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3 Questions I Wish I'd Asked Before Buying Bitcoin
By Jared McKinney
Updated October 13, 2017
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October 13, 2017

I remember the first time I tried to buy Bitcoin on an exchange. Signing up for an account was easy enough but then they wanted my address, social security number, and a picture of me holding my driver’s license. I thought for sure my identity would be stolen long before my account was ever “verified.”

It’s no surprise many would-be investors get cold feet long before they ever make their first trade. But who can blame them? You can’t go more than a few days without hearing about a new hack in the world of ICOs and cryptocurrency exchanges.

So in order to help dispel the fear and uncertainty that goes along with investing in digital currency, I started recording my experiences on different exchanges. So before you go and dump all your money into BTC on Coinbase, here are three simple questions you can ask yourself to help you find the perfect exchange:

What currency/coin would you like to purchase?

As of June, 2017 there were more than 900 cryptocurrencies on the market. Of course Bitcoin is the largest, making up 47% of the market, but the top 50 currencies all have a market cap of more $100,000,000 and can easily be found on many different exchanges. I’d recommend you review the most popular currencies on CoinMarketCap and learn what makes them different.

Where is the exchange located relative to you?

Now that you know what coin you’d like to purchase it’s time to pick an exchange. Starting with the coin helps you narrow down your options quite a bit. In my experience, it’s helpful to find an exchange operating in or near the country you call home. Since every country has different laws regarding the buying and selling of digital currencies, it’s important to make sure you aren’t breaking any laws before you get started. If you can’t find an exchange operating in your country, try and find one that works well with your method of deposit.

For example, if you wanted to fund your account with a bank transfer, you want to know what deposit and withdrawal fees are associated with that type of transfer. The last thing you want is to make a killing off of cryptocurrencies and have no way to withdraw your funds without paying a ton in fees.

What is the exchange’s reputation / has it been hacked?

Choosing an exchange is not so much about finding the largest, sleekest, or even the most secure—it’s about finding an exchange that works well for you. I recently got verified on a new exchange only to find out that they stopped accepting U.S deposits. So although the exchange an excellent reputation, advanced trading tools, and margin lending it wasn’t right for me simply because I couldn’t use it. Every exchange is a little different, and just because an exchange is large and looks reputable, it doesn’t mean it’s foolproof.