How to Buy a House with Bitcoin and Other Cryptocurrency

Cryptocurrencies have gained significant media attention and popularity in the last decade. Bitcoin is a type of cryptocurrency, specifically the most popular and well-known of all the digital currencies. Like any other form of currency, blockchain currencies can be used to make and complete purchases and transactions. These forms of payment became popular due to their increased security and because they operate on a decentralized banking system.

Can you buy real estate like this with Bitcoin?

Bitcoin and Ethereum are currently the best digital currencies available on the market. Bitcoin became the most popular and well-known crypto for a few reasons. The first reason is that bitcoin has a much larger volume of digital coin than any other digital currencies. It has more developers and software than altcoins. Altcoins is a term that is used to refer to all other cryptos besides bitcoin. Because of bitcoins expanded network, it has made it a more secure investment than other digital coins. One reason that digital coins became so popular is because they have the potential to reduce overhead banking costs and streamline financial processes to be more efficient. These currencies fluctuate in value based on the market. Like stocks, the amount they can be bought and sold for varies each day. Cryptocurrencies are a relatively new form of currency, which means they aren’t widely used and accepted by most sellers. Despite this, there are still many sellers who accept digital currency as a form of payment. Bitcoin is well-known known for its volatile nature. This is another reason it is not as widely accepted as a form of payment yet, especially regarding larger purchases. Although cryptos can be complicated and nuanced forms of payment, real estate transactions can still be completed with this form of payment.

How to Buy a Home with Bitcoin

The first condition that needs to be met for a real estate sale to be completed with cryptocurrency is for both parties to agree on the accepted form of payment. Additionally, the title insurance and escrow company must also be willing to complete the transaction with bitcoin. Without all parties in agreement, no transaction can take place. One benefit of buying a home with digital currencies is that the transaction can be completed in around ten minutes or less. The second noteworthy benefit of buying a home with bitcoin is decreased fees for both the seller and buyer.

Aside from the benefits of decreased fees and a swift transaction, there are a few things to be aware of when buying or selling a home via bitcoin. Matt Edstrom of GoodLife Home Loans says, “the riskiest part of buying a home with bitcoin is the volatility of cryptocurrency.” The market value of bitcoin and other digital currencies can change from day-to-day. This means if a seller accepts bitcoin as a form of payment and the value of the coin drops by 25% the following day and they haven’t cashed out their coins yet, they could lose 25% of the sale on their home.  On the flipside, it could lead to an increase in income generated on the sale. In one specific case, the seller profited $1.3 million from a real estate transaction completed with crypto. In the same regard, if a buyer completes a transaction with cryptocurrency and the value of their coin increases significantly after the purchase, they miss out on potential earnings.

Permanence is another potential issue that could arise when making purchases with bitcoin. Once a digital currency is sent to another user there is no safety net to get your funds back if they were sent incorrectly or to the wrong person. Even the creator of bitcoin can’t get your money back to you once it’s been sent so be aware of this before you send anyone your bitcoins.

Buyers should also check the legislation regarding bitcoin purchases for the state you are looking to buy a home in. For example, New York requires a BitLicense to make purchases with bitcoin. This license gives you a score to determine how reliable your purchases are. If you’re buying a home in New York you’ll likely need a BitLicense score of 6 to complete your purchase.

It is also important to address the subject of paying taxes on bitcoins. The IRS does not view bitcoins as physical cash, like the money in your wallet. Instead, the IRS considers digital coins as a form of property meaning that your coins are subject to capital gains taxes. Make sure that you are prepared to pay your capital gains taxes on your home purchase so as not to be penalized by the IRS.

Securing a Mortgage with Cryptocurrency

Another element to consider if you’re looking to purchase a home with a cryptocurrency is securing a mortgage. So far, all of the real estate transactions that have been completed with bitcoin have been paid in full, meaning that no mortgage was required. If you want to purchase a home with digital currency but need to secure a mortgage, it can complicate the process.

Most mortgage lenders don’t accept bitcoin or other cryptos as a form of payment, which means you may be able to purchase a home in full with cryptocurrency but won’t be able to secure a mortgage. This could change in the future, but for now, nearly all U.S. mortgage lenders only accept U.S. dollars as a form of payment.

*Digital currencies can always be cashed out for their current USD market value. This allows the person in possession of cryptocurrency assets the option to make purchases with vendors who don’t accept digital coins as a form of payment.

The Steps

Step 1: Determine your budget and decide what kind of home you want to purchase

Step 1: Find a seller who is willing to accept bitcoin as a form of payment

Step 2: Secure an escrow company and title insurance willing to accept bitcoin

Step 3: Have the home inspected

Step 4: Get an appraisal on your potential home

Step 5: Complete all of the necessary paperwork to finalize the sale

Step 6: Set up your bitcoin wallet

Step 7: Send the funds from your bitcoin wallet to the seller’s bitcoin wallet

Step 8: Close the sale

Closing On Real Estate Purchases with Bitcoin

Although it is possible to buy a home with digital coins, it’s not the most readily available option on the market. The selection of homes available for purchase with bitcoin is limited. This means the market for the buyer will be limited. If you’re hoping to find properties that accept cryptocurrencies as a form of payment, check out Open Listings page.

Due to the relative newness of cryptos there is massive room for growth and change. This means that if digital coins continue to increase in popularity, the market for homes for sale with digital currencies will increase. Additionally, the process of completing the sale will also become easier with time.

Sacha Ferrandi of Source Capital Funding Inc. and Texas Hard Money First says that because cryptocurrency is so volatile it may be best to use it to close the deal. “You may be able to sweeten the deal by adding in bitcoin as part of the closing costs. Offering a significant value to the seller may help tip the scales in your favor.”

