This year has been kind to crypto. At the beginning of the year Bitcoin was struggling to move past the $4k mark, and at press time Bitcoin sits at $8,008—doubling that amount. This, coupled with the recent developments regarding Facebook and Telegram, has brought a lot of attention to the world of cryptocurrencies. Perhaps the current buzz has made you want to buy cryptocurrency while Bitcoin and other altcoins haven’t hit the moon yet, or perhaps you just want to purchase crypto for the first time ever and you don’t know how to go about it.
There are multiple ways of purchasing crypto and in this article we will highlight a handful of options. Our aim here is to aid you in this process and guide you in your next purchase of crypto.
In addition to this article, we have also published a guide for different shops and services that accept crypto as a form of payment.
NOTE: This article is not to be taken as financial advice, and we are not promoting any of the services or websites mentioned herein. Be aware that risk is inherent to investing in crypto, and you should only invest funds that you can afford to lose.
For many, cryptocurrency exchanges are the de facto way of purchasing crypto, and some of them are among the most widely known crypto-related services out there. Essentially, cryptocurrency exchanges are platforms where people are able to exchange their crypto for another cryptocurrency of their choosing.
One of the main differences between exchanges and other alternatives is that, in the latter, the cryptocurrencies that you can directly buy with fiat are usually limited to Bitcoin and, in some cases, Ethereum. In exchanges, however, there are usually multiple fiat/crypto pairs that allow traders to buy coins such as Bitcoin Cash or Litecoin. What’s more, there are more than 2,000 altcoins out there, and in many cases the only way to purchase them is through exchanges. Even in cases where an altcoin has no trading pairs with fiat currencies, they will have a trading pair with Bitcoin, meaning that they can still be purchased indirectly with fiat money if you purchase Bitcoin first.
Given that there is a plethora of exchanges out there, and that the focus of this article is to highlight services and websites where you can use fiat money to purchase cryptocurrencies, only a couple of exchanges where fiat money can be used will be mentioned.
Supported Coins: BTC or ETH.
Payment Methods: Wire transfers and SEPA transfers of EUR or GBP.
Fees: 0.05% trading fees (Until the end of 2019, after which it will go up to 0.1%), 0.15% EUR/GBP withdrawal fees (a minimum of 3 EUR/GBP has to be withdrawn; the maximum amount being 15 EUR/GBP), and 0.0005 BTC/0.02 ETH for crypto withdrawal fees (min. withdrawals are 0.001 BTC/0.01 ETH).
Speed: Wire transfers reportedly require 2 to 5 business days, while SEPA transfers require 1 to 3 business days, the transactions are almost instant.
KYC requirements: Identity authentication and address verification are required to unlock all features of the exchange.
Founded in 2017, Binance is at press time the top cryptocurrency exchange in terms of trading volume, with almost 500 trading pairs. A big caveat for the exchange is that all Binance trading pairs are between two cryptocurrencies or between a cryptocurrency and a USD-pegged stablecoin, meaning that you can’t use your fiat money to buy cryptocurrencies directly. However, in mid-January of 2019, Binance Jersey was launched as a fiat-to-cryptocurrency exchange. Binance Jersey is built on the same technology as Binance, only now, on the Jersey version, you can use GBP and EUR to purchase BTC and ETH.
The options in terms of coins may be limited, but Binance Jersey benefits from being a subsidiary of a major cryptocurrency exchange. Additionally, any purchased BTC/ETH can be transferred to Binance, where they can be exchanged for about 150 different altcoins. Binance Jersey is not available for residents of the US or China, and there is a withdrawal limit of 10,000 EUR/GBP per day.
Supported Coins: You can purchase BTC, LTC, ETH, BCH and XRP, which can then be converted into 140+ cryptocurrencies.
Payment Methods: Visa, Mastercard. All currencies are accepted, but transactions will be in either USD, GBP, or EUR.
Fees: Depends on the cryptocurrency you want to purchase.
Speed: At press time, the average processing time in the last 24 hours is 15.3 minutes.
