Skip to content

Latest commit

 

History

History
34 lines (18 loc) · 2.7 KB

QUESTION 23-How much does it cost to buy bitcoins.md

File metadata and controls

34 lines (18 loc) · 2.7 KB

How much does it cost to buy bitcoins?

The bitcoins, or better, the satoshis, represent monetary units and as such can be bought and/or sold as other monetary units.

When we have to travel abroad and the destination country does not use our currency, we must necessarily change money.

This change usually takes place in two ways: either by going to a currency exchange (a shop, a bank counter, an app) or between individuals.

A very trivial example: if I go to Albania I know that the local currency is the Lek. I will therefore have to go to a currency exchange to sell my euros and buy leks, or I'll have to exchange some banknotes in my currency for a certain number of cash in lek with some local person, based on a conventional exchange rate (for eg 1 euro for 120 lek).

The same concept applies to Bitcoin as well.

If I want to buy bitcoins I will have to sell euros, while if I want to sell them I will have to buy euros (or other fiat currency), and I will be able to do so on special sites called exchange or through ATMs, or directly between private individuals.

Buying bitcoins therefore does not have a fixed cost, because it is based on a conventional exchange, for example the current price on Kraken or on Coinmarketcap, but may have commissions, especially if we buy from ATMs.

These commissions, or fees, range on average from 0.25% to 10% and are applied by those who sell us bitcoins or euros.

The average commission paid at a local currency exchange (ATM) is 10%; it can be deduced that, at a cost of 100 euros, I will get satoshis for a value of 90 euros.

Be careful also at what price is shown during the exchange phase!

If in the ATM the price of a whole bitcoin is 10,000 euros but we know that at the moment it is sold on average at 9,500 euros, then we are in the presence of another commission, this time a hidden one.

Taking the example again: if we sell 100 euros at this ATM we will get 0.009 bitcoins or 0.01 bitcoins minus 10% commission. In satoshi there are 900,000 sats (ie 1 million satoshis minus 10%).

If the exchange rate had been based on the average price, we would have obtained about 0.00947368 bitcoins, or 0.01052632 bitcoins minus 10%. In satoshi they are 947,368 sats.

On 100 euros the ATM has held 10 euros of commissions plus about 5 euros of "hidden" fees.

It may seem little, but on 1,000 euros they start to become important commissions.

Moreover, if a person thinks in satoshi and considers the potential increase in value per unit as the years go by, 47 thousand less satoshis are not few!

It is up to us to choose the most convenient exchange rate, just as we would do when we have to change euros for dollars or, taking my example, euros for lek or other local currency.