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Buyer Beware: Are You Paying No Fees, Flat Fees, or Spread Fees on Your Crypto?

Here’s Your Guide to Deciding Which One is Best for You

Hand reaching out to to try and get fees back.
Image courtesy of Canva

I write for Hackernoon.

As I began to stretch my horizons and move from exclusively writing on Medium, I found Hackernoon. They had a presence here on Medium. But now, they are more autonomous with a massive readership. In fact, I found Hackernoon through Medium. So, I wrote my first piece for them and got published. Yay! The link is below.

My Hackernoon story.

By default, Hackernoon doesn’t pay writers directly. Instead, writers post there to extend their reach. However, there is an option to make some crypto with the Coil service. It’s like Medium, except member sites are all over the net, not in one place. Then, you need a crypto wallet that supports an interledger payment pointer.

One such wallet is Uphold’s. So, I made an account on Coil ($5/month), and I already had an account on Uphold. All Hackernoon requires is you input your interledger payment pointer to the specific currency in your wallet. In my case, it was Bitcoin. So, I copied and pasted it from Uphold to Hackernoon. Now, it can get paid in BTC for every Coil member who reads my stories on Hackernoon.

If you want a more step-by-step tutorial on that, let me know in the comments.

So, what does this have to do with spread fees and flat fees?

Let’s get it.

News Alert: When you have time, please check out my publication here on Medium called AltStable. I post there more frequently than anyplace else. Thank you.

What is a spread fee?

A spread fee is a price charged and added to the cost of the crypto at the time of purchase.

For you to get an interledger payment pointer to your BTC on Uphold, you must have some BTC there in the first place. And when I bought $10 worth of BTC, there wasn’t a flat fee like on Coinbase ($0.99) but a spread fee of 0.8%. The spread fee was built into the price of the BTC when I bought it.

$10 x .8% = $.08

Uphold’s website clearly states that spread fees for Bitcoin in the U.S. and Europe are .8%-1.2%. The reason is they need a range in case of market stress. For example, when the U.S. experiences sudden market events like a crash of some degree, Uphold’s spread will jump to 1.2% in all likelihood. It covers their risk to the market.

Typically, an exchange can make more money with flat fees on low-volume trades. Likewise, they can make more on high-volume trades with spread fees. Coinbase, for example, charges $0.99 minimum and also includes a spread fee for higher orders. So, $10 of BTC on Coinbase is $0.99 while $20 is $1.49 and $30 is $1.99, etc.

Coinbase is a mix, while Uphold is pure spread with zero flat fees.

Why would an exchange charge no fees, only spread fees?

It looks great on a sales page and could attract more customers. Also, these exchanges charge a spread fee range depending on market stress.

Spread fees or trading fees are a given on most if not all exchanges. Investors expect them. But when an exchange exists like Coinbase with flat + spread fees, you have an opportunity for a value proposition. And that’s what Uphold offers. No fees or no extra fees sounds and looks great on a landing page.

Also, suppose your exchange wants more business or offers fewer services. In that case, you might forego a minimum flat fee to attract clients or communicate to the potential client you are aware you provide fewer services, and thus costs should be lower.

If only it were the case across the board. Binance is an excellent example of an exchange with the most trading volume and reasonable fees. Conversely, Coinbase has the second most trading volume with possibly the least reasonable fees (actually, they aren’t clear on their fees).

I realize I’m giving Coinbase a hard time. But they’re at a point where they should start to consider the client over profit, or they’re going to lose them to other exchanges. Who will, oddly enough, gain more profit. Strange how that works.

What are Maker and Taker fees?

Maker and Taker fees are paid by those who place orders (Makers) and those who take or buy orders (Takers). Makers and Takers pay a fee, but Takers pay more because they remove liquidity from the market.

So far, we’ve talked about fees on a surface level. The surface level is where you buy whatever is out there on the market at its current price. But what if you don’t like that price? What if you think BTC is going down soon and want to buy it at a lower price. You can do that. It’s called a buy order.

For example, BTC is selling at $55,000, but you foresee a drop to $53,000. So, you place a buy order for three BTC at $53,000. Your order sits in a book called an order book (clever, right). Then, the price drops. Now, someone decides to sell at $53,000 because they’re afraid of losing more money if the price drops further. The system matches their sell with your buy order, and you purchase three BTC at $53,000. Congratulations.

You were considered the Maker, and Makers pay a fee for posting their buy order. The seller is the Taker, and they also pay a fee but at a higher rate.

The reason is as a Maker, you provide liquidity to the market by expressing supply, but as a Taker, you take liquidity from the market expressing demand. Or, more importantly, Takers remove liquidity from the market. So, they pay a higher fee than Makers to offset the liquidity loss.

You can see an example fees structure for Makers and Takers on Binance here.


You must know your fees, especially when your portfolio starts to grow.

Spread fees help exchanges cover operational costs, especially with larger trade volumes. Allowing a range of spread fees also helps the exchange in times of market stress to mitigate risk and stay afloat and continue to provide investors with services.

Some exchanges charge flat fees and spread fees. Flat fees help cover costs of processing low-volume trades, making sense for a new exchange. However, as an exchange grows, one would think their success would pass to the client, and flat fees would disappear in favor of pure spread fees.

When you get more advanced with your trading, you will start placing buy and sell orders. Trading on that level has a new kind of fee: Maker and Taker fees. Makers tend to pay lower fees for posting an order than Takers who buy an order. Takers pay more because they’re removing liquidity from the market, and the exchange tries to equal out the liquidity from Taker activity.

Suppose you don’t do a lot of trading, then it might matter less which exchange you use. But if you trade a lot, then shop around and look at different fee structures and see which one best works for you.

There’s a great video I came across here that can help you make a decision. You should check it out.

Stay strong.

News Alert: When you have time, please check out my publication here on Medium called AltStable. I post there more frequently than anyplace else. Thank you.




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T.C. Gunter

T.C. Gunter

T.C. wants you to read his words. Hoping that the words transform you. Not in some grand way like spiritual rebirth. But more like a act of kindness or a smile.

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