from those mining it. 

How to minimise costs when purchasing cryptocurrency

The golden rule when it comes to minimizing costs when buying any kind of cryptocurrency is always the same,

Look beyond the price published and read the small print.

Irrespective of the seller or trading platform in question, there will always be a fairly long list of terms and conditions you need to ensure you are happy with.  Within which, all additional costs and commissions attached to the transaction must be disclosed clearly and completely.

An attractive purchase price is all well and good, but what kinds of additional costs and levies can you expect if you go ahead? Has a premium been included in the price and therefore inflated the cost of the crypto coin? Are there any excessive transaction fees or withdrawal fees you need to be aware of?

Final Note…

One of the best ways of finding vendors and trading platforms you can count on is to use the reviews and recommendations of established traders. There are countless options to choose from, so paying over the odds for the same crypto coins or the same trading opportunities is never advisable.

Shop around and always read the terms and conditions in full, before making any purchases or conducting any transactions using any form of cryptocurrency.

In addition, do not make the mistake of overlooking how quickly what appear to be moderate conditions at the time can quickly add up.  Particularly when trading assets as volatile as cryptocurrency, even a fraction of a percentage point here and there can really eat into your bottom line.

Disclaimer - OBN is an informational website which aims to give the latest blockchain related news to the readers. Articles on OBN should not be considered as investment advice. Trading cryptocurrencies is a high-risk investment, every user is advised to consult an expert before making any decisions.