The associated risk for the seller is much higher than the risk for the buyer. But if the value of the cryptocurrency increases after the deal closes, there is extra earning potential for the seller!

Looking for more great content? Check out our piece on crypto and disaster relief!

How Cryptocurrency Can Help Disaster Relief

How Cryptocurrency Can Help Disaster Relief

Each year, places all over the globe are victimized by an enemy as old as time: Natural Disasters. These disasters stemming from hurricanes, landslides, or earthquakes are impossible to both predict and to also prevent, which makes them impossible to defend. However, despite it being impossible to both predict and prevent; it is not impossible to prepare. Preparing how to survive a natural disaster can be incredibly difficult, which makes, preparing for the aftermath of a Natural Disaster so incredibly important. The most difficult factor in disaster relief is having the proper funding and supplies needed in which to overcome the disaster, but often, these disasters occur in places that do not have the necessary funding or supplies, which makes our disaster relief efforts both, far more difficult, and also, far more crucial. The most challenging issue stems from transferring our funding to the people in need  as well as being able to properly allocate our funding to produce the proper amount of supplies and resources based on need and budget, but due to recent technological advancements like Blockchain and Cryptocurrencies, we can help streamline this process and the way disaster relief programs are executed all over the world.

What is the Difference Between Blockchain Technology and Cryptocurrencies?

Before we get started on how blockchain and cryptocurrencies can help transform our relief efforts all over the globe, it is important to understand the difference between these two things as they often get lumped together. Blockchain is a trusted decentralized ledger system across a network of users which allows the users to seamlessly and securely transfer funds amongst themselves and each transaction creates a “block” of information. These transactions that make the so-called blocks are comprised of transactions using cryptocurrencies such as Bitcoin and Ethereum. A cryptocurrency is a decentralized form of money that can be transferred instantly and safely between users and avoids bank regulations and time constraints. So essentially cryptocurrency is a part of blockchain technology and the emergence of them both could and should change the way we execute our disaster relief programs.

How Blockchain Technology and Cryptocurrencies Can Help Disaster Relief

The current disaster relief system is need of some drastic improvements stemming from the fact that they are not using the advanced technology that is at their disposal. The programs are government funded and government run, and because of that bureaucracy, they have been very disorganized, and very inefficient. However, they can change those old ways and take a giant leap forward, by using blockchain technology and setting up a relief budget consisting of cryptocurrencies. If our relief programs were able to use this new technology, many of the largest issues facing our past relief efforts would go away. They would disappear because blockchain technology possesses the most advanced ledger system in the world today as well as permits the instantaneous transactions of funds and those are both crucial in the disaster relief effort.

Organizational Improvements With Crypto 

As we touched on earlier, blockchain is a network comprised of blocks and the blocks are created whenever a transaction occurs. The network is a system comprised of receipts and whenever one is made it can always be tracked and followed and for that reason, it would be extremely beneficial towards our disaster relief efforts. Being able to track the donations as well as the funding for a group that is recovering from a disaster is nearly impossible, so by having this system in place, both the donors, as well as the recipients, will have a clear documented ledger for every donation that comes in. This could significantly help the recovery process because it will help the relief effort budget and divvy up the money in order to buy the right amount of supplies for each and every unique situation.

 Efficiency Upgrades & RFID

Not only is blockchain technology the most advanced and organized ledger system today, but it is also the most efficient way to transfer funds between two parties. Crypto is efficient during an emergency due to the decentralized nature of the information. By using blockchain technology (instead of the current bureaucratic system) we not only can make sure the people in need receive the aid we are providing, but we can make sure they receive it as fast as they need it! With the availability of RFID, cryptocurrency transactions with RFID are even more convenient because there is little need for bulky computers at the transaction point. Cryptocurrency can often go hand-in-hand with RFID technology. There are some great examples of RFID helping disaster relief efforts. RFID chips, though mostly used for events, can be leveraged during an emergency to allocate funds or store important information.

Often times, Natural Disasters come out of nowhere, which leaves the area and the people that get affected by the disaster stranded without aid, waiting for the current system to mobilize, but with blockchain, there are no hold ups or delays. Our relief organizations can send the relief funding right away and getting a kick-start on the recovery process is enormous to the success of the operation.

Better Disaster Relief and Aid

Our disaster relief system will never be perfect because each natural disaster is a different beast, however, it can improve to become more seamless and less chaotic. The struggles with funding and properly allocating those funds, so that the recipients get their hands on the supplies that they need the most in order to survive can be helped drastically by using the blockchain network. The blockchain network gives, both our relief organizations and more importantly, the people in need of relief, the best possible chance to succeed because of its extremely organized ledger system as well as its instantaneous transactional capability.

Don’t forget about personal preparations! 

Cryptocurrencies will also help out individuals with disaster preparation. One of the easiest ways to leverage cryptocurrency to help disaster relief is to purchase goods and services that will help you get ready for any type of disaster. The process is easy and most coin trading platforms will let their customers exchange coin for dollars. Here are some of the things to consider:

People forget that goods are not the only item that needs to be purchased. In the event of a disaster, it is also important to have the necessary survival skills that could save your life or the lives of others. Cryptocurrencies can be used to pay for the classes and training programs that teach you skills such as hunting and foraging, first aid, and self-defense.

In addition to self-defense, it is important to understand your geographical region and outdoor survival items necessary to survive. Mike Liera of The Arena Gym in San Diego added “In a disaster situation, it is critical not to make yourself a target for others. Learning even the basics of self-defense by training in jiu-jitsu, boxing, or MMA can give you the confidence and know-how to protect yourself and others.”

