The cost of buying and selling bitcoins
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If you are looking to buy and sell bitcoins, there are multiple cryptocurrency platforms in India to do it from. However, every such exchange or company has a different fee and pricing structure.
What is on offer
Last week, Coinome, a BillDesk-backed cryptocurrency exchange, was launched and it currently offers three cryptocurrencies: bitcoin, bitcoin cash and litecoin. “We plan to include the top 20 cryptocurrencies listed on Coinmarketcap.com,” said Karthik Subramanian, vice-president, sales and marketing, Coinome. Coinome said that it is different from other such companies operating in India. “Companies such as Zebpay and Unocoin are not real exchanges. They are brokers. When a customer wants to buy cryptocurrency from Zebpay, the company sells the cryptocurrencies to the customers which it has bought and held. Ours is a real-time exchange, like a stock market, where customers are buying and selling from each other and to each other. We don’t get involved with the cryptocurrency at all. We are just a platform,” said Subramanian. Coinsecure is also a real-time exchange. “We are launching the open order book feature within 2 weeks,” said Sandeep Goenka, co-founder, Zebpay.
To buy cryptocurrencies, you need to comply with the Know Your Customer (KYC) norms. For this, you have to give details of your PAN, bank account, a photo and a cancelled cheque leaf. Some companies do eKYC, which can be done using Aadhaar and OTP.
Bitcoin prices differ on each platform. The open exchange orderbook model tends to quote lower rates. For instance, as of 4pm on 6 December, the bitcoin buy price on Coinsecure was Rs9 lakh while on Zebpay it was Rs 9.18 lakh. All these companies have different cost structures too. “Right now we accept RTGS, NEFT and IMPS. We are in the process of getting a payment gateway. We don’t charge a fee on this platform,” said Mohit Kalra, chief executive officer and co-founder, Coinsecure. How do they earn revenue? “When users trade on our platform, we charge 0.4% as fee,” said Kalra. Coinome also follows a similar model. “When a customer buys and sells, a percentage is charged as trading fee, which is based on maker-taker model and it ranges from 0.1% to 0.3% of the transaction amount. 'Maker' is the one who sets the price and 'taker' is the one who matches the price,” said Subramanian.
Here is how it works: say, the buyer is at Rs100 and seller is at Rs101. Now if the buyer increases the bid to Rs100.50 and the seller says she will match the price, then the buyer becomes the maker. And the seller matches the price so she becomes the taker. The fee is charged accordingly. In case of Zebpay, if you use the payment gateway, the handling charge is close to 2% of the transaction amount. The cost of these transactions can add a substantial cost to your returns, so be sure to analyse it carefully before finalising any buy or sell decision. For example: for a Rs4,000 bitcoin in 2016, the author had paid a total transaction cost of Rs8.31. But to withdraw Rs1,000 from it now, the cost would be about Rs10 per Rs1,000.
What you should know
Besides the charges, you should also check up to what decimal can you trade. “Cryptocurrency is created till the 8th decimal point. Most companies allow trading till only the 4th decimal. So when you withdraw, you can only do it till the 4th decimal. We allow it till the 8th decimal,” said Subrimanian. In case of Coinsecure, it is till the third decimal. This indicates up to what fraction you can sell your cryptocurrency.