The only person who hasn’t heard of Bitcoin today is someone who is completely disconnected from the digital environment. It gained particular popularity against the backdrop of a rising exchange rate - at the end of 2022, the coin managed to update its historical maximum. It is not surprising that many newcomers who have not yet encountered the cryptosphere are thinking about purchasing such a promising investment asset. Today’s guide from the editors of Profinvestment.com will help you understand how to buy Bitcoin conveniently and profitably.
What a beginner needs to know about working with Bitcoin
Before buying Bitcoin and starting to work with it, we recommend that you familiarize yourself with the basic terms and concepts.
What is a Bitcoin address and what does it look like?
A Bitcoin address is an identifier made up of letters and numbers (can also be represented as a QR code) that is provided to each network participant who has installed BTC-enabled software. The address is anonymous and does not contain information about the owner.
There are three main types of Bitcoin addresses:
- Legacy (1BUrDeWstWetqBFn8Au8m4JFg2xJaKVN4) . A standard format with higher fees and case sensitivity.
- P2SH (3H28N5WuREZ83CNmhWcRcrnykWrMqkhFyWN) . It has a similar structure, but the commissions when using such an address are slightly lower.
- Bech32 (bc1uf5tdn87k2uz7r2kl5zrfww362ch3746lq5vse7) . It features increased error protection, fast information processing and even lower commissions.
You can view the balance of a Bitcoin address, transaction history and other information using blockchain browsers.
Commissions on the Bitcoin network
When sending BTC, the commission does not depend on the amount, so it is more profitable to send one large transaction than many small ones. Some wallets give the user the ability to adjust fees to find the optimal balance between costs and payment speed. The fact is that, first of all, miners process transactions with the maximum commission level, since it is more profitable for them from an economic point of view.
Where is it more profitable to buy cryptocurrency for rubles: comparing commissions of exchangers and exchanges
02/20/2020 ForkLog
#Cryptocurrency exchanges
2800 BTC per day is bought and sold for rubles. Russians buy cryptocurrency in personal meetings, through Telegram bots and on exchanges. Especially for ForkLog, Currency.com cryptocurrency exchange analyst Dmitry Lazukov spoke about ways to exchange cryptocurrencies for rubles.
To do this, Dmitry calculated the commissions of the Binance, CEX.IO, Currency.com, Livecoin, YoBit and EXMO exchanges for the following exchange directions: RUB-BTC, BTC-RUB and RUB-BTC-RUB.
Cryptocurrency exchange methods
The security of your money and the benefit of the intermediary depend on the method of exchange. You can buy cryptocurrency like this:
- A personal meeting.
- Telegram bots.
- Bitcoin ATMs.
- Online exchangers.
- Cryptocurrency exchanges.
The intermediary's profit is the difference between the price of buying and selling cryptocurrency. The commission of payment systems is paid by the buyer.
From hand to hand
You negotiate with the seller and transfer money to him. The seller sends you cryptocurrency.
The advantage of this method of exchange is a favorable exchange rate. The downside is the likelihood of falling for a scammer.
The commission depends on the seller.
Telegram bots
Telegram bots have two types of owners:
- Exchangers - expand functionality and audience through a bot.
- Fraudsters.
The bot offers to create an exchange request: select cryptocurrency and fiat money, enter your wallet and payment details. The bot submits the request to the exchanger and waits for payment from the client. When the payment is confirmed, the exchanger sends the funds to the client.
Pros:
- convenient to use from your phone;
- bots offer several payment methods.
The downside is the likelihood of falling for a scammer.
Commission - from 5% for bot services and 1-2% for transfers in the payment system.
Bitcoin ATMs
The first Bitcoin ATMs appeared in Canada in 2013. Bitcoin ATMs are connected to a centralized exchange that sends the cryptocurrency to the buyer. There are 49 ATM terminals in Russia.
Pros:
- buying cryptocurrency through the terminal is no different from topping up your phone;
- the terminal issues a check.
Minuses:
- there are few terminals, they are located far away;
- You can buy only popular cryptocurrencies through the terminal, mainly Bitcoin;
- In Russia, you can sell cryptocurrency only in 5 terminals out of 49.