Wrapping Up

The bottom line here is that crypto can help individuals and organizations prepare, organize, execute, and track information. Hopefully, we see some major changes happen in the next few years!

 

What is Cryptocurrency?

There is a gold rush happening, but it is not taking place in the riverbeds of northern California, rather, it is occurring digitally. Daily, digital miners utilize super computer networks in order to mine cryptographic coins by solving complex mathematical equations. Although the process is physically less arduous, it is an infinitely more complicated process than gold pan mining ever was. Over the last year, cryptocurrencies such as Bitcoin, Ethereum, Ripple and Tether have become an integral part of the public finance discourse.

Blockchain technology is the new hot topic, especially for young investors ‘in the know’ with rapid, modern, technological advancements. You have likely read stories, or heard people talking about the ever-fluctuating prices of these coins and the meteoric rise in value, especially for the coins mentioned above. Doubtless, someone has said to you, “Buy now, it’s only going up!”

Now, any investor worth his salt would be dubious about any get rich quick scheme, which on first glance, many might view cryptocurrency to be. It would be easy to point out how in 2017, Bitcoin which, on average, had traded anywhere from $200-$1000 per coin, exploded, shooting up in value until it peaked at approximately $18,000 per coin. In less than three weeks, that price dropped precipitously, nearly losing 50% of its value until it eventually evened out. That insane volatility practically shouts, “Buyer beware.”

Again, it is wise to question and be doubtful about a new technology, but just to be clear; cryptocurrency is not a Ponzi scheme and should not be viewed as a means of making money fast. Crypto is a game changing, digital currency that brings with it a variety of benefits to investors in this modern age. That said, in order to objectively weigh and measure the efficacy of crypto, one must first ask the rather obvious question: what is cryptocurrency?

Currency 101

In order to gain insight into the world of cryptocurrency it is important that you first have, at least, a semblance of an idea on how normal currencies work. Before there was any sort of standardized currency, humans existed in a form of goods and services barter community.

For example, in a small village, a farmer trades his vegetables with a hunter for some meat or pelts. Both of the things being traded represent the time and labor invested into gaining those objects; they were the currency with an inherent value. In the beginning, this voluntary exchange of goods and or services works relatively well in a small community. Problems arise, however, as more parties are added to the mix.

The village doctor faces a dilemma; he is tired of meat from the hunter and would prefer vegetables from the farmer, but the farmer does not need or want the doctor’s services. So, how does the doctor go about acquiring the vegetables? Well, he must find someone who not only wants his services, but is also willing to exchange something that the farmer would, in turn, bargain for. This matter becomes even more complicated if you need multiple services in order to create one good.

The waters are further muddied, in that services or goods are not worth identical amounts; some are inherently more or less valuable or time-consuming. So, the question arises, how do we create a system where everyone benefits and this exchange can be simplified?

The answer to this question was to create a currency of sorts, an IOU that allowed people to convert their goods or services into something that would keep a relatively flat and tradable value. This IOU could later be used in exchange for something else.

In this way, currencies act as a sort of economic buffer; they allow people to convert their efforts into something universally desired, which maintains its value, and can be converted back into goods or other services at a later point in time. So, now the doctor could go to the farmer and give him this IOU in exchange for his vegetables and then the farmer could either save the IOU for another time, or go out and use it for anything he so desired.

Cryptocurrency: The golden IOU

This new method of currency exchange made everyone’s life simpler. However, the creators of this system saw that there was huge potential for immoral people to take advantage of this IOU system. If all an IOU was, was simply a piece of paper, that paper could be very easily replicated.

So, rather than working, a person could create a fake IOU instead and still reap the rewards. Thus was born the earliest form of counterfeiting. In order to prevent this from occurring, IOUs needed some physical backing to protect their value. It had to be something that there was finite amount of and something that everyone valued. Every currency became linked to a real world resource that was either scarce or finite, with Gold being the most common example.

Consider gold: it is rare and it is naturally occurring. Because of this, the only way it is possible to come by gold is by one of two possibilities: the first, you mine it or find it in nature, the second, you get it from someone else who (at some point in time, they or someone else) also got it from nature. Another benefit of gold is that it is highly divisible and based on weight.

 

Remember, for our hunter, a bear pelt is likely worth more than a wolf pelt. So, how do you pay him for one or the other? Half an IOU? A quarter? Now, thanks to gold backing the IOU, there is a clear, measurable and viable value behind it. Whether that gold has been earned or found, it does not change its inherent properties, the value remains and it is extremely difficult to fake that.

Gold was a great solution to that counterfeiting problem, but as with everything in life, a gold exchange currency had its own host of complications and issues. For one, gold is heavy, difficult to transport, easy to lose and it makes you a target for thieves, marauders or anyone else who wants to get their hands on your property. Once it is in their hands, that gold is theirs; who is to say that they did not earn it or come by it by honest means? There are also massive issues with scaling limits since there is only so much gold in the world.

As a result, countries started to centralize gold reserves and issue a currency that was backed by gold, but was not gold itself. So, from gold, we moved back into IOUs. These IOUs were different though, in that they were backed by sovereign nations who held a great deal of power and respect amongst other nations. These nations also dedicated time and money into guaranteeing these IOUs and preventing counterfeiting in any form.

Today, the U.S. dollar is no longer an IOU for physical gold, instead it has become a currency or resource in and of itself. The government mints it, backs it, protects it and creates the scarcity by limiting circulation. Even though it is just a piece of paper, the trust we place in it is what gives the dollar its value.

