What does it cost to trade bitcoin? Apart from the price of bitcoin itself, each cryptocurrency exchange adds a fee for trading, when customers purchase and sell coins. These fees include Maker (which add to the order book liquidity through limit orders) and Taker (which subtract liquidity from an order book through market orders) fees. In some cases, cryptocurrency traders can incur maker as well as trader fees, if the limit order is already present in the order book.
Cryptocurrency exchanges mainly calculate fees in two ways: as a flat fee per trade or as a percentage of the 30-day trading volume for an account. In both cases, they’ve adopted a tiered structure that depends on the amount being traded.
- Buying and selling cryptocurrencies has become increasingly popular since bitcoin first debuted back in 2009.
- Dozens of online exchanges now exist to help buy and sell digital currencies as well as to trade cryptocurrencies against one another.
- The typical costs involved include trading commissions paid to exchanges, the width of the bid-ask spread, and a fee to transfer funds to/from your bank account.
Four Things To Consider While Trading On Cryptocurrency Exchanges
There are four important things that traders must consider while purchasing cryptocurrencies.
- First, cryptocurrency exchanges are unregulated in most jurisdictions. Most regulators in countries around the world have taken a hands-off approach to cryptocurrency regulation in some of its biggest trading markets. For example, cryptocurrency exchanges are governed by a patchwork of regulations in the United States—among the largest markets for cryptocurrency trading. Some types of cryptocurrency trading are banned in China, which accounted for as much as 90% of overall trading up until the beginning of 2017. Nonetheless, several prominent Chinese exchanges are still operational and have simply shifted base to Seychelles or Malta since the government crackdown.
- Second, fee schedules at cryptocurrency exchanges are designed to encourage frequent trading in large transaction amounts worth thousands of dollars. Fees often decrease with an increase in amount and frequency of trades. As such, small and infrequent orders are not cost-efficient at cryptocurrency exchanges. For example, some exchanges charge no fee for trades worth $10,000,000 and over.
- Third, exchanges encourage trading with coins. Fiat currencies generally incur deposit and withdrawal fees at exchanges, depending on the payment mode. But purchasing cryptos with other coins, for the most part, is free. In some cases, a small fee may be charged to set up a wallet for the required cryptocurrency.
- Fourth, most well-known cryptocurrency exchanges do not offer access to all coins. But, in many cases, traders can transfer funds from one wallet to another and fund their trading accounts using either fiat currencies or cryptocurrencies. For example, traders wishing to buy Cardano (ADA), a top-15 cryptocurrency by market cap, are not currently able to do so directly on the popular Coinbase exchange. However, traders can use fiat currency to purchase bitcoin at Coinbase. Binance, another exchange, already offers users the facility to import coins from other wallets. Once they have bitcoin in their Binance account, they can use it to buy ADA listed on the exchange. The transfer between multiple wallets at different exchanges incurs small charges at each end.
Here is a brief comparison of trading fees for bitcoin at the current list of most popular exchanges by trade volume. This comparison does not take into account margin and leverage fees.
Seychelles-based HCoin is one of the newest entrants into the cryptocurrency exchange field as of January 2020. Launched in August 2018, HCoin offers customers the opportunity to trade in a list of cryptocurrencies and fiat currencies including bitcoin, ether, XRP, litecoin, bitcoin cash, EOS, USDT, and HKDT, among many others.
HCoin's fees are dependent on the base currency and volume and are listed in a chart on the exchange's website. The company does not appear to list any fees for funding an account through transfer of digital assets from another wallet, nor is it clear whether the transaction fees change depending upon the size of each trade.
Estonian platform Coinsbit has a focus on security and on innovative offerings such as InvestBox, a low-cost, low-risk way for investors to make exploratory transactions involving new altcoins. When it comes to fees, Coinsbit charges a flat 0.2% fee for trading. The exchange also has variable fees for deposit and withdrawal, depending upon the cryptocurrency, and with different minimums for each token as well. As of January 11, 2020, the fee to deposit USD was 0.8% and the fee to withdraw USD was 0.4%. Some of the cryptocurrencies are free to deposit (i.e. ETH, ARK, ATB, and others), and others are free to withdraw.
Additionally, new accounts are initially prohibited from making withdrawals. Later, basic accounts have a withdrawal limit of USD$500 or equivalent per 24-hour period, while enhanced accounts can withdraw up to USD$100,000 or equivalent in a 24-hour span.
The third most popular cryptocurrency exchange by trade volume is BitForex, an exchange headquartered in Singapore and registered in Seychelles. BitForex offers a host of trading options, including margin trading, derivatives, and more. As such, this exchange has a more complex fee schedule than some of its peers on this list.
For spot trades, BitForex charges 0.1% for both maker and taker feeds. For perpetual trades, there is a maker fee of 0.04% and a taker fee of 0.06%. Discounted rates are available for specialized market maker accounts on the platform. Deposits to BitForex are free, while withdrawals vary depending upon the currency involved. There are also minimum and 24-hour maximum withdrawal levels associated with each cryptocurrency.
Besides being a popular cryptocurrency exchange, LBank also supports innovation in the altcoin space through its "LBK Voting Listing" event, which pits 8 new cryptocurrency projects against one another for a chance to be listed on LBank for free.
LBank charges a taker fee of 0.2% and a maker fee of -0.05%, meaning that makers earn a portion of the generated trade fee on the transaction. Different cryptocurrencies are associated with various withdrawal rates set at fixed quantities of those cryptocurrencies themselves. For instance, a user withdrawing bitcoin from LBank will be charged a flat fee of 0.0005 BTC. There are also withdrawal minimums for each cryptocurrency that are also set as fixed quantities of the token in question. Interestingly, LBank does not indicate a maximum withdrawal over a 24-hour period.
Including one of the most extensive lists of trading pairs, with more than 700 possible combinations P2PB2B regularly sees daily trade volumes close to $1 billion. Like Coinsbit, P2PB2B charges a flat 0.2% fee for trades. Users can deposit most cryptocurrencies, including BTC and ETH, for free. However, there is a charge of either 4% or 5% (with a minimum of either USD$5 or USD$10) to deposit USD into an account, depending upon the method of deposit. P2PB2B also sets minimum deposits and withdrawals in most cases and charges a variable withdrawal fee depending upon the cryptocurrency. Like LBank, withdrawal fees vary from token to token but are assessed as fixed quantities of tokens.