Burning money is a recurring theme in cryptocurrency (via Pixabay).

Coinbase, Gemini, Bitstamp, and Changelly: Here’s how their fees compare

If you invested $100 in bitcoin 2010, it would be $75 million today. But after fees…

Everybody in crypto swears they were going to buy some bitcoin (BTC) on some exact date they read about and that we could be having this conversation on their yacht. Tai Lopez likes to remind listeners to his Bitcoin Crypto Mastermind podcast,“Remember, if you had invested $100 in bitcoin in 2010, you would have $75 million today.”

But he doesn’t ever really pick a day. Most agree that if you put in $100 on July 28, 2010 you would have $28,341,266 on December 12, 2017. We’ll give Tai the $75 million just for the sake of argument. Some early exchanges such as iGot (now Bitlio) had 0% buying fees on certain dates. But the sticking point is simple: Crypto people are universally jittery about jumping on the right price when they see it. And the exchanges know it and capitalize on it.

One rule of thumb: the easier it is to get on an exchange, the easier it is for their fees to bleed you dry. Verifying new accounts costs the exchanges labor and time. Lots of casual crypto enthusiasts get started on Coinbase—the Bank of America of high-fee easy crypto-banking. It’s not the worst service, but it’s also not the cheapest and it could cost you millions.

Here are the most common fees to onboard $100:

Exchange Fees per $100
Changelly $15.00
Coinbase $2.99
Bitstamp $0.25
Gemini $0.25

When you spend 18 hours looking at price charts and finally decide to buy in the dip you were waiting for, most of us have a tendency to ignore fees. Coinbase is still a lower fee than the sales tax you spend dining out and Gemini and Bitstamp are small, but not insignificant. But in the Tai Lopez example—that dumb one-liner story that got most of your friends into the exchanges in the first place—it is assumed that the person putting in $100 in 2010 would have added the fees on top. For instance,  the Changelly user would add $15 on top of $100 and spend $115. Obviously  you being a thinking person, you’d rather buy 15 percent more in 2010 and thus always have 15 percent more.  

Why would that matter? To put it in terms that Tai Lopez can use, here’s how much you would have today if you spent $100—fees included—to buy BTC in 2010 on these platforms:

Exchange 12/12/17 value on $100 invested in 2010 including fees
Changelly $64,282,500
Coinbase $72,757,500
Bitstamp $74,812,500
Gemini $74,812,500

I wouldn’t complain about having only $64 million. But at this level, your Changelly fee cost you $9 million. That’s nine family members who will never hit you up for money. That’s nine vacation houses.

Think about that for a second. Just by buying from Changelly, you lost 15 percent. You are betting that your currency will rise by 15 percent just to break even. Conversely, if you get one of those $10 affiliate links from your friends for Coinbase or Bitlio you kinda got a 7 percent return on your first purchase. But then you lose 3 percent after that in fees.

Conversely, my Apple stock has only gone down 0.85 percent in the last three months. Using Coinbase is equivalent to paying a $3 ATM fee to take out a hundred bucks.

The idea with crypto is that we’re breaking down the walls between the banked and the unbanked. Soon when I go to the bodega and get a $1 can of beer and want to pay for it electronically the price won’t include the $0.20 transaction fee or the 3.5 percent my credit card company charges me just to use my money.

However the reality of our overheated crypto markets is a little sadder than that. Lots of kids especially are spending their allowances on small coin buys hoping to be the next Erik Finman. They listen to Tai Lopez and they’re buying bitcoin the way kids in my junior high would save up for a Discman by putting away $10 from their allowance at a time.

To buy $10 on Coinbase costs $0.99. Not a huge amount. But for the kid who buys it $10 at a time they would end up with $90.10 after fees for spending $100.

So why doesn’t everybody use the lower fee platforms?

The one thing you need to get into the low-fee exchanges is something in super short supply in the coin community: patience. I gave my details to Gemini on December 30, 2017. I was finally verified on the exchange on February 2, 2018. When I signed in today to get these numbers I got this message:

Given that I may have missed out on 23.522 percent in that time: even Changelly’s 15 percent looks a little more reasonable.

But I like 0.25 percent a lot more.

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Brendan Sullivan is a writer, producer, and author of the memoir Rivington Was Ours: Lady Gaga, the Lower East Side, and the Prime of Our Lives. Disclosure: he owns cryptocurrencies. Follow him on Twitter.