The birth of Bitcoin

In October of 2008 an unknown coder published a paper under the name of Satoshi Nakamota. It was called, “Bitcoin: A Peer-to-Peer Electronic Cash System.” In this paper, Nakamota writes about his plan to create a way to communicate intrinsic value, but in a decentralized manner. Basically, his goal was to create a settlement system of sorts over a distributed ledger. Digital currency was only one part of such a value system. He had paved a way to something much bigger than simply cryptographic currency.

This system would function without a central banking system or single administrator, the network would be P2P (peer to peer) and financial transactions would occur directly between users without anyone interceding on their behalf. It eliminated the middleman, the third party and potential oversight.

His vision and all that it promised caught on in the digital world. It took hold and those with the computational power began mining the coin, storing them in digital wallets and trading them as a currency. Its early valuation circa 2010 was 10¢/BTC. By mid 2011, a coin was worth $70 and by 2014 it hit $1,000/BTC. As of January, 2018, there are 16,833,537 BTC in circulation with an appraised market value of $191,301,364,529. It is estimated that there are between 2.9 -5.8 million unique users utilizing a crypto wallet, and the vast majority of them use Bitcoin.

Digital gold

Cryptocurrencies, at their essence, are a digital form of currency; a decentralized system supported by mathematics, open source code, cryptography and the most formidable and secure computational network on the planet. They are a virtual accounting system that records and stores each and every transaction that takes place all the way back to the genesis, the alpha coin.

These transactions are bundled into blocks and then are given a secure cryptographic signature. At their core, they are all viable currencies, and what differentiates them are rather small operational changes in order to distinguish them in the marketplace.

One of the most attractive aspects about cryptocurrency is the inherent safety to the coin. Recall that a major issue with previous currencies was counterfeiting. When it comes to anything digital, this is an obvious concern, seeing as it is very easy to make a copy of a file, even without realizing it. This ease of duplication makes it difficult to create any sort of digital currency because of how easy it would be to fake it, rather than make it.

In order to protect the value of the cryptocurrency, cryptos have created a means by which people can exchange their exertion into a digital token system, which produces secure tokens that cannot be duplicated. It is a digital version of gold, silver or other precious gems; a finite resource that was mined.

Like these precious metals, cryptos can only be had in one of two ways: first, you digitally “mined it” yourself, or you got it from someone who mined it. Because of this, cryptos can be trusted to hold value and since they are decentralized, no one can artificially affect the market or simply create more of it.

Digital 49ers

To mine cryptocurrency coins you need an insane amount of computational power at your disposal.

Naturally, one would assume that the goal of mining was to create new coins, but that is realistically a tertiary goal. Remember, Satoshi’s focus of BTC was this decentralized P2P ledger. So, the primary focus of mining is to make sure that all members have a clear view of the Bitcoin data landscape. Since it is P2P, there is no centralized database logging BTC ownership, rather it is passed along the digital network. As you might imagine this could lead to some problems. According to Google Software engineer Ken Schirriff,

The main problem with a distributed transaction log is how to avoid inconsistencies that could allow someone to spend the same Bitcoins twice. The solution in Bitcoin is to mine the outstanding transactions into a block of transactions approximately every 10 minutes, which makes them official. Conflicting or invalid transactions aren’t allowed into a block, so the double spend problem is avoided. Although mining transactions into blocks avoid double-spending, it raises new problems: What stops people from randomly mining blocks? How do you decide who gets to mine a block? How does the network agree on which blocks are valid? Solving those problems is the key innovation of Bitcoin: mining is made very, very difficult, a technique called proof-of-work. It takes an insanely huge amount of computational effort to mine a block, but it is easy for peers on the network to verify that a block has been successfully mined.

 

Each mined block references the previous block, forming an unbroken chain back to the first Bitcoin block. This blockchain ensures that everyone agrees on the transaction record. It also ensures that nobody can tamper with blocks in the chain since re-mining all the following blocks would be computationally infeasible. As long as nobody has more than half the computational resources, mining remains competitive and nobody can control the blockchain.

One of the side-effects of this mining is that new coins are added to the system, with 25 new coins added for every block that is mined. A new block can theoretically be mined every 10 minutes, if you have the computational power. Because of this, there are huge incentives to begin mining the currency.

The mining aspect is simply cryptographically signing each block of transactions, for which you receive the coin. The concept is universal amongst cryptos, although different cryptocurrencies use different algorithms for the cryptographic signature of the transaction blocks. They also have disparities in recompense amounts, the amount of coins received with each blockchain and the frequency at which new blocks may be generated.

Mining ain’t easy

What may be overlooked by many is how difficult is it is to computationally solve a blockchain equation. As of now, the chance of a computer finding the correct answer is 1 in 10 quintillion (1019)… to put that in perspective the odds of perfectly guessing the NCAA basketball playoff bracket, which would earn you a $1 billion reward from Warren Buffett, is 1 in 9.2 quintillion. It is estimated that BTC miners currently work at 25,000,000,000,000,000 blocks hashed per second.

A personal mining computer might take weeks, if not months to solve a block by itself. The electrical power required to solve these equations is astronomical, so the utility bill will be enormous.

To make matters worse, miners go through dry spells where the equations simply are not being solved. For these reasons, mining is much too large an enterprise for most people to reasonably take on by themselves. So, the majority of miners will join or form an online, profit-sharing, mining community. In this way, they are able to pool their resources and work on blocks as a team, sharing fractions of BTC between the various miners.

The benefits of Cryptocurrencies

You may read this and still say, “So what? Why should I care? I’m not going to start digitally mining, I can barely turn on my computer!” or, “It is already too late to get into coins, they have already peaked.” Admittedly, these are reasonable opinions to hold. You should by no means sell all your earthly possessions and immediately invest everything in cryptos; just about anyone, including Nakamota, would call you a financial illiterate for doing so.

