A few days ago, I decided to purchase some cryptocurrency. Before you tell me that I was too late to ride on the Bitcoin wave, I want to emphasize the fact that I was more interested in the functional aspects of cryptocurrency and how one should go about transacting.
Learning a bit here and there, I was able to own cryptocurrency but it came with a cost. There are a few tweaks that one need to keep in mind before diving in headfirst. Here I will show how I bought cryptocurrency and where should you pay attention to while doing this.
I chose Binance since it is widely used and supports many cryptocurrencies. To open an account on Binance, you need to simply create an account and verify it with PAN and Driving License. There are two option to buy cryptocurrency. One is through P2P trading and another is Third-party payment.
I chose the option of P2P trading since it was convenient and I didn’t have any third-party payment account like Wazirx neither I wanted to create one. I wanted to buy with UPI so I proceeded with that option.
Here one thing to note that with fiat INR, you can only buy Bitcoin on Binance. Other cryptocurrencies require more sophisticated fiats like USD, EUR. But it is possible to buy Bitcoin and convert it to other cryptocurrencies. More on that later.
Here, a point to note is that when buying with IMPS or UPI, the Bitcoin was valued higher than the market price. This was the case with other cryptocurrencies as well. It is actually necessary to facilitate trading. Depositing fiat INR was not an option since I didn’t want to disclose my banking details so I chose the UPI option.
I bought 0.00022824 Bitcoins for ₹1000. The value of those cryptocurrencies was ~₹850 since I bought them for a premium. Binance charges 0.75% fees on each transaction but there are transactions of 0 fees for small volumes.
First, I had to put buy order on the exchange and it matched me with a seller who wanted to sell some bitcoins. Confirmation of selling is to be done in under 60 seconds. After that, the transaction is to be done in the next 15 minutes. The seller declares its respective cryptocurrency holding beforehand and Binance locks the amount of cryptocurrency from the seller’s account which is to be traded. The payment is to be done externally via UPI apps. I paid with Google Pay and sent the receipt to the seller in the app. After that, there was an appeal button on the interface and by clicking on it, Binance released the Bitcoin to my wallet. Here I couldn’t share the screenshots since the information is confidential but the process is straightforward.
You can choose from which seller you would buy cryptocurrency from. Every seller has a profile like this. The factors on the profile can be used to assess the reliability of the seller.
Here the main thing begins. Now I had ~0.0002 Bitcoins in my Binance Wallet. But if I had to trade, the minimum amount of Bitcoin to be traded should be above 0.002. Also if I had to withdraw to an external wallet, I needed to pay transaction fees larger than the volume of the Bitcoin essentially receiving 0 Bitcoins.
I didn’t want to keep my Bitcoins on my Binance account. So I researched a bit and found an idea. First I converted my 0.00022824 Bitcoins to Ethereum. But the withdrawing case was similar to that of Bitcoin; higher fees than volume. Nevertheless, I converted my Bitcoins to Ethereum just to experiment. Frankly, to say, this was an unnecessary move. After that, I converted my Bitcoin into XLM Stellar Lumens. XLM is convenient in terms of fees.
Another point here to note is in the case of Ethereum, three types of network (BEP2, BEP20 (BSC), ERC20) on which withdrawal is possible. In the case of Bitcoin, four types (BEP2, BEP20 (BSC), BTC, ERC20). BEP2 and BEP20 are for Binance Smart Chain Wallets. When withdrawing to any wallet, make sure if that wallet supports the network type on which you are withdrawing.
For simplification, choose BTC when withdrawing Bitcoin and ERC20 when withdrawing Ethereum. Most other cryptocurrencies have a dedicated unique network.
After this, the process was quite simple. My preferred cryptocurrency hot storage wallet is Coinbase. Purchasing cryptocurrency in India with Coinbase is not yet possible but trading is. Its interface and UX is what I like the most. So anyway, I had my account created on Coinbase. I clicked on the withdrawal button in the Binance app and added my Coinbase wallet address for Stellar Lumens and XLM memo.
XLM transaction requires wallet address and transaction memo. Make sure you correctly add those otherwise transaction may drift into oblivion. I essentially converted 0.00022824 BTC to 0.00737207 ETH to 31.90957884 XLM.
A Few minutes later, Stellar Lumens was in my account successfully. If I want to, I can convert XLM to BTC anytime for 0.50% fees. In the process, I lost few ₹s but that made me realize how much due diligence is essential before experimenting with capital. I would add my cryptocurrency in cold storage soon but as of now, I happy that I got to learn how one should go about operating cryptocurrency.
If you have any questions and if you want me to explain any step in the process, feel free to comment or you can contact me on my Twitter. I would appreciate your feedback. Have a great time!
All investment strategies and investments involve the risk of loss. Nothing contained in this article should be construed as investment advice. This article is written for the sole purpose of education. Any reference to an investment’s past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit.
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