Most of the new crypto investors are blinded by stories about regular people making huge amounts of money in only a short period of time. They feel like they should dive in as quickly as possible to be able to benefit from this relatively new investment opportunity before it’s too late..

"Investors get so distracted by their imaginary profitability prospects that they feel they should buy-in as quickly as possible."

However, this is when most of the new traders are seduced by a common pitfall. The logical first step in trading cryptocurrencies is to buy (parts of) bitcoin because this currency is most commonly used to trade for alt-coins. Investors get so distracted by their imaginary profitability prospects that they feel they should buy-in as quickly as possible.

“Fortunately” there are several online services that quickly trade your Dollars or Euros for Bitcoin. Platforms like Coinbase or Changelly are often used because of their fast service and intuitive interface. Nevertheless, these platforms aren’t as amazing as they might initially seem, they might also kill your startup investment.

To clarify, please consider the situation where you as a new crypto investor want to start trading crypto currencies. You do not have much money and you are not that familiar with the block chain technology, so you decide that you are only willing to invest $100,-. You did little background research and found Changelly to be an easy and quick platform to buy-in. Assume that the (theoretical) price of one Bitcoin is $10,000, -. So in theory you should be able to buy 0.01 Bitcoin (not taking network fees into account). Yet, this is how Changelly makes lots of money.

The platform uses brokers to purchase Bitcoin with your money. Graphically, the process would look like this;

You provide your $100,- to Changelly, the platform passes your money to their brokers and the brokers buy your bitcoin against the $10,000,- rate. The brokers will pass a certain amount of bitcoin back to Changelly and the platform will send the bitcoin to your bitcoin address. Obviously, both the brokers and the platform wants to receive a financial compensation for their efforts and this is where the fees come in; They charge 10%(!) over your initial investment.

To elaborate, you invested $100, - but Changelly claims $10, -. This means that you already lost 10 percent of your initial investment and you haven’t even started trading yet!

How to bypass the fees

No worries Newbie, there are several ways to make sure your initial investment doesn’t get cut-in before you even start to trade. Let’s zoom in on a digital asset exchange powered by Coinbase called; “GDAX”. The main difference between GDAX and Changelly, for example, is the fact that GDAX does not make use of a broker. On GDAX you can directly purchase bitcoin from the general crypto market.

How to get started on GDAX

The first thing you want to do is to make an account on Coinbase. When you finished your registration you can use your credential to login to gdax.com. The website might seem quite complicated to you but don’t let its appearance fool you, it’s not as difficult as it looks.

When you logged in, GDAX will ask you to provide official documents. The reason the website asks you to provide these documents is because of international legislation since GDAX builds upon an official market. Your documents are safe and will not be misused. I suggest you use the Coinbase app to be found in the App- or Play store to take a picture of your document since the webcam verification of GDAX often suffers from malfunction. Coinbase might take some time to verify your document. Please be patient.
When the verification is completed you’ll be able to buy Bitcoin with a fee of only 0.30% if you use a market order and 0.0% if you use a limit order! This how you make the most out of your investment.

Good Luck!