Investing all your wealth into one thing is a recipe for disaster, regardless of what that thing is. Ask any financial advisor, diversification is the name of the game, in that it minimizes risk and exposure to financial loss. If you have the means, it is wise to spread out your investments in stocks, land, businesses, cash and precious metals. So, if you view cryptocurrency as a form of precious metal, they are a more than viable investment. Below are some of the tangible benefits of cryptocurrencies:

  • A trustless digital cash system – As mentioned above, in regards to IOUs, there is an inherent amount of trust required in digital payment systems. There is an underlying risk between two parties in order to make these exchanges. For example, you must rely on a bank, Paypal, Venmo, or a credit card company to guarantee the transaction. Coins do not function on a digital payment system, rather they function in a digital cash system. These systems allow peer-to-peer cash exchanges, as if you were handing them physical cash on the spot. So, you do not need to trust the individual or a third party to guarantee the transaction since the coin is good regardless.

Since settlements are immediate and do not require a third party intermediary, contracts can be upheld in a fraction of the time they would be by more traditional means. If you want to buy real estate, that generally involves, brokers, bankers, lawyers, a notary and all the delays and fees that come part and parcel. Cryptos completely eliminate these extraneous parties and boil the process down to a simple exchange of cash.

  • Decentralization –There is a global network of computers accessing blockchain technology in order to manage and record transactions. Every interaction is peer-to-peer and free from outside influence.
  • Fraud Prevention – A person’s cryptocurrency is kept in a secure digital wallet, it cannot be counterfeited, nor can the transaction randomly reversed by the sender, like those that can occur with credit card charge-backs. You also need not worry about identity theft when using cryptocurrency since they use a “push” information mechanism; where the sender sends exactly what specific information to the merchant or buyer, where as with credit cards, a store or broker “pulls” from your line of credit. This can be an issue in that, when you give someone your credit card, you give them access to your entire line of credit, no matter the size of the transaction. That pull leaves your vulnerable to those who might take advantage.
  • Low, if not, no fees – For most cryptocurrency, there are generally no transaction fees since miners were already paid for their mining. Note, most users will have to use a third party digital wallet service that act like a credit card or PayPal account and there are varied fees for these services.

Conclusion

What is so incredible about blockchain technology and cryptocurrencies is that they are still in their infant stages. We have barely begun to even scratch the surface of what is now possible using these new technologies. Nakamota’s vision of the future was vast and we are in an extremely exciting time as these ideas and techs take root in our society.

Cryptocurrency is simply the dollars you hold in your hand but digitized. It is your own bank and wallet all wrapped up in a marketplace owned by the people. The technology, intuition, innovation, and intelligence involved with cryptocurrency positions the marketplace to possibly conquer all other forms of currency.

That’s what crypto gurus are betting on and from what we’ve seen, they might be right. When asking what is cryptocurrency in a philosophical sense, well, it’s the future. And it’s here. Right at our fingertips.

Coinmama Review [Our Take on the Exchange]

In this Coinmama review, we will examine Coinbase’s main competitor on the Bitcoin exchange market with many ex-Coinbase users migrating to Coinmama due to better customer support and increased reliability.

Reviewing Coinmama’s inception

In 2013, Coinmama was registered in Slovakia as a cryptocurrency exchange forum. It is owned by New Bit Ventures Limited and has its headquarters in Israel. Its founders, Asaph Schulman and Nimrod Gruber, both veterans of the digital crypto marketplace created Coinmama with the goal of, “Providing a financial service that makes it fast, safe and fun to buy digital currency, anywhere in the world. We believe that the future of money is one where we, the people, are in control of our own economy. A future where there’s no place for middle-men, hidden fees, and fine print. To deliver on that promise, we have come to work every day since 2013 to create the simplest financial service out there – spoken in a language you can understand, and backed by customer service you can count on.”

Their desire to create a simple, customer-centric buying platform for Bitcoin and Ethereum has been met with mutual interest from crypto investors the world over. Coinmama prides itself on providing a stage to purchase Bitcoin and Ethereum to 217 countries all over the world. Within the United States, Coinmama is available to 24 states including: Arizona, California, Colorado, Florida, Illinois, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Missouri, Montana, Nevada, New Jersey, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Wisconsin. They have publicly stated their plans to continue expanding to more states, so, if yours is missing from this list, check in periodically to see if they will soon be adding yours to the prodigious list.

Coinmama is a platform strictly meant for the purchase of Bitcoin or Ethereum. Upon completion of a sale, all crypto purchases are transferred directly from Coinmama’s holdings into users accounts, ensuring security that its competitors do not provide. It should be noted, however, that a user is not able to sell and trade coins through their platform. Bitcoin or Ethereum may be purchased with a credit card, debit card or through Western Union.

Why Crypto?

Some reading this may still be in the camp that does not have more than a passing knowledge of digital currency. Maybe it goes completely over your head; you find yourself hearing about it and ask, “What’s the big deal?” The especially, skeptical may think it some sort of scam or Ponzi scheme—rest assured it is neither of those things. You should not by any means sell everything you own and invest it all in cryptos. A wealth manager will be the first to say that a diversified portfolio is extremely important for long-term growth and portfolio protection. Diversifying your wealth in land, stocks, businesses, precious metals, and cash are all viable form of spreading your accumulated prosperity, and now, cryptocurrencies should be considered as a new type of investment to further diversify your wealth portfolio.