The average commission for purchases in Bitcoin terminals is 8.9%.
Exchangers
Online exchangers exchange cryptocurrency for fiat money. To exchange, you need to enter personal information: phone number, email. Exchangers with a strict KYC procedure may request your full name or photo with a passport.
You create an application, select the amount of cryptocurrency to purchase, indicate the payment method and enter the wallet address. You receive details for transferring money. The exchanger confirms the payment, sends the cryptocurrency and transmits a link to the transaction.
Pros:
- exchangers work quickly;
- large selection of cryptocurrencies and payment systems;
- The exchanger issues an electronic receipt.
Minuses:
- you need to provide personal information, sometimes you need to register;
- cryptocurrency may run out;
- the buying rate is 2-3% higher than the market rate, the selling rate is lower.
Commission - from 5% for exchanger services and 1-2% payment system commission.
Exchanges
A cryptocurrency exchange is an intermediary between sellers and buyers. On an exchange, you buy cryptocurrency from other users at the market price.
Pros:
- there is a choice of cryptocurrencies and tokens;
- buying and selling at market price;
- there is a price chart;
- exchanges regularly undergo security audits and form insurance funds in case of hacks.
The downside is that you cannot trade anonymously.
Commission - from 0.1% for exchange, from 2.5% or a fixed amount for fiat withdrawal through the payment system.
Where is it profitable to buy cryptocurrency?
The best way to buy cryptocurrency is on an exchange. Exchanges offer more cryptocurrencies for exchange. At the same time, commissions are lower than in exchangers or ATM terminals.
To exchange on the exchange you need to pay the following commissions:
- depositing funds;
- trading commission for exchange;
- withdrawal of funds.
Let's compare commissions on 6 popular exchanges.
Deposit in rubles
YoBit, EXMO, Binance and Livecoin support AdvCash rubles. Transferring 100,000 rubles from a bank card to an AdvCash wallet will cost 3% - 3,000 rubles. Next you need to pay a commission for replenishing your deposit:
- Binance - free;
- EXMO - free;
- Livecoin - 4.5% or 4,365 rubles;
- YoBit - free;
- On CEX.IO, depositing rubles from Visa and Mastercard cards costs 3% or 3,000 rubles;
- Currency.com does not charge a commission for replenishing a deposit does not charge a commission for replenishing a deposit from a bank account, but you need to pay 0.5% for a bank transfer.
Buying Bitcoin for Rubles
- Binance - 0.1%;
- CEX.IO - 0.16%;
- Currency.com - 0.2%;
- Livecoin - 0.18%;
- YoBit - 0.2%;
- EXMO - 0.2%.
Withdrawing Bitcoin to your wallet
The commission for withdrawing cryptocurrency from exchanges is the same - 0.0005 BTC (320 rubles at the time of publication).
Compare in the table
Exchange commissions for buying BTC for RUB
Where is it profitable to sell cryptocurrency?
We compare commissions on the same exchanges, but now the deposit is in bitcoins, and the withdrawal is in rubles.
Deposit in BTC
Free.
Buying rubles for bitcoin
- Binance - 0.1%;
- CEX.IO - 0.16%;
- Currency.com - 0.2%;
- Livecoin - 0.18%;
- YoBit - 0.2%;
- EXMO - 0.2%.
Withdrawal of rubles
- Binance - withdrawal to AdvCash is free;
- CEX.IO - 3% for withdrawing rubles to a card;
- Currency.com - fixed commission of 300 RUB for withdrawal to a Sberbank account;
- YoBit - 3% for withdrawal to AdvCash;
- EXMO - 4.49% for withdrawal to AdvCash;
- Livecoin - 0.1% per withdrawal to AdvCash.
Compare in the table
Exchange commissions for selling BTC for RUB
conclusions
There are plenty of ways to exchange cryptocurrencies, but not all are profitable.
