Four steps to getting into Bitcoin and Cryptocurrencies with ZERO fees — for noobs

10 min readOct 24, 2017

So you’ve heard about Bitcoin being “the next big thing” — even your granny has heard of it, but you’re just not sure about how to actually take the next step — I’ve got you covered!

I was in completely the same boat a few months ago — I’d heard of Bitcoin back in the $100 times and had zero clue. However, I’ve spent the last 3 and a bit months diving into cryptocurrencies and want to share what I’ve found so far…

Step 1) Understand what you are buying

It’s important to understand what you are buying and what a cryptocurrency or “Coin” actually means in the “real world” BEFORE you just dive right in and make a blind purchase (I’ve been there, done that, still live to tell the tale).

What is a currency?

A currency is a way of storing value that allows you to transact with someone, whether you are looking to purchase goods, services or anything else that requires a transaction of value — currencies usually come into play.

Where do they come from?

In daily life we use currencies (British Pounds, US dollar, Japanese Yen etc.), and these are created by a central entity, which is the governments of those countries and they are deemed to be legal tender by law — you’ll often hear these being referred to as “FIAT” in the crypto world.

They use printing and minting houses which generate the physical notes and coins that you hand over at the shop to pay for something. A currency generated by the government is not actually backed by a physical object — you might have heard the saying “not worth the paper it’s printed on” before, but this is true in the case of FIAT. These currencies are backed by the countries output, government stability and their ability to pay their debt to other countries.

Currencies are then valued by central banks and markets depending on supply and demand.

So you’ve told me what I have in my pocket and just bought my coffee with and I make digital transactions through my bank everyday — but what about Crypto!?

The difference is that a cryptocurrency is not created by a central government, it’s created by a decentralised entity, which could be anyone with a computer and some programming skills, the records are held securely by each user of the cryptocurrency, and there is no one single person or entity controlling it.

Why not call it Digicurrrencies and be done with it!?

Crypto in [Crypto]currencies is for cryptography, or in other words, Encryption. It’s the encryption that is a crucial part of the cryptocurrencies, because it means the records of transactions can’t be hacked and changed by anyone. You’ll hear the word “immutable” thrown around the crypto space — that’s what they mean.

What can I do with cryptocurrencies?

OK — you have Value Cryptocurrencies and Utility Cryptocurrencies.

Value cryptocurrencies or “coins” are simply that — a way of storing value and transacting with people i.e. Bitcoin, Litecoin, Monero etc.
Utility cryptocurrencies “coins”, allow you to store value AND provide some sort of utility, like registering land ownership, or keeping track of loyalty points e.g. Ethereum, QTUM, Stratis etc.

The way I like to think about the above is;

A Value Coin — I’m buying it because I believe it will hold and/or grow its’ market value and at some point I might want to make a transaction with someone — perhaps a $20 Million Pizza — go look that story up!!

A Utility Coin — I’m buying it because I believe it has the potential to become massively adopted and used, the product team is strong and that the technology is impressive.

Many of these cryptocurrencies have teams or companies backing them, and they are progressing just like a traditional company does.

KEY POINT

With that said, the key point here is that you should think about what a crypto currency’s use is and whether or not you feel it is a good idea.

Notorious “shit coins” that are only created for very small use in the world — I’m looking at YOU Potcoin, and may not have the world impact that say Ethereum, OmiseGo or Neo might have. You have to evaluate the coins use and be happy with it.

Step 2) Alright, enough already — Where do I buy “a Bitcoin”…?

Depending on your location, there are various ways to buy Bitcoin or Ethereum or any of these other coins.

Exchanges

Just as you can buy Euros, Dollars, Yen or Pesos or Apple, Amazon or Google shares, you can buy Bitcoin, Ethereum etc. on an exchange.

An exchange can be one of two things:

A digital exchange
A physical exchange

Digital Exchanges

We’ll focus on two exchanges in this guide, as there are a bunch of them each with their own pros and cons, but this is the easiest way I found of getting into crypto.

Coinbase — Coinbase.com

The most well known exchange is Coinbase.

Pros

US based company, but are seen as the “Google” of crypto exchanges
Can buy Bitcoin (BTC), Ethereum (ETH) and Litecoin (LTC)
Accept USD, EUR, GBP
Available through Desktop Browser, iOS and Android devices
Super easy interface
Carry out standard AML and KYC identity checks in line with many countries regulations — some may see that as a con, but that’s for another discussion
2 Factor Authentication
All cryptocurrencies held in Coinbase are insured should they ever be compromised

Cons

High provider fees

GDAX — GDAX.com

A sister site of Coinbase, and I mention it here because it will be key in buying Bitcoin cheaply READ: ZERO FEES!!

Pros

Sister site of Coinbase
All of the above currency exchanges
Available on Desktop/Mobile Site only
Same AML/KYC Identity checking as Coinbase
Same 2 Factor Authentication

Cons

User Interface isn’t as easy to navigate

For more info on crypto exchanges, have a look at this guide, which gives a good run down of some of the exchanges out there.

https://www.buybitcoinworldwide.com/exchanges/

Physical Exchange

There are a few ways to go about physically exchanging cryptocurrencies.

Find someone with some crypto, and arrange to meet them perhaps in a coffee shop and make the exchange (You hand them money, they send you crypto — similar to buying something from Gumtree).
Using a site that connects people like LocalBitcoins.com and buying some crypto through that.

The latter seems to be a better way of going about it, as the site provides some protection from people just running off with your money, but if it’s someone you trust, there’s no harm in buying some crypto from your mate!

