A Step by Step Guide on Investing in Your First Cryptocurrency
#8 — How to buy bitcoin, ethereum or litecoin without paying any fees on GDAX, step by step
You are ready to jump on the train of Cryptocurrencies? This article will explain you step by step how to buy bitcoin, ethereum or litecoin without any fees (actually there is 0.15 € deposit fees, almost nothing).
EDIT: GDAX got renamed to Coinbase Pro, also the fee model changed and you do have to pay fees.
This article is part of my Learning challenge where I learn about one topic each month. As you can imagine, this month, I was learning about trading & cryptocurrencies. I based this studies on a book and a few article and ended up investing 1000€ on cryptocurrencies. Click here, if you want to know more about my methodology.
Get Started. How to buy a cryptocurrency
Now we know how trading works and how to analyze it and take decision let’s see how you buy it to get started. If you don’t I invite you to read my 4 articles that you can find here. Or at least the following one.
https://medium.com/learning-lab/should-you-invest-in-cryptocurrencies-9380c803885a
Choose a cryptocurrency & an exchange
The first step is to decide what do you want to buy. Let’s go for Bitcoin (BTC) because you can buy most of the other cryptocurrencies with it. Another good alternative is to buy Ethereum (ETH), it’s also faster to send than bitcoin.
Once you decided you have to choose an exchange.
Here is what I recommend when you choose an exchange
- Go to CoinMarketCap and search for your currency
- Click on market tab (check the screenshot below)
- Leave it ordered by volume (that means the market will be less volatile and more liquid) and find your currency Pair, in my case I look for “BTC/EUR”
- The three first in BTC/EUR are Kraken, Bitfinex, GDAX
- Check the fees of each Exchange, the reputation and chose one of them
In the case of BTC/EUR the best is GDAX because you don’t have fees as a market maker (when you put limit order).
Create an account in an exchange
Then create an account in the exchange, most of the exchanges have KYC forms (Know Your Customer), so you will have to take pictures of you, your ID, and/or your passport.
As concern GDAX, it’s the same company as Coinbase it can be confusing, and be very careful if you buy bitcoin in Coinbase instead of GDAX you may have to pay 3% of fees instead of 0% in GDAX 😎.
If it doesn’t work in GDAX create first an account in Coinbase and then GDAX.
Here is the address: https://www.gdax.com/
Deposit some fiat currency
Once logged in and validated in GDAX you can deposit your fiat currency (USD, GBP or EUR). People having bank accounts in the USA can even directly link their account to their GDAX account.
It’s very easy just click on “Deposit” button.
And then follow the instruction, make a transfer from your bank account to this IBAN (cf screenshot below) and don’t forget to add the reference number in your transfer (the one I hid behind the red rectangle). Without it, GDAX will not able to top up your account.
The deposit is supposed to take 2 days 🤞 but it can sometimes take up to 10 days if you are not lucky. Be sure the first name and last name in your bank account match the one in GDAX otherwise, the money will be sent back to the bank account.
Once the transfer is done, you will receive an email. But you have to do one more step. Connect again in GDAX, click on “Deposit” and this time go to “Coinbase Account” tab.
As you can see above you will have to transfer the funds from the Coinbase EUR Wallet to your GDAX account so just put the amount and press deposit. You will then be ready to trade!!
Place an order
Depending on each Exchange website the amount of fees can differ, many websites put more fees for Market order than Limit order. If you don’t know the difference between a market order and a limit order, I invite you to read this article.
So you have to think carefully before putting your order. Let’s see how to use the three type of orders.
Market
For a market order it will get the prices in BTC from the Order book so just put your amount of Euros you want to spend, and GDAX will calculate the amount of BTC you will get.
Limit
The limit order is to buy (or sell) at a defined price you can set yourself, you can either type the price yourself or just click on the order book or in the graph to automatically prefill the field. Then put the amount of BTC you want to buy.
A trick is, when you buy to add some numbers after the comma to appear first in the order book. You can do this without paying too much for example if in the order book the first price is 13 090.00 € just put 13 090.01 €.
The limit buy order should be lower than the current market price.
Stop
The stop order is a way to set a threshold to launch a buy order when the price goes up. Or to sell when it goes down below another threshold. It can be very useful to save your investment in case of a crash.
The order in this capture above means that if the price goes above 15909.41 € to buy 100 € of BTC at the market price. By putting advance option you can set a limit price that will be activated once the price reaches the Stop price.
Once you place the order it will be either directly executed (for market order) or once it reaches the limit or the stop.
It will appear in your order list below the charts. You can cancel it before the order is filled.
Transfer it to your wallet or another exchange (optional)
Once you have your BTC you can either:
- Keep them in the exchange, if you want to sell them in case of crash or to do short-term trading for example
- Transfer them to another exchange to buy another currency which you can only buy in BTC
- Transfer them to a software wallet, or hardware wallet, to protect your investment from a hacker who hacks your account in the exchange, or even from hackers who will hack and take down the entire exchange (it happened in the past) or from legal issues, if the exchange shut down with your investment it will be very sad 😟.
So to transfer your BTC it’s very simple, instead of clicking on “Deposit” click on “Withdraw”, go on BTC tab, then put the address of the wallet, the amount of BTC, Get the two-factor authentication Code and press “Withdraw funds”, see the screenshot below. Be careful, always double check the BTC address is the right one otherwise you will lose your BTC forever!
Be patient a BTC transfer can take 1h or sometimes more when GDAX servers are partially down.
Security
As I said below it’s better to have your coins in a Paper, Software or Hardware wallet. I recommend you to read the following article which is even more like a guide about security. Also, it explains how wallet works and why security is important 😵.
What’s next?
This article is part of my Learning Challenge about Trading & Cryptocurencies. Like this one I made 4 others article related to the topic.
- Should You Invest in Cryptocurrencies?
https://medium.com/learning-lab/should-you-invest-in-cryptocurrencies-9380c803885a - Read This Before Starting with Your Cryptocurrency Portfolio
https://medium.com/learning-lab/read-this-before-starting-with-your-cryptocurrency-portfolio-4bcb029eec0f - Become a Better Crypto Trader with Technical and Chart Analysis
https://medium.com/learning-lab/become-a-better-crypto-trader-with-technical-and-chart-analysis-1496b2fc6b85 - Manage Your Cryptocurrency Portfolio and Track Your Profits
https://medium.com/learning-lab/manage-your-cryptocurrency-portfolio-and-track-your-profits-f5ba747a0158
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