- I spent several hours and lost $10 trying to buy altcoin solana (SOL) for an upcoming story.
- Buying crypto in the UK proved to be a frustrating, fruitless experience.
- Here’s what happened and why it’s a sign that a crypto winter might not be such a bad thing after all.
I’d love to say that I am jumping into crypto as the market is in free fall because I have amazing market insight from my time interviewing crypto and investing legends.
I don’t. I simply needed to buy a tiny amount of altcoins for a story I’m working on.
It should be straightforward. After all, crypto has become mainstream over the past two years, right?
The crypto market has dominated headlines as the currency generated stellar returns. El Salvador adopted bitcoin as legal tender. Big-name celebrities like Steph Curry and Jimmy Fallon bought non-fungible tokens, while legacy institutions like Sotheby’s and Christie’s sold them. Even Nike and Gucci jumped head first into the metaverse.
Through all this madness, I stayed on the sidelines. As a reporter covering investing, I am not allowed to play the markets that I cover.
And while it riles some crypto personalities and investors that “mainstream journalists” don’t have a stake in the game, those are the rules (I don’t make them, so don’t @ me).
My first purchase came from a need to participate, not speculate, with the altcoins that provide access to the virtual worlds and blockchain games I’m writing about.
I expected the purchase process to take five minutes, maybe 15 at most.
It shouldn’t be that hard, right? Everyone from my little sister’s best friend to the biggest names in investing are already in crypto. I am also tech savvy, having spent several years as a software developer, as well as studying computer science as an undergraduate.
It turns out that despite the apparently mature market environment, my investing experience, and my tech know-how, a lot can go wrong.
Let me walk you through my frustrating, time-consuming, money-losing experience.
Buying from a mainstream crypto exchange
To purchase the altcoins, I decided to go with Coinbase, the largest publicly traded cryptocurrency exchange.
It’s a well-known platform and likely the first port of call for “noobs” like me who don’t have much to spend.
Since I was buying crypto in the UK, the process is slightly different than in the US. I needed to upload a photo ID, such as a passport or driver’s license for verification purposes.
I know this process doesn’t exactly align with the “anonymity first” ethos of crypto, but I was also under time constraints and seeking a low-fidelity approach where I could spend under $50. (I don’t think I’m alone here. I believe the next wave of crypto adopters will expect buying crypto to be as simple as buying an in-game video item.)
The verification process took a couple of hours, and once I was set up, I had two payment options: my American Express card or a debit card linked to the UK bank TSB.
Since Coinbase doesn’t accept American Express, I was left with the debit-card option. Immediately, my $10 deposit bounced — this past June, several UK banks imposed a ban on payments to crypto exchanges, and TSB was one of them.
Kari McMahon/Insider
I later asked a Coinbase spokesperson if there were other options I could have used to pay instead. While they did not directly answer this question, they did say that “all UK banks enable transactions to Coinbase” and “UK customers can both withdraw and deposit with PayPal on the platform.”
They told me the issue was with my account and not Coinbase’s system. Customer service would be in touch to resolve the problem, according to the spokesperson.
Kari McMahon/Insider
I discovered I wasn’t alone in this situation. Many other potential investors have made similar complaints on Reddit but have apparently received little help from customer service.
A Coinbase spokesperson explained that the challenges stem from the firm’s “robust and rigorous KYC process,” which means it can take longer for a small number of customers to get onboarded and gain access to Coinbase’s full suite of products.
I tried again four days after my initial transaction attempt to see if my onboarding issues had resolved, but I faced another error.
I am still waiting on Coinbase customer service to get in touch.
Kari McMahon/Insider
Expecting a similar set of hurdles with other leading exchanges, whether it be Binance, Bitstamp or Kraken, I looked at my alternatives.
I could either sign up to these various exchanges, hoping they had an AmEx/PayPal payment option, sign up with a crypto-friendly UK bank, or go to an online broker that sold a range of different assets, including cryptocurrencies.