Step 3) Now you know WHERE to buy it, but HOW do you buy it without paying fees?

The aim of the game here, is to buy crypto with zero or as low fees as possible. Fees eat into profit, meaning it will take you longer to realise a gain.

It’s important to note, that all cryptocurrencies have fees, as they are used to be part of the system i.e. you send Bob some Bitcoin, the Bitcoin network charges a fee to send the transaction. Fees are a little complicated, and it would take a bit to explain which I will do in a later guide, however, you should know the difference between a service provider fee i.e. Coinbase and a network fee i.e. Bitcoin.

Right, let’s get on with it…

Get your funds ready

Many Banks charge fees for currency exchange (haha, funny that’s also part of the reason crypto has bloomed).

Coinbase seem to take transfers in EUR & USD rather than GBP at the moment, so I transferred my money (GBP) into my Revolut account, as it has no currency exchange fees and does the currency conversion automatically. If you don’t have access to a zero fee currency transfer, look for low fee options — or perhaps a family member may have access to a low/zero fee option.

3. Sign up for Coinbase — Coinbase.com.

Send funds from Revolut to fund your Coinbase account — it should take a day for funds to be received — I’ve had it transfer in under a day, but often takes 1 day. NB: Weekdays only.

4. Sign up to GDAX and transfer funds from Coinbase to GDAX — instantly

Step 1 — Select your currency
Step 2 — Select Deposit

Step 3 — Select Coinbase Account
Step 4 — Select Source i.e. EUR, GBP, USD account
Step 5 — Select deposit amount
Step 6 — Hit Deposit funds

5. Place trade with GDAX

Step 7 — Click on the currency
Step 8 — Click on Limit — you are about to place a limit order (where you set the price of your trade)
Step 9 — Buy or Sell — probably buying at the moment
Step 10 — Amount of Bitcoin (BTC)/Ethereum(ETH)/Litecoin(LTC)
Step 11 — Limit Price — this is where you should look at the market rate at the moment, and enter an amount just below it i.e. it was 5662.56 USD at the time of writing, so I would enter something like 5660.00 USD
Step 12 — Click on Advanced, which will show the below options. Ignore “Time In Force Policy”, but make sure you click “Post Only” — this will ensure your trade has ZERO fees!
Step 13 — Hit Place Buy Order (or Sell Order) — DONE!

It may take a minute or two for your trade to be accepted in the market, but you can view this in the Open Orders window in the bottom right.

Congrats, you’ve just bought your first cryptocurrency — How do you feel!?

Step 4) I have my crypto, I feel great, but still a little nervous — WALLET, I NEED A WALLET!

You could stop here, but the next step is actually VERY IMPORTANT.

Move your shit off the exchange — I repeat, MOVE YOUR SHIT OFF THE EXCHANGE.

You my crypto foraging friend, need a WALLET.

WTF is a wallet?

A wallet is what holds YOUR crypto. Think of it as a secure vault, but in digital form. You chuck your crypto in, seal it up, and no one can get to it — but YOU!

Why do you need a wallet?

It’s important to move your crypto off an exchange as they are targets for hacks. You may have heard of Mt.Gox, which rocked the crypto world, and not in a good way! So in this brave new world, it’s important to protect your assets.

The very essence of crypto is decentralisation and the fact that YOU have complete control over your assets, I personally decided to download a wallet and keep my crypto with me, rather than leave it on Coinbase.

The reason for this is that Coinbase holds your “Private Key” — what’s a Private Key you say!?

Well, you have a Public Key and a Private Key:

Public key allows you to view and receive crypto
Private key allows you to spend your crypto

A Private Key is THE most important part of your crypto being. It allows you (and anyone else that has it), the ability to spend your crypto. Think of it as your PIN number on your Credit or Debit Card — anyone that has it, can spend on it.

Now Coinbase can’t actually spend it, because it’s all encrypted out of their sight, but you DON’T own the private key to your wallet, so if something goes tits up with Coinbase, you may have a job trying to get to your crypto.

Instead, you can download a wallet on to your computer, iOS or Android device and store your crypto on that.

Now there are lots of pros and cons to each of these, I’ll create a “Keeping Your Crypto Safe” guide soon, but to get you started in the right direction get yourself a wallet like JAXX, MyCelium or Airbitz.

JAXX is my favoured wallet, as it has a user friendly interface, can be installed on desktop, iOS or Android and holds several different cryptos in one.

The process is:

Download your wallet
Use your public key from the wallet you want to send your crypto to
Add that into GDAX when making a withdrawal (Click on withdrawal in GDAX and follow the instructions)
Transfer complete — it may take a few mins to show up in your wallet. Don’t panic.

You should generate a back up of your wallet — I’ll leave you to Google how to do this, but it’s very straightforward.

And that’s it — a helping hand into the exciting world of cryptocurrencies!

One more thing…

Lots of people have the mindset that you must own something as a whole, however, it’s important to remember that although you CAN’T buy fractions of a FIAT currency, you CAN buy fractions of a cryptocurrency, and you therefore don’t have to go on a crusade to have “one whole solid Bitcoin” at your disposal.

Go slow, buy in small amounts initially until you get your feet and then decide how you want to move forward — it’s OK to own 0.0001 Bitcoin, it’s more than a lot of people!

It’s a long way off from being straight forward, however, I hope you find this guide useful for clarifying the steps to taking your first foray into crypto.

Elliott

DISCLAIMER: You should carry out your own due diligence and research into anything you may be looking to invest in. The above should be taken as a guide and not financial advice — but have fun!