KYC requirements: AML/KYC procedures are applied if Changelly’s system spots suspicious activity, prompting users to submit proof of identification or proof of the origin of the funds before allowing the trade to continue.
Currently based in Malta and in operation since 2015, Changelly is an exchange platform that promises to provide its users with the best exchange rates available. This is achieved in part thanks to the fact that Changelly isn’t exactly an exchange, but rather an exchange service that is integrated into other popular exchanges like Binance, Poloniex and Bittrex. Changelly makes bids on these exchanges and selects the one that has the best exchange rate for the trader. Changelly stands out as one of the only ways to purchase crypto directly with a credit/debit card.
You can just select (from a list of 140+ cryptocurrencies) the coin that you want to send and the one you want to receive, and exchange them in one transaction with a fixed fee of 0.5% (along with a variable network fee). However, Changelly also allows you to buy cryptocurrencies with fiat money, but in order to do this Changelly requires assistance from third-party payment services, which severely affect the fees.
The fees that you need to pay with Changelly depend on the third-party payment service, which in turn depends on the cryptocurrency that you want to purchase with fiat. The purchase of BTC, BCH, LTC, XRP and ETH is powered by Simplex. In such cases, in addition to the network fee, Changelly will charge a 5% fee, and Simplex will charge an additional 5% fee (which can’t be under $10). When exchanging other altcoins, Changelly will take a 0.5% fee in addition to the network fees, but Indacoin (the third-party payment service) can set a specific exchange rate that might differ from the market rates. It is because of this that it is highly advisable for you to pay attention to fees and exchange rates when using Changelly, as the fees can be quite hefty and the exchange rates may vary. In terms of purchasing limits, Simplex has a limit of $50 to $10,000 for the first transaction, with daily and monthly limits of up to $20,000 and $50,000, respectively. Indacoin, on the other hand, has a 3,000 USD/EUR limit for the first purchase, and $10,000, $15,000, and $30,000 as the daily, weekly, and monthly limits. Despite the costly fees, Changelly is a good option for the purchase and exchange of multiple cryptocurrencies. What’s more, Changelly is especially good for beginners thanks to its app and user-friendly interface. It also allows you to get some coins with fiat without having to make multiple trades, simplifying a process that can be daunting for newcomers.
Changelly is mostly an anonymous service, (with the exception of the use of credit/debit cards), but there have been multiple reports of transactions being kept on hold, demanding users to go through KYC/AML procedures for the transaction to go through. This move has been quite controversial, but Changelly claims that this happens only when a transaction is deemed suspicious, reportedly notifying the user before processing the transaction (Changelly also published an article on how to pass KYC, read here).
Supported Coins: Mostly Bitcoin, though there are also sites for Ethereum and Monero.
Payment Methods: Cash Deposit, bank transfers, cash, mobile payments, gift cards, etc.
Fees: Mostly without fees, though exchange rates can differ from market rates; some p2p websites may charge a small fee.
KYC requirements: Mostly anonymous, though some websites may require KYC procedures in order to upgrade limits on users’ accounts.
Peer to peer websites are a decentralized solution for purchasing cryptocurrency, as they remove the middleman (in this case, the exchanges) from the equation, allowing for people to buy and sell their crypto to each other directly. Since there are no other parties involved in transactions that take place on p2p websites, this also means that, for the most part, there are no extra fees involved.
One of the most renowned p2p websites is LocalBitcoins, which serves as a worldwide marketplace where people can buy and sell Bitcoin. It allows you to filter through advertisements (listings where a seller is offering a price and payment method for their Bitcoin) so you can choose one that is close to you and suits your needs. The only fees that apply to the website are a 1% fee for every completed trade for people who put up an advertisement and a 0.5% fee for merchant invoicing services. In other words, no fees are applied when you buy through LocalBitcoins.
On Jun. 4, LocalBitcoins announced on Twitter that due to obligations determined by the Act on Detecting and Preventing Money Laundering and Terrorist Financing, the website would disable local cash trades (where people meet in person to conduct the trade). This, coupled with the news that LocalBitcoins would enforce more AML/KYC procedures, caused a lot of backlash from the community, with many members turning to other similar services that still allow Bitcoin local cash trades and don’t require KYC procedures such as Bisq and HodlHodl.