  • Identity and Fraud Prevention – Cryptocurrency is kept safe and secure within a digital wallet, unable to be counterfeited or its orders canceled or falsified. Identity theft is a much lesser concern with cryptos as a result of their “push” mechanism. In this, the sender sends or pushes, the specific information that might be required by a merchant or a buyer. Credit cards, on the other hand, utilize a “pulling” mechanism by the merchant pulling from your line of credit. When this occurs they have access to the entirety of the cred, regardless of transaction size, leaving your account potentially vulnerable to attacks.
  • Digital cash system that does not require trust – These types of blockchain payment systems facilitate peer-to-peer exchanges of assets. They remove the middleman and some of the inherent risk when you involve a third party as you would with a digital payment system such as a bank, Paypal, its subsidiary Venmo, or credit card company. This lack of intermediary allows contracts to happen at a much quicker pace by eliminating extra parties, regulations or waits by turning it into a form of cash exchange.
  • Low Fees – Relatively speaking, for many cryptocurrencies there are a no or low transaction fees, especially when compared to fees that are associated with more traditional means.

A Coinmama Review: Getting Started

Below we will review Coinmama’s ease of activation.

Registering your Coinmama account

In order to get started on Coinmama, a new user has two options to begin. This Coinmama review has found this platform to be unique in comparison to its competitors in that it allows users the prospect of purchasing up to 150 Euros/Dollars of cryptocurrency without requiring any form of identity verifications. These days, this is an option that very few of its competitors offer. However, if you would like to purchase more than that you will have to register an account with Coinmama. Registering an account requires that you provide a good deal of personal information in order to verify your identity.

Reviewing Coinmama’s KYC and AML compliance

As the crypto market continues to evolve and spread into the mainstream, a growing worry is how easy it digital crypto platforms make it for criminals enterprises to utilize cryptos as dirty money laundering platforms. In order to protect their business’ reputation and to prevent illicit activities from being possible much in part to their platform, more and more crypto platforms are integrating themselves with standard banking enterprises. This means that they too comply with the stricter banking regulations, including KYC (know your customer) and AML (anti-money laundering) guidelines.

KYC and AML were created to fight growing corruption, bribery, fraud and money laundering by increasing transparency between banks and their customers. Banks wanted to ensure that their customers were not using their services for ill-gotten gains. In order to accomplish this, there are four primary tenants to KYC and employed by Coinmama. This involves them, monitoring transactions, assessing risk management, completing customer identification procedures and requiring customer’s acceptance of these policies.

Traditional Bitcoin investors may lament this lack of decentralization, saying it is far removed from Bitcoin’s original purpose. You can not blame those purists. However, this is a trend that platforms across the digital exchange are following and Coinmama is not alone in its desire to prevent unscrupulous players from taking advantage of its services. By complying with these regulations, Coinmama secures and legitimizes your purchases, protecting you in the long run.

A Coinmama Review: What will be asked of you?

In order to purchase larger amounts of crypto, you will need to satisfy KYC and AML requirements. This means you will have to verify your identity with a government-issued identification card or certificate. This will have to authenticate your full name, gender, age, address and card number. In order to verify this information, Coinmama asks that you submit documents that are: “No larger than 4 MBs, completely visible front and back, high-quality images, and valid documents, with the expiration date easily seen.

Once this has been provided, verification processing sometimes lasting a few business hours, though if you register on a Friday, it may take until the following Monday. If you require a faster process, Coinmama’s customer service assistance will do its best to aid you in that.

The average user will be verified in a matter of minutes and will then be able to place orders on Bitcoin or Ethereum at once. One of the drawbacks of Coinmama is that it does not provide an online wallet for its users to safely store their coins. Because of this, you will first have to create a digital wallet, which Coinmama will first confirm is active and valid. These orders happen rapidly and will be completed in a matter of minutes. Do not worry though, as soon as the order is placed, the exchange rate at purchase time remains locked in. Your order will, therefore, ignore trends or fluctuations that occur after purchase, ensuring that you get exactly what you dealt with. If, for any reason, an order aborts, this Coinmama review has found that the system will automatically make the payment void within a 48 hour period and will return the money to your bank account.

Purchasing through Coinmama

Upon registering and verifying your identity, Coinmama does not require the registration of credit or debit card before users may purchase Bitcoin or Ethereum. Rather, users create a purchase order, selecting the quantity they wish to purchase, entering their digital wallet’s address and then filling out card details at check out. If your card address matches your customer account address, you will be given the green light to complete your order as long as it supersedes the minimum $60 purchase. Do not worry though, Coinmama does not store their customer’s credit or debit card information on their servers, thus protecting identity theft via hacks.

Once the purchase is made, the transaction will go through processing, which lasts 15 to 20 minutes on average. After this, the cryptos will be transferred to your digital wallet.

Purchase Limits

This Coinmama review finds that the platform offers relatively high buying limits in comparison to its competitor. There are three tiers to purchase limits, the higher tier you have, the more you are allowed to purchase. Because of this, there are more verification and identification requirements.

  • Tier 1 – Requires users to provide a valid government issued ID. Verified users are allowed to purchase $5,000 max a day with a max limit of $20,000 per month.
  • Tier 2 – Requires users to provide two valid government-issued IDs as well as either a utility bill or a photo of yourself holding your ID. At this level, users may purchase up to $50,000 of Cryptocurrency per month.
  • Tier 3 – Requires users to provide all the previous information as well as a short form that must be returned and certified by Coinmama. At this tier, users may purchase up to $1,000,000 in cryptocurrency per month.

Reviewing Coinmama’s fees

When compared to its competitors, a review of Coinmama’s transaction fees will reveal that its 5.5% fee for every transaction to be in the upper echelon. This fee will be charged in addition to a 5% fee on each debit or credit card transaction. One of the larger complaints regularly logged against Coinmama is this higher rate.

