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Buying Cryptocurrencies as an American is Different

When I first wanted to buy Bitcoin, I thought it would be pretty simple. I mean, ease of transactions is a hallmark of Cryptocurrencies, right? Well, it turns out that isn’t always true and, pretty much never true when you are buying Bitcoin with US dollars and are from the United States.

Wait, what? It is hard to do something innovative and cutting edge BECAUSE you are an American? Sorry, but as a fellow American, I sympathize, share your frustration, and hope this article helps you in a small way.

Quick Tip

• If you have a trusted friend with Bitcoin willing to sell to you, buy it from them. It is much easier to transact directly. Go to https://coinmarketcap.com/ to get the price and work out a deal with your buddy.

What are the hurdles?

1. Dollars to Crypto Process is long and confusing. There are two “levels” or Markets for Cryptocurrency: At the top level, you have Bitcoin, Ethereum, Bitcoin Cash and Litecoin. The second level is where all the “Altcoins” are. These are projects that each have their own story and value. Some are currencies, and some are not --but that isn't a topic for now. When you buy Cryptocurrency with US dollars, it is nearly impossible to buy an Altcoin directly. You will need to buy one of the top level currencies first and then buy the Altcoin of your choosing.
2. Regulation - it is unknown, but the beast is watching. The SEC has stated that they are looking for fraud while they work out what all this Crypto stuff is all about. Not a bad thing, but the result is that most projects that involve any Cryptocurrency, simply exclude American’s just in case. Many projects simply say, “No US Citizens Allowed At This Time.”
3. Banks and money transfers - painful. This is nothing new. A driving force for the creation of Bitcoin was improving the transfer of currency. Here are the areas to prepare for:
   1. A bank is federally mandated to limit transfers to 6 per month. I found this out the hard way and almost had my account closed because of it.
   2. Transfers take up to 10 days to “clear.”
   3. The sites that allow US dollars limit the amount per transfer and how often.
   4. Make sure you have the money in your account…it will take almost the full ten days to have it declined and you need to wait for the time limit to expire before starting a new one.
4. Being your own Bank…its hard. Decentralization is excellent for many reasons, and I look forward to it achieving its promises. However, there potential traps that a traditional Bank would take care of for you and Crypto does not. Think about it; there are reasons that an estimated 3.5 - 4 million Bitcoins are lost forever. You will need to take time to learn a few things that Banks have taken care of for you in the past. Like everything, when you are at the beginning, it can be difficult, but it is getting better every day.

Let’s Jump Over Some Hurdles

Here are a few “principles/guidelines” I suggest you follow.

Option 1: I want in NOW. I’ve lost my Lamborghini opportunity in the time it took to read this article

If you want to buy Bitcoin, Bitcoin Cash, Ethereum or, Litecoin at the current price, then the best option is Coinbase.com or Uphold.com.
Both allow you to BUY Bitcoin, Bitcoin Cash, Ethereum, and Litecoin directly from your Bank Account. Other sites have you transfer USD into their Exchange and then buy Crypto from there, sometimes incurring an additional fee.

Tip: you cannot change or cancel your transaction once started. You won't be able to buy/sell the Cryptocurrency you purchased until the deal has cleared. Waiting 10 days can be scary with such a volatile market. I did a transaction once this way and the price of Bitcoin dropped by $1,000 by the time I could use it. I think it makes sense to do it this way if the market is really low IMO.

To get going with Coinbase.com, you will need to set up an account, connect your bank and then go to the Buy/Sell Tab and Buy one of those coins. You will be buying it at the price when you click Buy. In 7-10 days, when it clears from your bank, you will have that much Crypto, and it will be worth whatever the exchange rate is.

A new contender is Uphold.com. I have just started using them to see the benefits and drawbacks. You have the same options for buying top-level coins and a few others to boot, including currency supported by other countries such as Japan or New Zealand. I won’t go into that here.

The setup is the same but presented in a much different manner. Uphold.com uses a Card concept for each currency. Once you get the hang of it, it does make sense. It is just different. Uphold.com also seems to have more features, but many were not of interest to me at this time.

For many, this is the right way to do it. There will be a single, upfront fee to Coinbase.com or Uphold.com. For example, I just did a transfer of $750 to Ethereum, and the Coinbase.com fee was $11.03. (2018-02-03)

Option 2: I just want to be ready to buy in the future when I have learned more.

Coinbase.com or Uphold.com support holding your USD until you are ready to buy Cryptocurrency. Instead of Buying a currency, you transfer dollars from your bank into Coinbase.com or Uphold.com and use them as another USD bank. The process looks something like this:

1. Transfer USD to USD. Wait for it to clear in 7-10 days.
2. Buy Ethereum, or another top-level Cryptocurrency when the timing meets your requirements. I like Ethereum for this because it costs less in transaction fees, tends to follow the value of bitcoin, is faster to get confirmed transactions and, excepted at most exchanges.
3. Buy regularly. You can only transfer a small amount at a time so put a schedule on your calendar to periodically initiate a new transfer.
4. Transfer from more than one bank. Federal law prohibits more than 6 transfers per month per bank account so setup a couple of bank accounts to transfer from.

Quick Tip

• Coinbase.com allows transfers of up to $2,000 per week
• Uphold.com allows transfers of up to $500 per day
• Fees are similar
• Both allow multiple bank options.
  Coinbase.com does have a PayPal option for free transfer TO PayPal. This is unique, but at this time they were having troubles, and the feature was turned off. PayPal also leaves a sour taste in my mouth because they are quick to freeze funds and rack up fees. This happened to me a few times on eBay, and it sucked. I tend to avoid them now.

In summary, for US Citizens, start now getting your accounts setup with Coinbase.com or Uphold.com. Initiate your USD transfer or Buy your Cryptocurrency immediately depending on how you feel about the market. Make regular purchases or transfers following their rules and split up your banks, so you don’t get too many transfers showing up on any one bank.

Let me know what you think. I'd like to make this as helpful to new Crytpo buyers as possible.