How I Buy Cryptocurrencies

About two months ago I wrote a post highlighting my foray into the cryptocurrency space and since I bought my first digital coins late last summer I can truly say from a first hand experience that this has been the wildest financial ride I have ever been on. Looking back, the only regret I have is not buying more when prices were much lower in the summer. In the end, I feel good about all my purchases for the long term. I truly believe this train will continue to chug along and we’ll be reporting five digit values for Bitcoin and much higher levels for many of the alt coins as well.

 

As I have stated in my original post, I do not intend to trade my coins, rather employ a ‘buy and hold’ strategy for many years down the line. I approach my cryptocurrency buying exactly the same way I have been doing with my long term dividend stock portfolio which is by nibbling into positions and dollar cost averaging up or down almost every day. Specifically, I use my Coinbase account (referral link) but do all my buying on GDAX.com which is fully owned by Coinbase. The reason I buy through GDAX is because I am able to set limit prices and buy the cryptocurrency with zero trading fees and with a spread of close to zero. Buying directly on Coinbase will subject you to a trading fee as well as a much higher ask price for the cryptocurrency. I just want to point out that there’s nothing wrong with using Coinbase. My very first buy was done on the Coinbase platform but I quickly learned that using GDAX was much more flexible and efficient. Here’s how I set up my typical buys:

 

I set up several limit buys each day and simply wait for my price to be reached and trades are executed automatically. For Bitcoin each of my limit buys are set for 0.01 BTC. For Litecoin I typically set up buys for 1.0 LTC and for my Ether my buys are set up for 0.3 ETH at a time. In this way I am able to slowly build up a position every time my buy price is reached and not have to remain glued to my screen and monitor the wild daily price gyrations.

 

The beauty of buying into Bitcoin or any alt cryptocurrency is that it is well within the reach of everyone. Each cryptocurrency is broken down to eight decimal places which means the smallest unit of Bitcoin you can own would be 0.00000001 or 1 Satoshi. Think of whole Bitcoins as dollars and Satoshis as the cents. So there you have it. My general plan for buying digital coins. At the end of each day of successful buying I transfer all my coins to a hardware wallet and cold store them.

 

As all you of already know the cryptocurrency space is full of hardcore proponents and opponents and whether you are one or the other I think everyone should own at least some cryptocurrency on the side. No one says you have to risk thousands of dollars. While there is a risk of owning cryptocurrency, there is also a risk of not owning it either.

 

I truly believe that cryptocurrencies are here to stay and not some Internet fad. Of course, the question of which currency or currencies will reign supreme remains to be determined. Until then, I’m happy to be a part of the movement and go along for the ride.

 

What do you think about cryptocurrencies and their applications? Do you already own or plan to own any digital currencies? Please let me know below.

20 thoughts on “How I Buy Cryptocurrencies

  1. Love reading and following along with everyone’s post about cryptocurrencies. It is fascinating. Wouldn’t mind dabbling in it myself, but free capital is limited even for my normal stock purchases. Guess we will see. Thanks for the update. Very informative. Glad it is going well for you.

    • Hi DD,

      The beauty of buying into the crypto space is that it doesn’t require a heavy cash investment. If you ever want to give it a try, you could buy an amount that’s very small just to get your feet wet and see what happens. I just wanted to be a part of this story and see where it takes me. Believe me, my first commitment is with my dividend portfolio. Time will tell how this “experiment” will end. Thank you for sharing your thoughts.

    • Hi R2R,

      100%, get off Coinbase and start using GDAX. Coinbase also has a huge spread. GDAX has a spread of 0.01 cent. I made my first buy on Coinbase just to see how purchasing a digital currency works and once I learned about GDAX I haven’t looked back. Remember, to buy fee free you must place limit orders on GDAX. This way you are the market maker and not taker. On the GDAX site you see the entire fee schedule. Using GDAX it’s easy to buy in very small increments and DCA into a position. Thank you for stopping by and commenting.

  2. I’m not invested in digital currency in any way. I haven’t had the time yet to learn more about it. At this point I just don’t understand it. If the digital currency is decentralized, somebody has to issue it somehow. If it’s not the government than it has to be somebody else. Time will tell.
    Dividend Income Stocks recently posted…2018 TFSA ContributionsMy Profile

    • Hi DIS,

      Exactly. Time will tell how this technology will evolve or perhaps devolve. There is a lot to learn about the space and I would recommend watching some great Youtube tutorials that explain the basics of the crypto space. As I mentioned in the post, I just wanted to be a part of the movement no matter what happens down the road. It is very interesting to see how value can be transferred peer to peer seemingly instantaneous. As always, I appreciate your comment.

  3. I’ll have to look into using GDAX because I like that no fee commission/fee. The CB fee makes it really hard to justify making small purchases in order to DCA. Do you just go to the GDAX website and use the CB log in? I’m just starting to tip my toes into the crypto space and there’s still plenty for me to learn. Any tips would be much appreciated. All the best Keith.
    JC recently posted…Making Progress | Net Worth Update – October 2017My Profile

    • Hi JC,

      I agree that the CB fees are outrageous not to mention the huge spread. All you need to do is go to the GDAX site. You should automatically be logged in with your CB information. Everyone who has a CB account automatically has a GDAX account as well. For free trades you must place limit orders otherwise market orders have a small commish. As I mentioned in the post I only use limit orders on GDAX and buy in small increments. With zero fees it’s easy to DCA into a position. Also, I don’t recommend you store your coins on the exchange once you buy them. They should be transferred to an offline hardware wallet for safer storage. I use Trezor but Keepkey and Ledger are also very popular. Feel free to comment/email with specific questions.