A review of Coinmama’s customer support

While the transaction rates may seem high, what you get in return is excellent customer support. Since Coinmama does not have to deal with the sheer volume of users as some of its competitors in conjunction with its extremely secure system means that almost any customer service request is answered within 24 hours. A select few users experienced delayed the order, had misunderstandings, or system related issues. If you do ever have issues with the platform, you can contact Coinmama’s Customer Care number by dialing: +1-800-261-6932, an alternative form of contact would be by email: [email protected] & [email protected]. Coinmama’s customer support operates from Sunday – Thursday, 11 pm – 7 am pacific time.

A perusal of the Coinmama forums on either Reddit or elsewhere reveals that Coinmama does not carry with it a ton of controversy. The one main complaint would be their relatively high transaction fees, but as mentioned above, you pay more for better safety. No platform is bug or issues free, but a Coinmama review finds that the service is attentive to customers and makes a concerted effort to provide a reliable service. They have built up a solid reputation as a reliable service that is intuitive and one of the easiest ways to begin purchasing Bitcoin or Ethereum. Signing up is quick, and once you have filled out your KYC and AML compliant information, you will be able to buy cryptos almost immediately. Remember that you are unable to sell or exchange coins through this service, it is intended solely for the purchase of coins and it is very good at doing that.

 

 

 

 

 

Coinbase Review [Is it Safe?] Our Take on the Exchange

In this Coinbase review, we will take a thorough look at the world’s largest Bitcoin broker. While it does not function as a traditional marketplace, Coinbase is a great point of entry where you can exchange traditional fiat currencies for cryptocurrency.

A brief review of the Coinbase History

Like many other startups, Coinbase was incepted in San Francisco’s Silicon Valley. Its founders, Brian Armstrong and Fred Ehrsam, created the concept in July of 2011, making it one of the oldest coin exchanges in existence; their vision, to create a brokerage exchange of the three most popular cryptocurrencies: Bitcoin, Ethereum, and Litecoin. In June of 2012, Armstrong and Ehrsam launched their product, their stated goal, to offer a digital currency wallet and exchange platform viable for both consumers and crypto merchants.

By 2013, Coinbase had more funding than any other Bitcoin start up and quickly became the largest cryptocurrency exchange brokerage in the world. Later in this Coinbase review we will go further in depth over the variety of reasons why Coinbase became so popular and what about its model worked so effectively. Briefly, though, Coinbase was unique in that it permitted users to exchange cryptocurrencies at a set price based on their market value, which in turn allowed users to either sell or buy cryptocurrencies at a much faster rate than that provided by other exchanges currently on the market. They also were one of the first companies to take the risk and accept credit cards as a means of purchasing coins.

While it began as merely a brokerage, whereby it sold Bitcoins directly to customers, in May of 2016, Coinbase added a secondary product by joining the GDAX, (global digital asset exchange). As of today, Coinbase operates in 32 countries, with its three largest consumer hubs coming from the United States, United Kingdom, and Brazil. It has north of eight million customers and has facilitated the exchange of hundreds of billions dollars worth of coins.

How to Get Started on Coinbase

Below we will review how Coinbase works and the positives and negatives of the system:

How it works

It is important to understand that Coinbase functions in a manner that is far more similar to the operations of a bank than the actions of a broker. Much of this is due in part to the fact that it was the first of any digital exchange company to receive a VCOL (virtual currency operating license). In order to receive this and to participate with major banks, it would have to adopt more stringent banking laws and regulations. Therefore, Coinbase complies with AML (anti-money laundering) and KYC (know your customer) regulations.

  • KYC Regulations and Coinbase – Because of increased corruption, money laundering, and bribery passing through international banks by criminal enterprises, Know Your Customer regulations were introduced by large banks so that financial institutions could spare banks from being used to hide or clean money, regardless of whether or not they were intentionally doing so. There are four main pillars to KYC that help banks become better acquainted with the people using their banks:
  1. Monitoring transactions
  2. Customer identification procedures
  3. Risk management
  4. Customer acceptance policy

While you may wish to protect your identity and transactions and may shy at the notion of being required to fill out quite a lot of personal information, this Coinbase review has found that such regulations not only curb crime, mainly by preventing money laundering but also protect you as a customer in the long term. This sort of compliance means that your purchases are secure and guaranteed by Coinbase, which is a rarity in the relatively unsafe virtual currency market.

Because of this Coinbase will monitor how you spend their coins and have the power to shut down your account if you do any of the following:

  • Adult service transactions
  • Purchase or sale of illegal imports via darknet markets
  • Gambling with bitcoin, including gambling that is considered to be skill-based
  • Resale of coins on other exchanges, especially those that do not follow KYC or AML regulations

It should be noted that some accounts have been shut down or frozen for various arbitrary reasons, but that is not the norm. If your account is suspended or shutdown, while it may be an inconvenience, take heart in the fact that your money is guaranteed to be returned to you. The safety and security of their website and their customer base as a whole are more important to them than potentially upsetting a customer. A word of advice, do not do shady things with your digital currency and you should be fine.

Getting started

As mentioned previously in this Coinbase review, the service operates in a variety of countries. Because of this, the payment methods available might be different depending on where you are living. That said, the following is generally applicable to the majority of users and the platform is especially useful for American digital investors.

Coinbase provides its brokerage services to the following countries: the United States, Canada, the United Kingdom and Singapore. It also supports the following EU countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Finland, France, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Malta, Monaco, Netherlands, Norway, Poland, Portugal, Romania, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland.

Customers may acquire or unload Bitcoin, Ethereum, or Litecoin in a variety of ways including a SEPA transfer, Interac Online, a connected bank account, A Paypal account (for sellers), EFT payments, SWIFT transfer, ACH transfer and via major credit cards. While the company has plans to add more cryptocurrencies to their digital marketplace, for now if you wish to purchase alternative coins, you will have to utilize a different platform.

