For daytrading you need the liquidity of your coinpair - in 2018 that can be alt/btc as well as alt/eth or alt/neo in Asia. Alt/fiat pairs are also tradeable very well.User Guide · [exchanges] · Author: KarlVonBahnhof
It is incredible how fast the markets have changed. This article was originally posted in January 2017 when people commonly traded at Poloniex and normally referred to altcoin/BTC pairs as their altcoin trading.
Since that, we got past the age of Tether trading and finally altcoin/USD pairs on Bitfinex started getting some considerable volume. At last, other exchanges started adding established coins like LTC, XMR and ETH.
Since that, it is more common to onramp to your cryptocurrency of choice directly from fiat. People also trade altcoin/fiat pairs more commonly and started referring to altcoin/BTC as “the ratio”.
Getting altcoins for fiat
BitStamp / EU, US and most of the world (SEPA, wire)
Rating of buying cryptocurrency:
- Resides in: EU
- Altcoins: Ripple, Ethereum, Litecoin
Bitstamp’s tradeview is good and very reliable exchange. If you live in the EU, you can send them a SEPA that will be cleared the following day – although sometimes they do have delays, especially when new customers flow in. Bitstamp takes US customers too, they can even purchase coins with a credit card. Bitstamp banks in Slovenia so be prepared that your bank might call you and ask whether it was really you sending money somewhere to Slovenia.
You need to be fully verified to have any access to trading and you will find that Bitstamp has deposit and withdrawal limits that trigger additional KYC in form of a questionnaire. Their support is responsive which is rare among cryptocurrency businesses to say the least.
You shouldn’t have issues getting verified from most countries of the world, instant buys are also available quite widely.
The only drawback is their slow trading engine and fee rounding: Bitstamp rounds up the fee for every partial purchase which makes the whole trade relatively expensive. The engine also matches only slowly so for daytrading it can be a nerve-wrecking experience where you eventually resort to market orders placed ahead of the market.
There is no margin trading yet but it’s in the works.
Bottom Line: Bitstamp is a good exchange to buy from but not to trade at. This is a post about buying though, and for that Bitstamp is definitely a solid choice.
Coinbase/GDAX / EU, US, other countries
Rating of buying cryptocurrency:
Important Perks: You probably are aware of Coinbase, especially if you are from the US. They are the most popular wallet provider and their exchange is the biggest one in the US. Many people first start with crypto via Coinbase, usually via a referral link that gives them $10 for the first $100 purchase. What then outrages them are the fees for any transaction - be it buy/sell transaction or withdrawal. The important perk of Coinbase is that they provide the wallet app - Coinbase - that also has buy/sell functionality which is incredibly expensive, and they provide trading interface, GDAX. You can access GDAX with your Coinbase credentials at https://www.gdax.com/trade/ETH-USD. If you are going to buy cryptocurrency please do it at GDAX rather than on Coinbase: GDAX has zero-fee policy on limit orders and even market orders are way cheaper there than on Coinbase.
- Coinbase instant buy fee: between 1.49% and 3.99% depending on method
- GDAX instant buy fee (market order, fills right away): 0.25%
- GDAX limit buy fee (limit order, fills when the market gets there): 0
Coinbase claims they are adding 100k users daily but there are no figures available for how much of these actually hold cryptocurrency or trade. It can very well be that most of these are bonus hunting accounts clicking the Coinbase $10 referral links. Click yours by the way, why not.
Coinbase recently lost their case with the IRS and is obliged to provide some customer information to the IRS. Curiously what stirs the crowd more is gossip over the CEO Brian Armstrong’s competency and affiliations with ETH and BCH as both coins have been taken for attack on bitcoin by some people.
Bottom Line: It is obvious why Coinbase/GDAX has no interest on making it clearer to new buyers they can pay them much less to come to the same end. Otherwise friendly exchange mainly for Americans, however not very stable trading platform during important price action events and very strict no-gambling policy. If you send crypto from Coinbase to a gambling site you lose your account even if you are from a country where what you’ve done is perfectly legal. If you are coming to buy and hold though, Coinbase is a not a bad option. They support BTC, LTC, ETH and newly BCH.
Bitfinex / All world except verified US customers (EUR SEPA wires through a Polish bank, other options for mid-5 figures and up)
Rating of buying cryptocurrency:
- Resides in: British Virgin Islands
- Altcoins: IOTA, EOS, Santiment, Litecoin, Ethereum, Ether Classic, Zcash, Monero, DASH, Chain split tokens …
It is not easy to get fiat to and from Bitfinex but their trading interface has no competition. If you want to margin trade one of the coins that are listed on Bitfinex, that’s what the exchange is great for though. For buying, they are trying to profile themselves as a wholesale place for bigger fishes so generally Finex will be a better option for you if you are looking to spend 5-6 figures at the very least and they’ll let you buy via their OTC desk.
