I’m vehemently against cryptocurrency as an investment for a number of reasons that I won’t go into in depth in this article (think: no intrinsic value, no laws governing the currency, no reason for particular cryptocurrencies, to many scams around, etc.). For me it’s not really investing because investing is about calculating return based on real factors; cryptocurrency investing is more like gambling in my opinion.
Nonetheless, I decided to partake in the fun and buy some Ethereum (ETH) and Bitcoin (BTC). I figured $1,000 on each wouldn’t do any harm and wouldn’t be the end of the world if I got scammed or lost my money in some other way (lost wallet, hardware failure, virus, currency related issues, etc.).
After reading an article on MoneyHub, I signed up for EasyCrypto. EasyCrypto is not a crypto exchange (matching buyers and sellers), but instead it’s a retail shop (selling you currency and buying it off you, making profit on the difference). Upon preparing to make my purchase, I noticed that the fees are very different for small purchases (~$100) vs “large” purchases of a whole crypto token ($6,239). Here are the prices I was offered:
NZD$6,239 = 1 ETH
EasyCrypto’s price to buy ETH vs NZD at the time of writing
NZD$105 = 0.01190783 ETH
If we divide NZD$105 by 0.01190783 to get the price for the whole coin, that gives NZD$8,818. That’s a 41% increase in price for buying a smaller unit of ETH, which is a phenomenal difference if we consider that the brokerage fee.
I didn’t bother looking at the difference in sell price (which could be less favourable as they may consider having you by the #@!!$ because if you’re buying from them, you might not have the technical nous to sell elsewhere), but if we assume that it’s similar, you’re looking at an 82% increase in your ETH investment to break even when buying and selling with EasyCrypto. This number is worse if you compare it to the ETH price listed on Google, rather than the rate they sell for when buying a whole unit of ETH. This shocked me enough to not even bother investigating the fees for the small volumes I was looking to buy.
In EasyCrypto’s defence, I guess it could be argued to be a fair rate; after all, a retail shop of any other nature might have similar markups and they are dealing in a commodity whose price can fluctuate wildly – coupled with the fact that purchases may be automated through the website and therefore subject to additional fluctuation risk.
However, given the fees of EasyCrypto I think this precludes me from making any investment through this website. Perhaps a crypto exchange is the way to go if I were to pursue an investment in cryptocurrency?
