Crypto is here to stay - Exchanges

September 01, 2020 • 6 min read

There’s a lot I want to say about Crypto which I’ll write about in future articles. For now, I’ll make this post short and sweet and explain how to get started

Exchange

There are a ton of exchanges that exist today that allow you to convert your dollars to crypto think of how E*Trade, Robinhood, TD, etc. are all entry points into the stock market

It’s the same idea for crypto and they’re called exchanges

Listen below are the few that I use

Gemini

Gemini was started in 2014 by the Winklevoss twins. Yeah, the guys who “started” Facebook, besides that they’ve also gone on to invest in a ton of successful startups giving them more credibility

You can sign up here. Full disclosure, this is my referral code and I get $10 of BTC if you trade $100

This has been my go-to exchange for a few reasons:

Deposit Limits

If you get verified with your address, ID, etc. you can get the daily ACH limit up to $15,000, but it starts at $500, and you can start trading immediately

There’s no limit for wire transfers but they take 3-5 days to process, banks… am I right

Withdraw Limits

If you need to withdraw your crypto to your wallet there is a $10,000 daily withdraw limit and $100,000 monthly limit

If you’re hitting those limits well then clearly you’re doing something right :)

Ideally you’ve taken your assets off of there before it’s a problem

Fees

Just like in life, there are no free lunches

Every trade and transfer you make costs something

It should, someone is doing work to help you and you should repay that

The base fee is 0.25% for any trade e.g. $1000 trade will cost you $1002.50, which is half as much compared to 0.50% on Coinbase

The fee itself goes down as you trade more to incentivize you to be more active on the app

You can get in to the specifics here although, as a beginner, most of this won’t apply to you

Safety and Insurance

FDIC Insurance

All of the USD you have on Gemini is FDIC insured up to \$250k like any other account you likely have

The crypto you have (i.e. BTC and ETH) is not insured by FDIC because the government doesn’t insure any digital assets. No exchange will be able to offer you insurance on your crypto

2 Factor Autentication

There’s mandatory 2FA, I recommend using Authy on your phone to keep track of your 2FA in a single place. It’s got a nice UI and plays really well with Gemini

Even if it wasn’t mandatory I highly recommend keeping your financial life as secure as possible with 2FA

Hacks

So far there haven’t been any large-scale hacks of Gemini which is promising, but I repeat do not keep your assets on an exchange. When it’s secured by your private key that’s when you control your own destiny

Leaving crypto on a centralized exchange makes for an easy point of attack for hackers and a very lucrative one given all of the money that’s been funneling in to crypto

Some famous examples are Mt Gox back in 2014 which was handling 70% of all BTC in January and by February the exchange had gone bankrupt

A quick timeline goes as follows

• Launched in 2010 by Jed McCaleb, future founder of Ripple
• Quickly becomes the most popular BTC exchange
• June 2011 it’s hacked and 2000 BTC were stolen from customers and sold
• 2013 Mt. Gox re-establishes itself as the largest BTC exchange while the price of BTC reaches it’s first peak of $1200 up from $13
• As it turns out Mt. Gox was never licensed in the US and therefore was operating illegally and the US seizes \$5 million
• Feb 7, 2014 Mt. Gox stops all withdrawls claiming “to obtain a clear technical view of the currency process”
• Feb 24, 2014 all trading suspended and the website went offline
• Within that week a leaked internal document stated that they had been hacked and 744,408 BTC had been stolen
• Feb 28, 2014 they declare bankruptcy

It’s simply not risking leaving your assets on an exchange unnecessarily

If you’re wondering where to move your digital assets to I talk about storage [here]](/blog/crypto_here_to_stay_storage)

Cold Storage

They offer cold storage which is basically moving your crypto to a “safe” that has up to \$200 in insurance and 24/7 customer support

It offers you instant withdraws to the Gemini exchange, but you lose external liquidity and it’s meant mostly for institutional investors so I don’t use it, but if you’re interested you can read more here

Coinbase

I also have a Coinbase account

It’s another exchange, that serves a similar purpose except it acts more as a “crypto retail store” with set prices as opposed to Gemini that operates as a true market

I rarely use Coinbase as the fees are higher than Gemini, 0.5% vs 0.25%

I will say that, when starting off, the deposit limits on either website are prohibitively low and getting your account verified takes a few days

I’d recommend setting up both accounts at the same time to have access to both if you ever need

You can sign up here, we each get $10 worth of BTC if you trade $100 of crypto

There are pros and cons to both websites which you can read about in more detail here

The main difference to me is that Coinbase has a much simpler UI which is meant for beginners as a great place to start

As you start to understand how the crypto world and trading works you can move towards Gemini

Conclusion

There are many ways to enter the market, each with their own pros and cons

Gemini, my preferred, is cheaper with a higher learning curve

Coinbase, favorite for the masses, is more expensive but way easier to get started and use

Both work great and I’d sign up for both accounts today and see what works best for you and your existing crypto/trading knowledge

Next we’ll talk about how to store your digital assets

Whatever you do, don’t keep them on an exchange

This is your money and not a joke

Seriously, just don’t or imma be pissed

Once you’ve finished setting up your accounts you’ll next want to learn about storage

Written by

Fran

Knowledge makes the world go round, share yours