I bought one Bitcoin on September 19, 2017 for $3,909. This purchase was approximately 4 years in the making. For those who haven’t yet bought Bitcoin or altcoins, I’m reporting my experiences to help you avoid the problems and frustrations I encountered. Much of it was self-inflicted. Some of it was bureaucratic.
By the time I finally acted on my intention to buy Bitcoin, the price increased X100. During the summer of 2017, I trolled the Internet researching the best platform to buy, and decided on Coinbase. This was my first mistake. To be fair, it seems that people who signed onto Coinbase between 2012 and mid-2016 are happy with the platform. But those of us who signed on mid-2016 and later had a terrible experience.
In the spring of 2017, Bitcoin climbed from $800 to $1,300. I could see the steady rise in valuation and I wanted in. When Bitcoin reached $2,000 at the beginning of June, I signed up for a Coinbase account. I was wanted to buy immediately. That day I learned there is no “immediately” when you are buying for the first time.
In hindsight, all crypto platforms I’ve encountered (in the US) require a “validation” process, which basically means you prove you are who you say you are before you are allowed to buy or sell. Basically, without this ability, having a Coinbase account is pointless. On Coinbase, getting “validated” takes A LOT of time. In fact, 5 months after signing up, Coinbase STILL hasn’t “validated” me. And during that time, the price more than doubled. I tried reaching Coinbase’s customer service and learned they don’t have customer service. They only provide canned FAQ answers and “chat bots” but no live humans to call or email. A heroic amount of digging uncovered a customer service email address. I sent many requests inquiring about my status and how to expedite the process: Provide more information? Clarify something? I never received a response.
I’m embarrassed to say it took 3 and a half months before I moved on to a different platform. Archived Reddit chat rooms indicated Kraken as a decent platform, so I signed up for Kraken and discovered Kraken has 5 “Tiers” of validation.
The first is “Tier 0” which means you activated your account, and you can look around but not buy, sell, or trade. If I recall correctly, you click on a link that’s emailed to you. It only takes a few minutes.
The second is “Tier 1” which means you can trade Bitcoin you already have, but you can’t buy anything with real money (or “fiat currency” as they call it). You provide your full name, country of residence, birth date, and phone number. You can reach “Tier 1” certification within a few hours, but for someone buying their first Bitcoin, this Tier is useless.
So you move on to “Tier 2” which gives you a little more functionality but still restricts a US resident from buying their first Bitcoin. You are asked to upload a scan or photo of the front and back of a government-issued photo ID, like a driver’s license. It also asks that you upload a scan or photo of a bank statement or credit card statement with your full name and address on it. It also asks you to take a selfie holding your government-issued photo ID and a sign with a statement declaring “Only for trading digital currency on www.kraken.com” with the date and your signature. It felt like a posing for a “proof of life” note in a hostage situation. I uploaded it all and waited for confirmation. After a few days of no change in status, I became concerned and looked for a customer support outlet. Of course there was no phone number but there was an email address. Remembering my bad experience with Coinbase, I reluctantly emailed Kraken customer service and I was shocked to receive an answer a few hours later that day – signed by a person’s name. He said my application was working through the system but it all looked fine. I thanked him for the speedy response, and received a response saying “you’re welcome” which was not necessary but nice.
I think a week passed before I received the email indicating my ID was accepted and I was “Tier 2” validated. In the mean time, Bitcoin price rose 10%.
I moved on to “Tier 3” which lets a US citizen link a bank account to a Kraken account. I was eager to complete this phase because Bitcoin value was rising quickly. Unfortunately, linking your Kraken account to your bank account takes almost a week.
First of all, you need to know your bank’s wire routing number WHICH IS NOT THE SAME as the routing number on your checks. Finding the right person at your bank who understands what you’re asking for is a process that may take an hour or more. Once you get this information, you populate it into your Kraken account. Then you have to decide EXACTLY HOW MUCH money you plan to wire from that bank account into your Kraken account. I found this nerve wracking since Bitcoin prices were rising daily. I ended up wiring enough to buy 2 Bitcoins at the time.
When you identify the amount of money you plan to wire, Kraken sends you special instructions that you MUST PRINT OUT AND TAKE TO THE BANK. You need the special instructions to wire the money into your Kraken account successfully. If you make a mistake, your money can be stuck in limbo for who knows how long.
I printed my instructions and went to the bank. My bank charged $35 for the wire. The funds’ destination address on my print out didn’t match what was in my bank’s system and I was concerned my money would end up in purgatory. The bank employee assured me their system was correct which gave me no comfort. I logged into my Kraken account every day for the next few days and saw my wire transfer “pending”. I wired the money on a Friday and the following Thursday the wire cleared and appeared in my Kraken account. Apparently, funding your account the first time takes the longest and subsequent wires will clear faster.
That day Bitcoin was $3,909. I wanted to buy 2 (one for each of my kids) the amount I wired was just short of the $7,818 I needed. So I bought only 1 Bitcoin and had about $3,500 left in my Kraken account. I was glad I finally bought my Bitcoin, but disappointed I procrastinated for so long that I could only afford to buy 1. With my remaining $3,500, I bought some altcoins and I’ll tell you about that adventure in a separate post.
Kraken also has a “Tier 4” which is just like Tier 3 but gives you higher spending limits. This is for ballers, not civilians like me. There’s a whole menu of “leveraged options” and “stop limits” that I’m quite confident I will never use.
So, the moral of my story is if you’re THINKING of buying Bitcoin (or any cryptocurrency), you should set up your account NOW because it’s a very time consuming process. It might be a good idea to sign up for a few exchanges simultaneously so you don’t lose time if you find one platform is not good. When trying to choose which service to commit to, test out its customer service. If they aren’t responsive when you test them, they won’t be better when you actually need them. When you decide on a platform, fund your account before you’re ready to buy. Wire a small amount to make sure you’re doing it right. When that arrives successfully, wire more money – enough to make a purchase so you’ll be ready when the price is right.
I wish I had the benefit of someone’s experience before I muddled my way through the process. Let me know about your first Bitcoin purchase in the comments section. I’m also happy to answer questions to help you get through the buy in process.