Some people don’t trust Bitfinex because their parent company is involved with Tether which is the subject of popular conspiracy theories. If you read them carefully you will find little to no facts and a lot of overblown speculations, at the same time it is also not a good idea to implicitly trust a cryptocurrency exchange completely.
- Customer support is unresponsive
- Margin trading and margin funding is enabled and working mostly OK but if you check what you’re paid you will find the occasional cockup
- Cryptocurrency deposits get cranky often, especially with ETH and IOTA. That is not entirely fault of Bitfinex but it is annoying because you might not be able to get hold of a customer support rep. Watch out for PSAs like sending ETH from Bitstamp
Bottom Line: To buy from Bitfinex for fiat, you’ll need to verify and perhaps check with customer support for your options. If you get the chance to do the business though, you will get your cryptocurrency from the most liquid market or even fairly easily via their OTC desk. You will definitely pay less on fees than on other exchanges. Bitfinex was hacked in Aug 2016 but if you are willing to keep money on Bitfinex only for the duration of your trade you are reasonably safe using them.
Kraken / EU, US and most of the world (SEPA, wire)
Rating of buying cryptocurrency:
- Resides in: US
- Altcoins: Ethereum, Monero, Ether Classic, Litecoin, Augur, Dogecoin, Iconomi, Lumen, Ripple, Zcash …
Kraken is one of the least reliable exchanges in terms of platform availability – it crashes every time there is a substantial price action.
There was an upgrade of the trading engine planned and postponed several times, evenually it took place in January 2018 resulting in a much longer downtime than what was announced. It seems to have been successful though.
Kraken is the exchange with the most solid banking relationships so I was recommending to keep your account on there and get verified because hopefully one day the trading engine upgrade will make the place great again. It seems that in January 2018 OP finally delivered and traders are more or less over the “Kraken down again” PTSD.
Kraken fee structure coin by coin shows the fees are quite low, certainly lower than Bitstamp.
They recently acquired the charting portal Cryptowat.ch and using the exchange from trade.kraken.com offers more advanced charting features.
Bottom Line: For now it seems Kraken is back in the game. There was zero-fee trading in January and the exchange stood the test of traders flowing back in during that, although there were some hiccups in margin trading. Customer support apparently still needs new hires but overall Kraken can be recommended again.
Buying bitcoin first
Getting an altcoin for your bitcoins that you already bought on localbitcoins or elsewhere is the classic way to start holding or trading altcoins.
Buy and hold small amount of altcoin
If you just want to quickly buy an altcoin like Monero, Ether, Dash, Factom or other, you can use ShapeShift. The fees are a little bit higher – basically Shapeshift trades on Poloniex and Bittrex for you so that you don’t have to – but if you are looking to buy a couple hundred dollars worth only, it might be a viable option as the fees won’t add up to much.
You don’t need a user account, you simply send in the money. You need to have bitcoins or an altcoin and a wallet to which you want to send the altcoin. Some desktop wallets already have Shapeshift on board - such as Jaxx and Exodus.
Buy and hold larger amount of altcoin
In general, you will be better off using either Bitstamp, Bitfinex or Bittrex for larger BTC-to-altcoin trades. Choose according to your preference:
- Bitstamp is the only one that will need to have you verified.
- Bittrex has a withdrawal limit of 100 BTC worth a day for unverified accounts.
- Bitfinex has the lowest fees.
Trading Alt/BTC pairs
The former mecca of altcoin trading was Poloniex. They listed a lot of new coins fast, all the intial trading of a new coin used to happen there. They have spot, margin and lending – but their website is too cranky, full of bugs that rip people off left right and center and support is unresponsive.
Bittrex is the altcoin gambling place of the season nowadays. The have so many markets and the occasional fault in automated market makers makes for nice arb opportunities if you are in the right place at the right time. Support is quite unresponsive.
- ICO tokens these days get listed first on Liqui or EtherDelta.
- Tokens that nobody ever heard of, like SAN, get listed on Bitfinex.
- Try and avoid Hitbtc, they don’t have a good reputation.
Altcoin Storage: Cryptocurrency Wallets
You have two options - an altcoin-specific wallet or a multi-altcoin wallet. In any case, it is always a bad idea to leave your coin on an exchange. That doesn’t mean that an altcoin in an altcoin-specific wallet is automatically 100% safe though.
Keep in mind that all altcoins are works in progress - even the big ones like Ether. There are bugs in the software. See the Ethereum’s Mist release notes on Github
Because of that, proprietary wallets might not always be the best bet. Solutions like Jaxx or Exodus wallet might be much better - but they don’t support all the altcoins and there have been sone security issues.
You will need to compromise a bit but it certainly won’t hurt if you simulate cold storage by having your desktop wallets on a computer that is mostly offline and that you don’t use for your day to day web browsing or downloading.