I've just spent a good couple of weeks trying to open a cryptocurrency account to start trading. I've been mining and using faucets until now. That is as long as they were still profitable. But as much as I am careful when it comes to finances, I do enjoy a bit of speculative fun. Thus, I decided to open an account with a couple of exchanges. Initially I only wanted to register with one exchange and take it from there. Unfortunately this attempt failed rather badly. Whatever site I went to to register an account, the same story: too many people were trying to do the same completely overloading all systems.
In case you haven't tried yet, opening a cryptocurrency trading account is more difficult and time consuming than opening a bank account. You need to get verified, frequently multiple times with multiple documents. I had to share my identity card and drivers license with two exchange provides only to be informed after a week or more that the quality of the image was not sufficient enough. I used their own applications to take and upload the document images. When they asked for my passport details on top of everything I turned to another provider. Not enough that you have to share that much personal information with one single exchange, you simply know relatively little about who you are sending these details to. It's crazy what the Wild West of cryptocurrency has done to previously cautious individuals. Of course there are some of the bigger exchanges that have built a reputation, but with little to no regulation can you be certain that the person on the other end will treat your information confidentially?
After refusing to send yet another document I opted for an alternative way to trade bitcoin and co. I went with one big exchange to trade Euros for bitcoins and a smaller one to trade bitcoins for litecoin and dogecoin.
Delay when opening a coinbase.com account
The process to open my account with coinbase (insert referral link here) took about one week. I had to upload my ID and then take a photo of a real live image of my face. I expected to take it no longer than a few minutes, however it took about eight tries before it worked. Apparently they were overwhelmed with applications around the Christmas period. I guess people had more time and the mainstream media really jumped on board the bitcoin craze reportedly daily on the price and on what it is (or at least what some commentators thought it was and all the potential dangers and opportunities).
Is Coinbase.com good for buying bitcoin?
Coinbase, however, only allows you to trade US Dollar and Euros for bitcoin, litecoin, ethereum, and bitcoin cash. It won't let you buy any other currencies. To be honest, given that they had the fastest verification times and were the most responsive, they currently are probably one of the best platforms to get into cryptocurrencies, particularly bitcoins, litecoin, ethereum, and bitcoin cash. There is one big drawback hindering coinbase.com to be the top dog: their fee structure. Their fees are too high. To make them a feasible option for trading cryptocurrencies they would need to decrease their fees. One euro for a small trade of slightly more than 100 Euros make them simply to expensive to be a contender for the top spot.
So what are alternative cryptocurrency exchanges?
The others I tried were Bitpanda and Kraken. Amongst the ten or so that's attempted to open an account with only kraken managed to verify enough tiers to enable trading. Tiers are the different levels called deterring what volume (the amount) you are allowed to buy and sell in a day, week, or year.
To be frank, given the idea behind cryptocurrencies, the notion of trading limits and verification are per se rather ironic. Cryptocurrencies were thought to be capable of speeding up financial transactions and allow each and every one independent of a central body to control and overview their finances. However with the limitations and complicated verification processes many cryptocurrency exchanges have implemented, trading cryptocurrencies or even opening a cryptocurrency trading account falls way short of the ideology of why satoshi ... wrote his article about a decentralized financial system and thus bitcoin. Cryptocurrencies at their core are designed (unless they are some fraudulent or joke instrument created by someone) to speed up and ease financial transactions. Thus, what are some feasible cryptocurrency exchanges?
To begin, most exchanges and cryptocurrency trading platforms don't offer trading too many cryptocurrencies or allow to only trade a particular cryptocurrency against another. Many cryptocurrency trading platforms don't give you the option to trade dogecoin or similar for a fiat currency such as dollar, euro, or pound.
Are the exchange fees justified?
To be frank: no. The entire idea behind cryptocurrencies was to have a novel system cheaper and faster than current banking and payment systems. Satoshi Nakomoto's idea was also to create a system independent of a central institution. With the exchanges all of this appears erased. If you are charging fees as high as some exchanges do than it should also be significantly easier to open an account. And it should be easy and fast and not take weeks. It also needs to be stable.
For cryptocurrencies to survive and become a genuine contender to dollar, euro, yen, and other currencies, usage needs to become much easier and easier to setup.
What shall I look for in exchange?
For starters the fees. Particularly if you want to trade bitcoin, litecoin and co it'll be essential that the fees don't eat into your profits.
Secondly the time it takes to open an account. If you are like me and aren't keen on waiting weeks before in fact becoming active than the delay between clicking that 'open account' button and actually being able to use it shouldn't be too long. Ideally only a few hours, certainly not weeks.
Thirdly the accessibility and uptime of the site itself. A site that struggles from a technological perspective is useless for anyone who wants to actively trade cryptocurrencies or even for those who just want to test the waters.
Fourthly, and most importantly, make sure that the owner of the exchange is trustworthy and won't disappear with your money.
All in all, there's still some way to go. But for those keen on trying out the cryptocurrency market, good luck opening an account and playing the field.