There are multiple websites that offer similar services but with other cryptocurrencies. One of these websites is LocalEthereum, which offers the same services (including local cash trades), but is centered around the Ethereum cryptocurrency. In this case, however, people who respond to a listing and buy ETH are charged a 0.75% fee, whereas the people who put up an offer are only charged a fee of 0.25%. LocalMonero is another website that offers the same fees as LocalBitcoins (1% for sellers, 0% for buyers), but this time centered around the Monero cryptocurrency. These two websites are not affiliated with LocalBitcoins.
P2P websites are not as popular or user-friendly as cryptocurrency exchanges, but they offer a wide arrange of payment options, including local cash trades in most cases. Users need to be careful while choosing a particular advertisement or listing, which is why it is advisable for websites such as LocalBitcoins to be used by people who already have some experience in cryptocurrency trading. Dealing with unknown sellers is also something that comes with some measure of risk, and for this reason it is also advisable to check the reputation of the seller and the escrow system available on the website before you make any purchases.
Supported Coins: BTC, BCH, ETH, DASH, LTC, ZEC, XMR, DOGE (depending on each ATM).
Payment Methods: Cash, debit or credit card.
Fees: Between 5-10%.
KYC requirements: No (though identity verification is required in certain ATMs).
ATMs are another way to buy crypto, and one that is easier than P2P websites. Cryptocurrency ATMs work like regular ATMs, with the difference being that instead of withdrawing money from your account, you deposit money and buy one of the machine’s supported cryptocurrencies, or you sell your crypto and withdraw fiat money. To buy cryptocurrencies this way you don’t need to register or create an account of any type, and if you do not have a crypto wallet to provide, the ATM will create one for you. The coins that are supported in each ATM will change depending on the manufacturer of the ATM, but the full list of cryptocurrencies that can be supported is made up of BTC, BCH, ETH, DASH, LTC, ZEC, XMR, and DOGE. At press time, there are 4,928 cryptocurrency ATMs in 77 countries.
Buying crypto at ATMs has many benefits: it is simple to do, it’s fast, you can use cash to purchase crypto, and, at most crypto ATMs, there are no identity verification processes. However, there are drawbacks to using ATMs to purchase cryptocurrencies as well: transaction fees are very high, and there are not as many ATMs as you might initially think. The U.S., for example, has over 3,000 different ATM locations, and Canada is just under 700, but in other countries, cryptocurrency ATMs are a lot scarcer. You can search for a cryptocurrency ATM near you here.
This alternative is especially useful for people who don’t want to wait or don’t want to engage with other parties in order to purchase crypto. The hefty withdrawal fees might be a dealbreaker for some, but in some situations they are the most convenient option available.
Supported Coins: BTC, BSV, BCH, ETH, ETC, LTC and DOGE. However, Robinhood doesn’t currently support coin withdrawals (though they plan to do so in the future).
Payment Methods: Bank transfer.
Fees: No fees, but rates can be worse as Robinhood sells trade data to HFT firms.
Speed: Instant access to funds (for deposits under $1,000), 4 to 5 days to clear for deposits over $1,000.
KYC requirements: ID number, name, date of birth, address, and more information about investment experience (because of FINRA).
Robinhood is an app available for iOS and Android that was designed as an investment tool to connect people with financial markets. Robinhood Financial has actually been around for years, but last year the platform introduced Robinhood Crypto, an extension of their previous app. According to their site, the app is “intuitively designed for newcomers and experts alike”, making it a useful tool for everybody. After the news broke of Robinhood Crypto being released, a waitlist of over 1 million users occurred before the app was even out.
In Robinhood Crypto you can find and buy cryptocurrencies, and you can invest in stocks, options and ETFs through Robinhood Financial. The app gives you instant access to your funds to deposit or sell stocks in order to buy cryptocurrencies. When you open an account you get a share of free stock (the value of which can be anywhere between $2.50 and $200, chosen randomly).
