Hi there, Bitcoin hits 56k today and I’m here to introduce a way to buy Bitcoin or other major cryptos with relatively lower fees. I am just a newbie as well, you are welcome to tell me an even better approach to reduce the annoying fees.
I wanna mention that I do not recommend use Robinhood to trade crypto because you won’t even get a wallet for the crypto you own.
Years ago, I used Coinbase to buy Bitcoin, apparently, it’s the most convenient app for most people to buy crypto. But they also charge minimum of 1.49% fees for any buy/sell transactions, if your transaction amount is lower than $200, the expense ratio is even higher.
Easily we can switch to Coinbase Pro which only charge you 0.50% if you are a new user. But 0.50% still sounds high, especially when most brokers charge 0 commission fees nowadays.
Then we found an awesome crypto exchange: Binance.US, they only charge you 0.10% fees for transactions as a new user, and if you buy a little amount of BNB (a crypto that was created by Binance) and pay you fees by BNB, you will get 0.75% discount which leads to equivalent 0.075% fees for transactions.
Let’s do quick math to see how transaction fees can eat your profits: you deposit 10k to buy Bitcoin, and assume you sold it when the price of Bitcoin up 50%! Without any fees, here is how many profits you can keep at different exchange (round to the nearest integer):
| Exchange | Transaction fees | Original Funds | Original value in Bitcoin | Final value in Bitcoin | Final funds | Profits | Percentages |
|---|---|---|---|---|---|---|---|
| Benchmark | 0 | $10,000 | $10,000 | $15,000 | $15,000 | $5,000 | 100% |
| Coinbase | 1.49% | $10,000 | $9,851 | $14,777 | $14,557 | $4,557 | 91% |
| Coinbase Pro | 0.5% | $10,000 | $9,950 | $14,925 | $14,850 | $4,850 | 97% |
| Binance.US | 0.075% | $10,000 | $9,993 | $14,990 | $14,980 | $4,980 | 99.6% |
Lower transaction fees can protect most your profits for even 1 transaction, if you seriously want to invest or trade crypto, I strongly recommend minimizing the transaction fee. But there is a problem about Binance.US: a new user can hardly deposit USD into the account. Here are the steps you can follow to bypass as much fees as possible:
- Create a Coinbase/Coinbase Pro account, link you bank account and deposit USD.
- Buy USDC (USD Coin) with USD with 0 fee, 1 USDC almost always worth 1 USD.
- Create a Binance.US account, go to Wallet -> Deposit, find and copy your USDC wallet address.
- Go back to Coinbase, go to Send/Receive, paste your USDC wallet address from Binance.US and send all your USDC, it will cost you few USDC as network fee, this fee is paid to Ethereum (underlying infrastructure of USDC) and is irrelevant with how much USDC you sent, so you should send all your USDC at once.
- Once you received USDC in your Binance.US account, convert USDC to BUSD (Binance USD) with 0 fee, 1 USDC almost always worth 1 BUSD.
- Buy few BNB with BUSD as your transaction fees.
- Buy crypto you want with BUSD and enjoy the 0.075% transaction fees from now.
So this is the optimal path to reduce the transaction fees I found so far, hope this will help anyone who’s new to investing crypto!