If you plan on buying cryptocurrency, you must first prepare yourself by acquiring as much industry knowledge as possible. One of the most important factors you must anticipate and pay attention to is the hidden fees. You will part with excess money when buying these digital tokens from an exchange. This article outlines seven hidden fees when buying cryptocurrency.
It is common for most exchanges to charge a deposit and withdrawal fee. However, if you are lucky to find a trading platform that does not charge deposit fees, they will likely charge higher withdrawal rates. Still, some exchanges do not impose any funding fees. Instead, they offer free cash withdrawals, but these platforms are few and rare. You should also prepare to meet your legal mandates once you start trading cryptocurrencies and earning profits. These will change and depend completely on your country’s regulations. If you are in Canada, this post will offer insights into handling your crypto taxes.
Exchanges are in business. They primarily make their profits by charging a fee on every order you make on their platforms. While these charges, commonly referred to as order or exchange fees, are popular, you need to be aware that different platforms impose varied rates. As such, you need to do your research by analyzing the fees you will pay for each trade. Look at whether it is a fixed or variable rate to avoid unpleasant surprises.
As a crypto investor, the safest way to store your digital tokens is in an e-wallet. This provides you with a valid blockchain address that is accessible using a private key. Since these electronic wallets run through the blockchain network, which is dependent on miners running full nodes, you can expect some fees. Although these fees are usually extremely small, especially after your first deposit, you must pay attention to them. Luckily, when choosing an e-wallet, there are open-source alternatives. These are from cryptocurrency supporters that often attract no fees at all.
Crypto mining is essentially the electrical fuel that runs the blockchain networks, given their decentralized nature. Since crypto miners require a lot of processing power and expensive equipment, they get paid a fee for every transaction they complete. These charges are known as network fees. While you can choose to pay lower rates, this comes with the burden of waiting longer for verification of your transaction. The primary reason is that miners will prioritize solving blocks with higher transaction fees. This can ensure that they only take a few seconds to complete and not minutes.
If you choose to use an exchange that does not accept your country’s currency, you will pay a fee for converting your currency. Most exchanges impose these conversion fees when you deposit and cash out in the same account. Typically, the best way to avoid these extra charges is to choose a secure and competent trading platform. Ensure that it accepts payments and withdrawals in your local currency.
If you choose a crypto exchange premium package, you will have to pay a fee to enjoy these exclusive services. As a crypto investor, you will love these premium services. Especially, if you want the convenience of making a trade instantly as you enjoy low or no exchange fees. However, you must be ready to pay a pre-set commission after certian periods to keep benefiting from these services.
Buying crypto with a credit card is a costly affair as many issuers will treat your purchases as cash advances. This could mean parting with up to 5% of the transaction amount. This a primary reason why you should avoid using credit cards for these purchases.
It is important to have a crypto buying strategy to avoid the many pitfalls in this volatile marketplace. Especially those that come from hidden fees.