Robinhood Financial is available everywhere in the US, but Robinhood Crypto is only available to use in 38 states at the moment, though the platform is currently working on getting the app out there to more states.
Security-wise, Robinhood Financial is part of the Securities Investor Protection Corporation (SIPC) and the Financial Industry Regulatory Authority (FINRA), wherein the former “protects securities customers of its members up to $500,000 (including $250,000 for claims for cash).” However, since cryptocurrencies are not stocks, Robinhood Crypto is not a member of either of the aforementioned. For security reasons, Robinhood also limits deposits and withdrawals to $50,000 per day.
Robinhood is an interesting alternative that is a mix of different ways of purchasing crypto. It is user-friendly thanks to its intuitive app and interface, and it is also an alternative that charges no fees. That being said, Robinhood has received criticism for making profit from selling their customer orders to high-frequency trading firms, which makes rates worse for traders. Other than that, the major drawback of Robinhood is that it doesn’t currently support coin withdrawals, so users can’t transfer the purchased crypto to their 3rd party wallets. Despite the fact that Robinhood doesn’t support coin withdrawals and its availability could be improved, the people who are within the 38 supported states can enjoy an additional way of purchasing Bitcoin without having to pay fees.
Supported Coins: Bitcoin.
Payment Methods: Debit and credit cards from Visa, MasterCard, American Express, and Discover, bank transfer.
Fees: No fees for purchasing Bitcoin, however, the rates can be worse than on other exchanges. If you want to use a credit/debit card as the payment method, you have to pay a 3% fee for each transaction. If you want to cash out fast without the 3-5 days waiting period you can pay a 1.5% fee for an “instant transfer”, which will happen instantly or take up to a couple of minutes.
Speed: transactions take seconds, transfers to external wallets take between 30-40 minutes.
KYC requirements: KYC procedures need to be applied in order to increase the limits of the app.
Cash App is a mobile app where you can send, spend and save money, as well as buy and sell Bitcoin. It works as a platform that allows you to make and share payments with friends and family with no fees being charged.
Square, the company behind Cash App, is a financial technology company that has many different services (such as POS services for companies, cryptocurrency wallets, and more). It was co-founded by Jack Dorsey (co-founder of Twitter), and the company’s headquarters are located in San Francisco, CA, USA. They have offices in Atlanta, St. Louis and New York City as well as in Canada, Japan and more. Its reputable team and feature of buying and selling crypto without fees seem to have paid dividends, as the app actually reached number 1 in the App Store on Dec. 8, 2018.
The aim of Cash App is to provide easy ways of sending and receiving money, and their intention is to do the same with Bitcoin. Transactions to buy or sell Bitcoin are easy to do, are completed in only a matter of seconds, and can be done straight from your Cash App balance. All the Bitcoin you purchase stays within your Square Cash account. You can, however, send your coins to a different wallet if you so choose.
One caveat to the app is its limit. You can only spend $250 within any 7-day period and receive $1,000 within any 30 day period. In order to increase this limit and enjoy Cash App to its full capability, users will have to comply with KYC measures such as providing full name, date of birth, and the last 4 digits of their social security number.
There are multiple ways in which you can buy cryptocurrencies, all of which have subtle differences that make them stand out on their own. Certain cryptocurrency exchanges stand out because they are already widely known crypto services, and that thanks to them you can purchase most altcoins. P2P websites are a good option if your main concerns are anonymity and partaking in decentralized activities without having middlemen taking hefty fees for each transaction. Cryptocurrency ATMs are a bit different; they don’t offer much in terms of coin variety and they usually charge very high fees, but they’re also a good option for anonymity, and they can be very convenient if you have one nearby. Finally, apps like Robinhood and Cash App are making a name for themselves in crypto by offering no fees and intuitive apps.
All in all, it all depends on your personal preference. Just like with most things in crypto, there is no absolute answer. To know which alternative for purchasing crypto suits your needs the best, you’d need to reflect upon your priorities as a trader, an essential step in trading crypto safely.
Thanks for reading,
The COIN360 Editorial Team