Problems you will have buying Crypto Currencies

Problems buying crypto currencies

Before we jump in and do this - we want to warn / prepare you some more.

There is a reason most people cannot buy crypto currencies. It's not straight forward and simple. Hopefully if we prepare and warn you - you'll be able to sail right through the process, recognizing the hazards we identified before you started.

A lot of these problems / limitations / realities are related to security and throwing up road blocks against hackers and thieves that want to steal your fiat and crypto currency.

Here are some of the problems / realities we typically see.

Security is a major pain

All the security is a major pain - but it's there to protect your fiat and crypto currency

Most exchanges require two factor authentication.  Two factor authentication requires you to login using two different methods. Entering a username and password is only one method for identifying yourself.  A website sending you an email and you click on a link in the email or copy a code in the email to the website is a second authentication method.  Sending you a text (SMS) message and you enter the texted code into the website is a third way to identify yourself.  Using Google Authenticator is a fourth way to identify yourself.  Making small authorizations in your bank account is a fifth way websites can verify your identity.

Two factor authentication usually requires you to enter a username and password and then they send you an email or text message or use Google Authenticator app to identify yourself a second, different way. Sometimes they use three factor authentication, especially if you are logging in from a different computer or location.  Like username, password, send you an email that you click on, and send you a text message where you enter the code they texted to you - on the website you are logging into.

This is a major pain but you should sleep better at night knowing that it is unlikely for criminals to login into your accounts and be able to steal your fiat and crypto currencies.

Small limits

Problems buying cryptocurrencies

Exchanges prefer to limit you to smaller transactions. For example, instead of buying $1,000 right now - many exchanges would prefer you buy $250 each week for four weeks.  The limits can change but I think you can only buy about $250 per week using a credit or debit card. This is called dollar cost averaging.

Don't worry.  You will not miss the opportunity of a lifetime by not throwing all your money into crypto currencies immediately and waiting another week.

You can transfer more money using bank transfer - where you give your bank account routing number and account number. This is like writing a check.  But this takes about 5 business days to settle.

You can wire transfer from your bank to Coinbase. This the method most high dollar investors use to both send and receive money to crypto exchanges.

Your bank will freak out

Your bank may start flashing warning signs. Many exchanges are physically located outside the United States. When they charge your credit/debit card - it is an international transaction. If you have a good bank - your bank will get concerned you are making international transactions. So expect a few calls with the bank to reassure them everything is okay.

Again - better that people are over cautious about your fiat and crypto currencies than to allow people to easily steal them.

Does all this guarantee your money?

No. One important note. If you have your fiat currency in a regular bank and that bank is robbed of all their money (not likely - but let's assume) - the US government guarantees your money in the bank up to (we think) $250,000.

US banks also have guarantees against theft on credit cards - not sure about debit cards.

Your money is pretty safe sitting in a US bank. Somewhat safe using a credit card. Less safe using a debit card.

Once you buy crypto currencies you are not guaranteed anything. You are counting on your crypto wallet to hold your crypto currency. Think about it like - you take all your money - get your money in paper cash - put it in your regular (fiat) wallet and walk around town with it.

If someone picks your pocket, or mugs you, or holds you up - your money is gone. No one will replace your money.

Crypto currencies are similar. Once you buy crypto currency - you put it in your crypto wallet. If you lose that crypto wallet - in most cases - your money is lost and no one will replace your money.

Storing your money online in an exchange is not like storing your money in a bank. A bank guarantees your deposits up to $250,000. We do not know of any crypto exchanges or crypto wallets that guarantee your money will not be stolen.

All that said - online exchanges and wallets are are going to extreme measures to make sure no one steals your cryptocurrency.  If an exchange or wallet is stolen - the exchange / wallet and the business owners lose everything.  So the crypto businesses have just as much at stake as the investors do.

Ready for the next lesson?

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Multi-factor authentication