This chart below provides information on payment methods available to Coinbase users, as well as the fees, transfer times, and countries availability.

#Payment MethodCountriesFunds AvailableCurrencyFees
1Bank TransferUSA5-7 business days**USD1.49%
2Credit / Debit CardUSAOccurs instantlyEUR3.99%
3Credit / Debit CardCanadaOccurs instantlyCAD3.99%
4SEPA TransferEurope1-3 Business DaysEUR1.49%
5Credit / Debit CardEuropeOccurs instantlyEUR3.99%
6Credit / Debit CardUKOccurs instantlyGBP3.99%
7Xfers TransferSingaporeOccurs instantlySGD1.49%
8Credit / Debit CardAustraliaOccurs instantlyAUD3.99%


How to purchase coins
As you can see, in this Coinbase review of fees, the charges are quite low, especially when compared to other digital exchanges such as Coinmama or CEX. It should also be noted that depositing currencies into your account is free. Following that, Coinbase will charge a 1.49% per purchase fee.

Getting started with Coinbase is quite easy. The operating system is very beginner friendly and proves to be an intuitive process.

Coinbase lets you buy bitcoins instantly with a credit card or debit card. Here are step-by-step instructions to help make the buying process easier for you:

  • Step 1 – create an account – this includes your personal details and login information, after creating your account you will need to upload an identification scan.
  • Step 2 – go to account settings – After logging in, navigate to the right corner of the page, click on your account name and a drop-down menu will appear. Click “settings,” then “payment methods.”
  • Step 3 – add payment method – Once you have reached the payment methods screen, select an option, including adding your Paypal account or a credit/debit card.
  • Step 4 – enter your information – Odds are you have done this a thousand times. Enter the name on your card, the card number, the expiration date, the CV, and the Zip code.
  • Step 5 – await confirmation – If your card or payment method has been successfully added you will receive a confirmation reply.
  • Step 6 – purchase coins – At this stage, you can visit the buy page, enter the amount of a coin you wish to purchase and then click “buy bitcoin instantly.” Upon completing this task, your coins will be delivered to your digital wallet.

 Controversies and Questions about Coinbase

Since we are still in the relative infancy of digital crypto exchange, there are understandably kinks, drawbacks, and controversies surrounding just about any platform you chose. Coinbase is considered ancient in the crypto world, and it is only five years old, so as time moves on, and the market and technology further develop, these platforms will continue to improve and work out issues. Now, we will review coinbases’ consumer complaints or controversies as revealed by a perusal through the various crypto subreddits or alternate internet crypto forums.

  1. Customer Service/Support – A handful of ex Coinbase users have lamented the lack of user support provided by Coinbase. At times, Coinbase did not respond to complaints for up to three weeks. Others complained that they were not as helpful as they would have liked. That said, as mentioned above, Coinbase is a relatively young company with a massive user base, so there will inevitably be some issues from a statistical standpoint. While the vast majority of users encounter no problems, some have been left jaded by the experience. Coinbase claims that their average response time to an issue falls within a 48-hour period. Review Coinbase’ FAQ section page and the support forum to see how other users dealt with any issues.
  2. GDAX bugs and outages – Some users expressed frustration over GDAX bugs. Coinbase has only been operating on the GDAX for two years, so the system is once again relatively novel.
  3. Frozen account –The most vocal complaint levied against Coinbase is when some users receive the digital equivalent of the “black spot,” the feared “account freeze notice.” If received, Coinbase temporarily suspends your account until the matter is resolved. As mentioned above, much of this is due to their integration with traditional banking laws and following of AML and KYC regulations. A select few users complained that their account was frozen erroneously and were understandably upset. Like it or not, Coinbase takes pride in its legislative compliance and its reputation, so, some users will inevitably be swept up in the efforts to prevent digital crime or money laundering. Coinbase says that they are continuously working to improve their accuracy as well as their communication with the customer
  4. Lack of privacy – For those who wish to remain anonymous and their digital actions and exchanges to be unmonitored, Coinbase is not for you. By following KYC and AML regulations, you trade your anonymity for security and insurance that your money is safe and that Coinbase is not providing a haven for criminal enterprises or activities. While Coinbase understands individuals desire for privacy, they believe this monitoring to be better not, just for their user base, but for the world as a whole. You have to respect the fact that they are willing to lose potential customers by refusing to turn a blind eye and simply allowing their website to operate as a trade route for illicit activates; activities which could lead to the degradation of society.
  5. Ties to the Banking Establishment – Coinbase makes no secret that it has forged bonds and close ties to traditional banking institutions. They have received more than $100,000,000 in investment and capital funding, which should illustrate that it is backed by trusted investors who believe in Coinbase and its methods. Purists within the bitcoin community will decry these banking ties, saying this defeats the purpose of bitcoins and altcoins since they were created to be a decentralized currency.

Coinbase Review Conclusions

In summary, Coinbase is a great entry point, especially for novice Americans coin investors, looking to break into the market. Initial plunges into Bitcoin, Ethereum, and Litecoin, should provide a solid crypto investment introduction and Coinbase’ interface is easy to pick up. While there are admittedly some complaints about Coinbase, including their customer support and frozen accounts, overall, the pros outweigh the cons. Coinbase has developed a sterling relationship within the banking community and is backed by multiple investors with millions of dollars; it is heavily regulated, which provides you security and insurance from breaches or hacks; its fees are reasonable, especially when compared to alternate exchanges. As of now, Coinbase is one of the best USD to Bitcoin marketplaces available.