  4. DivHut, I think your approach and strategy is a sound one. I also respect your long term vision in this area. I’m not invested in this asset class. I just don’t understand it very well and I’m not much of a visionary to project what it could be in the future. I think it’s best for me to stick to my strengths and sit out for now even if I do miss some big upside. Tom
    Tom @ Dividends Diversify recently posted…Where I Went Wrong….with General Electric (GE)My Profile

    • Hi DD,

      Always stick to what you know best and more importantly, what you feel comfortable with as well. I can totally respect that attitude, especially when it comes to cryptocurrencies. My end goal if to own between two and four whole Bitcoins and just let it ride long term. As I mentioned, I don’t plan to trade my coins nor do I plan to get too heavy into the many alt coins that exist. The bulk of my holdings will remain in Bitcoin. Thank you for commenting.

  5. Do some research into NEO. Sometimes referred to as the Chinese version of Ethereum, but the beauty of NEO is that they essentially pay a “dividend” in GAS shares. Gas is the fuel that companies use when setting up ICO’s on the NEO platform. The dividend percentage fluctuates based on the blockchain, but typically is between 7-8% at a time. As a dividend investor myself, I was super excited to discover some crypto’s actually employ a dividend based strategy of throwing off additional income.

    • Hi Andy,

      Thanks for the NEO tip. I have seen it mentioned by others online. I’m still not clear between the NEO and GAS differences but as you pointed out it’s almost like a stock and dividend. Each with its own price. I’ll have to look at other exchanges too as Coinbase just offers three cryptocurrencies. Thank you for stopping by and commenting.

  6. Div Hut, I do almost the exact same thing with my digital currencies. That is, I DCA my way into bitcoin, and the other alt currencies using Coinbase. So, every month, I have my account set up that automatically buys a small amount of digital currencies. The fees are high and absolutely does not make sense for the amount of money I’m investing, but I think the benefits of investing, even with the high fees, is well worth it. I’ll have to consider GDAX, but I don’t know if I’ll be able to automatically have money transferred to my GDAX account to invest the same way I can do so passively with my Coinbase account.
    Dividend Portfolio recently posted…Inspirational Quotes Of The Month – November 2017My Profile

    • Hi DP,

      YES!!! Coinbase = GDAX. If you have a Coinbase account you have a GDAX account. Just go to GDAX.com and you will be automatically logged in (if you are already logged in at Coinbase). Most people don’t know about GDAX but it is the same company as Coinbase without the fees (limit orders only) and almost zero spread. All Coinbase/GDAX transfers are instant and free too. Check it out.

  7. Hi DivHut –

    Thanks for the post – very interesting. I also just read your earlier post for additional context.

    As you and others mentioned above, the fees / spreads – wow. I’m still on the fence (fees / costs aside).

    From the GDAX site:

    “GDAX offers institutions and professionals the ability to trade a variety of digital currencies like Bitcoin, Ethereum, and more on a regulated U.S. based exchange.”

    Regulated by who? I couldn’t find anything in the F.A.Q.

    Thanks again for the post.
    – Mike
    Mike @ Balanced Dividends recently posted…How We Got To Averaging +$1,000 a Month In Passive IncomeMy Profile

    • Hi BD,

      Buying from Coinbase/GDAX probably is the safest way to go when acquiring cryptocurrencies but, of course, it’s not without its share of potential pitfalls. For the foreseeable future I plan to make my buys exclusively on this exchange and not bother with any of the other exchanges based outside the U.S. There’s no doubt that this world represents the wild west with laws and regulations being implemented still far from becoming a reality. In the meantime, it’s HODL (Hold on for dear life) when it comes to BTC and the alt coins.

    • Hi DI,

      Some are surprised that I even jumped aboard the crypto train considering my conservative investing nature but this trend seemed too much for me to ignore and I still think that, while it is hyped up quite a bit, there is a long term future for this value exchange medium and I’ll continue to buy and hold for the long term. Thank you for commenting.

  8. Hey DivHut
    Interesting read. I am particularily fascinated by Blockchain, the technology behind BTC. There will be a huge impact on many industries, countless applications and great benefits. However I took the decision not to trade BTC or other cryptocurrencies. It’s fun to watch price developments on the sideline but I guess I would not feel comfortable to engage in such transactions as I consider it as too speculative for my taste.
    Cheers
    Financial Shaper recently posted…October 2017 Dividend IncomeMy Profile

    • Hi FS,

      I totally agree that blockchain has the potential to change our world in the same way the light bulb, auto, PC, Internet, etc. has in the past. It’s perfectly fine to sit on the sidelines and be a spectator of this new technology. Believe me, I totally understand. I really just wanted to be a part of this new wave, for better or worse, which is why I decided to allocate a portion of my funds to building up a mini portfolio of sorts of cryptocurrencies. Only time will tell how this venture plays out and I’m excited to learn more, follow and be a part of it. Thank you for stopping by and commenting.

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