Have you been thinking buying Bitcoin lately? Whether it’s your first time or you’re just looking for a better way to buy Bitcoin that’s faster and costs less, there are a few things you should know about entering the crypto marketplace. This is especially true for crypto buyers outside the U.S.
These are the top 8 things every crypto buyer should know before they start.
#1 Don’t Fight KYC
KYC means Know Your Customer or Know Your Client and it’s the best tool crypto exchanges have to fight money laundering. It’s become a common practice as financial regulators require it of investment planners, banks, and mutual funds. Proving your identity can feel like overkill in a world where you can buy anything online, but cryptocurrency is being treated more like an investment than buying furniture off the internet. Get your ID ready when you sign up.
#2 Use a Cryptocurrency Exchange in Your Own Country
Buying cryptocurrency outside the U.S. can feel like it comes with a lot of snags. When you use a cryptocurrency exchange in your own country, you can avoid paying fees on the exchange rate, and you can enjoy more options for deposit and withdrawal methods. Local exchanges can also keep you informed about changes to local laws and taxations.
#3 Research Exchanges Online
Are other people happy using the exchange? As with most things online, the easiest way to find out if a product or service is right for you is doing your research. The reviews are a great way to see how an exchange stacks up to the competition.
#4 Make Sure They Have Good Relationships with Banks
If you’re using an exchange that asks you to send a wire transfer to an international bank, it’s time to find a new option. You need a local cryptocurrency exchange that deals with the major banks in your country, otherwise your bank may wind up holding your transactions.
Cryptocurrency is still new to many banks and some even believe that the banks hate cryptocurrency. Whether that’s true or not, major institutions take time to adapt. It’s up to cryptocurrency exchanges to build bridges. In Canada, cryptocurrency exchanges like Bitbuy have been actively working with banks to make transactions faster and cheaper.
#5 Don’t Use Your Credit Card
You use your credit card to make a deposit on a cryptocurrency exchange to buy Bitcoin; did you know this will cost you 5% of the transaction before the exchange even takes their fee? Cash advances are expensive and it’s now how many credit card companies treat cryptocurrency purchases.
Credit card companies really don’t want you borrowing money to buy Bitcoin.
#6 Pay Capital Gains Taxes
In many countries, you have to pay capital gains taxes when you sell Bitcoin. If you plan on buying and holding Bitcoin (or HODL), you may not have to worry about taxes just yet. If you plan to sell quickly or use cryptocurrency to make purchase, keep in mind that when you sell Bitcoin, the proceeds are considered income and you need to pay for it.
#7 Stay Secure
Invest in a cryptocurrency wallet! While cryptocurrency exchanges like Bitbuy take security seriously and allow you to store coins on the platform, it pays to have your own wallet options.
#8 Expect a Bumpy Ride
Prices in cryptocurrency remain extremely volatile, especially compared to other assets. Don’t part with money you can’t afford to lose.
With these 8 tips in hand, you should be ready to start buying Bitcoin.