After the dramatic fall of the Bitcoin value last week, I decided to try out buying a crypto currency. I guess I was getting into the FOMO (Fear Of Missing Out) of the explosive rise of Bitcoin prices.
Following all the crypto currency news, a major concern is the rising transaction costs of Bitcoin ($1.96) and the slow speed of transaction processing. If you buy some Bitcoin and want move it to another wallet, maybe a safe paper wallet, it will cost you another few dollars. When you're a enthousiast with small amounts of currency, these costs can add up to a significant percentage of your funds.
I chose Bash as a crypto currency to play around with, because of the low transaction costs ($0.19) and speedy transactions. It also seems that the prices of Dash and a lot of other crypto currencies follow Bitcoin closely.
I bought a 100 Euros worth of Dash, and received 0.42131306 Dash within a few minutes. I used the Bitrush (bitrush.nl) exchange - you can use iDeal (popular way to pay for things online) and quickly get Bitcoin, Ether, Litecoin or Dash pretty quickly.
After buying some Dash, what do I do with it? Most enthousiasts on Youtube talk about crypto trading - just like stocks, you just buy low, sell high. It seems to me that the big decline in Bitcoin price last week was a good time to buy. Even then it was not easy to judge when the market reached the bottom. Now we just wait until prices rise.
Suppose that I want to lock in my profit and sell Dash for Euro, I can go to Bitrush again. Currently, if I sell, I can get 100.50 Euro. That is a bit disappointing, since I thought the the prices have gone up since I bought my Dash. When you sell your currency, you will get less for it than the buying price. It is just like buying and selling ordinary fiat currency. Because of fluctuations in the exchange rate, the exchange uses different prices for selling and buying, the difference is the spread.
If I buy Bitcoin for 100 Euro, I get 0.0294445 Bitcoin. When I directly sell this Bitcoin, I get 80.06 Euro back. The difference is about 20 Euro - just for trading Bitcoin you pay 20% in costs and buy/sell spread. So, if you want to make a profit, the price has to go up at least 20%.
Perhaps Bitrush is a bit expensive, I noticed that the numbers for Anycoin Direct are a bit better, a buy/sell difference of 100/93.49 - only 7.51 Euro difference.
Anycoin Direct
| Bitcoin | Ether | Dash | |
|---|---|---|---|
| Buy | 100.00 | 100.00 | 100.00 |
| Sell | 93.49 | 92.24 | 89.35 |
| Costs | 6.51 | 7.76 | 10.65 |
Bitrush
| Bitcoin | Ether | Dash | |
|---|---|---|---|
| Buy | 100.00 | 100.00 | 100.00 |
| Sell | 79.47 | 91.87 | 92.87 |
| Costs | 20.53 | 8.13 | 7.13 |
I am a bit surprised by the large different spreads - Bitrush has a large Bitcoin spread. Perhaps this is caused by high transaction fees?
To conclude, making a profit with Bitcoin is not as easy as it seems, you need to take all transaction costs into account.
