Choose your Currency Exchange Wisely (Stay away from Coinsquare)

Posted by The Mining King on 2018-01-25

The day will come when it is common for merchants to accept cryptocurrency in exchange for goods and services. But for now, fiat rules the day. As such, being able to change crypto into fiat is pretty important.

There are two ways to do this:

1. Buy and Sell Direct

Search for local crypto MeetUps. It isn’t too hard to find people willing to buy and sell Bitcoin directly. It’s trickier to find people likewise willing to trade lesser-known currencies.

2. Join a Currency Exchange

Currency exchanges are a pain, but they’re the only other option we have at the moment. I’ve created accounts on six different currency exchanges (probably… I lost track), but have only actually used three.

Before I had any ether to play with, I needed to put Canadian dollars into my trading accounts. For peace of mind, I gravitated toward these two notable Canadian exchanges:

I purchased my first Bitcoin ever through Coinsquare. It has exorbitant funding fees (5% on Interac eTransfers), but it was easy to use and it did the job. I deposited CAD $100 and used the remaining $95 to purchase about 0.004 BTC.

Then ether started trickling in…

Naturally, I wanted to use my ether to start trading. I attempted to fund my Coinsquare account, but was surprised to learn that Coinsquare had run out of ether wallets. Yes, this is actually what they said.

Ether wallets are plentiful and available to anyone who wants one (or one thousand), so this bewildering error message immediately triggered my spidey senses. This happened back in November. The error message has changed, but the situation is the same. You can’t deposit ether to your Coinsquare account and it seems no one on their staff has the ability to fix the problem.

Something simply does not add up…

I suspect Coinsquare’s development team walked off the job, which means the company could be in big trouble. Having lost all confidence in the Coinsquare exchange, I needed to withdraw my Bitcoin into a private wallet, ASAP!

Why the urgency?

The wallet you fund on a currency exchange is not your wallet. It belongs to the exchange. If the exchange goes bankrupt, any coins in your exchange wallet could go with it.

Don’t keep your coins on an exchange!

When it comes to withdrawing currency, you are, of course, hindered by transaction fees and the like. For example, it is probably not worth withdrawing a small amount of currency, because the bulk of it will be eaten up by fees.

This is true of all exchanges, but especially true of Coinsquare. At the time of writing, the minimum amount of Bitcoin you are allowed to withdraw is 0.01 with a 0.0025 transaction fee. Even if I could withdraw, the fees would eat up most of my meager 0.004 BTC.

Hindsight

With the benefit of hindsight, I should have asked two question in assessing whether or not to join a currency exchange:

1. How much are deposit fees?

The exchange wants to make money just like you. They make theirs through transaction fees.

Until we have exchanges where we can skip over this funding nonsense and trade directly from our private wallets, we’re going to get gouged.

2. How much are withdrawal fees?

This question is far more important than the first.

Had I thought to ask this question, I would have discovered that Coinsquare does not publicly list the withdraw fees for the various currencies in which they trade. There was no way I could have learned the 0.0025 BTC withdraw fee before signing up.

I even submitted a support request asking specifically for those withdraw fees… as of writing, no response yet, but I’ll keep you posted.

The moral of the story

The whole point of joining an exchange is to change your currency and get out. Coinsquare makes this difficult and expensive. By contrast, QuadrigaCX is a breeze (and way cheaper).

Stay away from Coinsquare. QuadrigaCX has my endorsement until something better comes along…