Binance, YoBit, EXMO and Livecoin require the purchase of AdvCash or another digital currency. On Binance you need to pay 5% for this, on other exchanges 6% - like on an exchanger. There are no deposit or withdrawal fees on Binance. On other exchanges - from 3% to 4.5%.
To buy and sell Bitcoin on CEX.IO you do not need to change rubles, but there is a 3% commission on deposits and withdrawals to the card.
Currency.com cooperates with Sberbank and does not charge commissions on bank transfers in rubles. Commission for withdrawal to a Sberbank account is 300 RUB.
Here is a summary table of exchange commissions for the RUB-BTC-RUB exchange:
Exchange commissions for RUB-BTC-RUB exchange
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Transferring money to cryptocurrency using intermediaries
How often do you visit forums that are dedicated to cryptocurrencies? If you are a regular on such sites, you must have noticed that there are topics dedicated to the purchase and sale of Bitcoin through an intermediary. Moreover, there are separate sites, like Localbitcoins, that rank such merchants.
To buy Bitcoins, you need to register and select the bet you like. After this, enter the amount of BTC to purchase and send the corresponding amount of money to the specified wallet or bank card number. Then you need to click the “I have paid” button. As soon as the seller sees that the funds have arrived in his account, he will send Bitcoins to your address.
Here the question arises: what are the guarantees that the intermediary will not deceive? When he places a bid to sell Bitcoins, he places a specific amount of them in an escrow account. The coins are blocked, and even if the seller disappears without a trace, you can contact support and they will transfer you Bitcoin. To withdraw Bitcoin from the service account, you need to go to the “Wallet” section, enter the necessary details and confirm the withdrawal.
If you do not want to use any platforms, you can try to contact the intermediary directly and agree with him on all the terms of the transaction. But keep in mind that this is a very risky method since there are no escrow accounts or support. In this case, everything will be completely built “on my word of honor.”
Why is it called Satoshi?
Bitcoin only had two official units.
- Bitcoin is called BTC for short
- Satoshi is briefly called Sat and the plural form of Satoshi, which is often abbreviated, is called Sats.
Satoshi (0.00000001 ฿) received its name Satoshi Nakamoto . many in the Bitcoin community have proposed calling the second smallest denomination of Bitcoin “ Finney ” .
1 Phinney is equal to 10 Satoshi, which will be equal to 0.00000010 BTC.
The name Finney is a reference to Hal Finney, a computer scientist who was an early user of Bitcoin who received the first BTC transaction from its creator Satoshi Nakamoto.
While Satoshi is officially the smallest unit, there is also a "millisatoshi" which is one thousandth of a Satoshi or one hundred billionths of one Bitcoin.
Bitcoin - Units of measurement are usually expressed in decimals such as BTC, mBTC, µBTC, etc. Due to the high value, a transaction involving a whole Bitcoin is not that common and you may be wondering what to call 0.01 BTC or 0.001 BTC .
Bitcoin transfer using the terminal
A few years ago this method could surprise many.
Instructions for purchasing bitcoins through the terminal:
- Find a crypto machine in your city. For example, iBox.
- On the screen you need to select the btcu.biz service.
- Enter your phone number. You will receive a message with a confirmation code for the terminal.
- Enter the amount you want to top up your address with. Take into account the terminal commission (1% of the amount).
- Print out the check. It will indicate a code, without which replenishment is impossible.
- Visit btcu.biz.
- You need the “Receive” => “For Cash” section. Enter the code from the receipt. You also need to agree to the terms of use and enter the captcha. Click "Pay".
Funds will be credited instantly. To make a Bitcoin to digital currency transfer, go to the “Receive” section again and find Bitcoin there. The withdrawal will be carried out automatically after entering the captcha.
This method of replenishment is not yet widespread in Russia. There are only a few terminals that work with this service.
In Ukraine, almost every terminal works with btcu.biz, so it is very easy to top up a Bitcoin address with cash. If you live somewhere in Europe, the USA or Japan, then in the context of replenishing wallets you are incredibly lucky. Europe is loyal to crypto, so there are crypto terminals everywhere. And the USA and Japan have completely recognized Bitcoin as a payment system.
