How to Stop Paying Cryptocurrency Exchange Fees by using GDAX

I've been a loyal Coinbase user since 2013, when I bought my first Bitcoin. As one of the most well-backed cryptocurrency companies with over $200 million in funding, Coinbase has made a name for itself as a reputable token exchange.

But as I've gotten deeper into cryptocurrency, I've started to care more about the fees that companies take when exchanging. Coinbase's dirty little secret is that it also provides a service called GDAX. GDAX is a fully-fledged cryptocurrency exchange (supporting Bitcoin, Ethereum, and Litecoin) targeted at professional investors. Importantly, with GDAX, there are much lower fees. Let's do a quick comparison of what you might pay to buy a Bitcoin on Coinbase vs. GDAX.

Here's a purchase on Coinbase for 1 Bitcoin.

If you look at the market for Bitcoin on GDAX at the same time, however, you'll notice that you could buy a Bitcoin for a mere 4410.94. That's $88 in savings!

This is because Coinbase takes a 1.49% fee on purchases made through a bank account. With a Credit or Debit Card, this fee is 3.99%! That can amount to a hefty amount of cash if you're making substantial investments in cryptocurrency.

With GDAX, if you're "taking" an order (meaning filling an existing order in the order book), the fee is only 0.25% for Bitcoin and 0.30% for Ethereum. Maker fees (meaning placing a limit order on the order book that may or may not be filled) are 0. Pretty awesome if you ask me.

One can argue that Coinbase's fee is for the convenience of using an interface that doesn't require understanding order books. But how hard is it really to navigate GDAX? Buying a token is as simple as A) depositing dollars in GDAX and B) placing a market order for Bitcoin.

Personally I don't think you need to be a professional trader to be able to use GDAX and save a few (hundred) bucks.

  1. Reply
    Miguel (The Rich Miser) September 5, 2017 at 8:50 pm

    Interesting! What do you think of some of the newer exchanges, such as Gemini and Poloniex? My understanding is that their fees are lower than Coinbase, and about as easy to use as an online brokerage.

    • Reply Profile photo of Wallet Genius
      Wallet Genius Customer September 5, 2017 at 10:54 pm

      Great question. Last I’ve heard, Poloniex is better for inter-cryptocurrency exchange and supports more alt coins, though I haven’t used them myself. I’ve read about people using GDAX for fiat-to-crypto conversion, then transferring to Poloniex for crypto-to-crypto trading. Not sure about Gemini.

      Bittrex is another one that I personally use because it supports a bunch of alt coins, but I’d be sure to withdraw funds quickly after trading. The big questions for exchanges is security and reliability of withdrawing. I’ve heard that Poloniex is pretty good in these regards.

      I plan to do a follow-up post where I try the various exchanges and review them. Stay tuned.

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