Hello and welcome. Here is the fifth episode of the miniseries called Alt coins on the Internet. This series is mainly for beginners, who would like to give a chance to the crazy world of cryptocurrencies. Today I would like to talk about exchanges and other services how to buy some coins.
In previous parts I described how to get some Bitcoins (but it might be even other altcoins), if you would not like to give your money into that. Honestly, I do not consider previous ways as good way how to start with altcoins, it is just the way if you want to have a fun and have crazy dreams (like I had) that you will become a millionaire by viewing ads or filling captchas. If you would like to be more serious with altcoins, the best way how to get some is buy them. But where? I guess there are three options, you will go to the exchange, let some service to buy it for you or you can buy it directly from people.
People-to-people
Wait, what, buy them from people? How? Well, it might sound crazy, but you can try some forums, chats... no, I would not recommend that, or you might try some "services" which can somehow guarantee you will get what you wanted, but still, it will be exchange between people without third party. One and I guess the best option is Local Bitcoins. Local Bitcoins is a good way how to buy or sell Bitcoins in local currency. It is like a marketplace where people making offers and another people, if they like the offer, can buy or sell their Bitcoins.
What is important here is that there is also reputation system showing people who are trustful and finished orders as they should. I did not tried that personally, but what I read about that, there is no KYC (know your customer, which usually means uploading your ID, bank account statement etc.) restrictions, so only your e-mail should be enough to start there. Of course there are different types of payment for Bitcoins, but it depends on the person who offers Bitcoins, as you can see on the picture.
Exchanges
Exchanges. What to say more :) Place which is crazy and probably used mostly by well developed exchange bots making most exchanges. But I think it is the best place, at least if you are trying to get less known coin. But it is good for exchanging Bitcoins, too.
One of my best friend, we know each other since high-school, decided to try it with altcoins (I guess after my stories) and what surprised me, he was a little confused, when he got on the exchange (it was Bittrex) and got lost.
So, I will try to describe it very simply. Exchanges may have more markets, it means you can buy altcoins for different currency, for example you will be able to buy them for USD or CNY or JPY or EUR etc. But there might be exchanges focused only to Altcoin-Altcoin exchange without option to buy for regular (fiat) currency (USD,EUR,..), like Poloniex or Bittrex. I will explain that later. You can see overview of markets on Bittrex exchange on the picture here:
I added there labels to make it more readable, most interesting is the blue box, if you want to find the coin you are interested in, just fill the name there.
Once you will choose the market, next thing you will have to deal with is an order book. Order book is nothing more than a list of current offers on the market. This list is already ordered from the best price to the worst, so, do not be scared, you would not see best offers. The order book has two parts, one shows you orders, where you can claim to buy coins (somewhere called asks, which are offers which want to sell) and the second shows you where you can sell coins (somewhere called bids, which are offers which want to buy). Image with labels is here:
When you will decide to buy/sell Bitcoin usually you can just click on the offer, which fill the form for your order. Then you can edit the amount you want to have and submit that. If your offer was successfully filled, than congrats, you have your coins in the wallet on the exchange. If not, you will find your order in "open orders", which means your order was ordered into order book and waits for someone to take it. It may happen, if someone is faster and take the whole offer earlier than you or if the rate (price per unit) will change and the rate of your offer will be worse than best in the order book. You can wait or just cancel the open order.
And that's it. I mentioned that there might be exchanges with pair only altcoin-altcoin. Why is that? That is simple. If you want to make exchanges with fiat currency as USD, there are restrictions given by AML/KYC (anti-money laundering/know your customer) rules, and most services connected with fiat currencies have to deal with that. Every person needs to provide personal information, documents to prove that he or she is not criminal or terrorist. But if you want to exchange altcoin-altcoin, there is no so strict restriction. Why? Altcoins are not still taken as currency and law is still not prepared for that. It might change in the future, but now it is not. Of course there are some restrictions, but not as strict as with fiat currencies.
I can make another post with list of exchanges and their supported currency as I know, at least for Bitcoins, so, if you would like to see simple overview, just let me know in comments ;)
Bitcoin services
I had a problem to find the name for that, but try to imagine as service which will visit exchange with the best price (in better case) or will find another way, like Bitcoin Locals to get coins for you or to sell them. Of course, this is service, so, you should not expect it will be for free. It might be comfortable for someone to not be registered on more exchanges and use just one service, but be prepared for the same restrictions as exchanges have.
I think that good example is Litebit.eu. I tried this service 2 years ago, it works well, but you have to expect that you will pay more (most of the time) than if you would buy/sell on the exchange. Usually it works in the way that you need to send them your money, and than, when they will get them, they will buy coins for you with some additional fees for their work. Very often the rate is not strict, and they will send you amount which is connected with current rate, so if you asked for buy two day ago, but the bank transfer is finished today, you should expect you will not get the amount with the rate when you made the order. In this point of view it was not comfortable for me, but people still use that and are OK with that.
Well, I guess I described most common ways how to buy some coins. It is just a brief introduction, if you would be interested more in exchanges, let me know and I will try to make post with more details. I hope this post will help you to get better overview and did not make you confused. I am looking forward to your comments and see you in next post. Thanks for reading.