Buying crypto from a regular broker
I picked eToro, a multi-asset brokerage company with a focus on trading services.
eToro has become a brand name in retail investing. Insider frequently cites its surveys and analysis on retail investing and trading behaviors.
I found the sign-up process to be smooth. All I needed to do was provide my national insurance number and complete a questionnaire on my investing behaviors and my understanding of complex derivatives.
Within minutes, I was signed up, with $11 deposited in my account.
I looked for the “buy” button to purchase $11 of solana (SOL), but could only see a “trade” button.
After making the trade, I thought I had made a huge mistake. Solana was in my portfolio, but it was flashing green or red, based on gains or losses in line with the fluctuations in the cryptocurrency. Thinking that had I entered some type of speculative position rather than actually buying the asset, I closed out the trade and exited the position, losing around 30 cents in the process.
After some more research, I discovered that what appeared on my portfolio was correct and I had purchased — and had owned — the solana. I reopened the position and went to transfer solana to my Phantom wallet.
I discovered two caveats:
1) Crypto assets must be transferred to the eToro wallet before they can be transferred to an external wallet.
This involves transaction fees, a minimum required amount of crypto, and several days to transfer.
An eToro spokesperson told Insider this transfer process can take up to five days. However, the length of time can vary depending on the blockchain. Fees can also vary, but eToro typically charges 0.5% of the transaction size. A blockchain fee is also determined at the time of the transaction and is independent of eToro.
“eToro Wallet acts as the gateway between the eToro investment platform and the blockchain,” said an eToro spokesperson in an email. “Once eligible users have transferred supported crypto assets to the eToro Wallet they can then move them anywhere on the blockchain. It is important for users to note that our security protocol only allows transfers from the platform to the wallet.”
2) Solana can’t be transferred to a wallet.
This is because it’s not currently eligible for transfer to the wallet.
I sold the solana again, losing more money in the process. Using the remaining money, I bought ether, which could actually be transferred to the eToro wallet, only to discover I needed much more ether if I wanted to actually make a transfer.
This was around 0.107588 of ether to be precise, which is around $260 — way over my initial budget.
This whole setup might have been ideal for a crypto speculator or trader, but it really wasn’t ideal for my purposes.
Sasha Yanshin, a UK YouTuber, has highlighted how the platform is much more oriented to traders than investors and how difficult withdrawing money can be if you haven’t done your research in advance. Despite this, he still continues to use the platform for its more unique features.
Another YouTuber, Jason Foong, has also described the difficulties eToro presents for long-term crypto holders.
Help, I want my money back
I faced some of the issues Yanshin talked about when I decided to give up on the process and withdraw my remaining $9.94 from eToro. Unfortunately, I couldn’t.
Kari McMahon/Insider
I needed at least $30 in my account to make a withdrawal.
I likely wouldn’t have had to deal with this if I had been able to pay into the blockchain games or metaverses directly, using my debit card and good old-fashioned fiat currency.
I decided to deposit an additional $20 to enable the withdrawal. This new attempt kept failing. A day later, I received an email saying my account was verified, which made me question if the first deposit that went through had actually been a fluke.
Further research showed that even if I had managed to put $20 into my account via online banking, I would have to wait around seven days to withdraw that money.
With all else failing, I decided to close my account. At this point, I was informed that any money held in the account that had not been withdrawn would be kept.
“eToro, like many providers, has a minimum withdrawal amount, which is stated on our website,” said an eToro spokesperson. “At eToro, the minimum a customer can withdraw is $30.”
A withdrawal request will typically take two business days for approval and funds will be received in a few days. However, it can take up to 10 business days, depending on the payment method, they added.
Crypto needs a bear market
So with $9.94 of hard-earned cash still sitting in my eToro account, I am left with a bitter taste in my mouth.
You might argue I should have done more research in advance. But realistically, how much research should we expect consumers to do for a $10 transaction to play a game?
And while UK banks implemented this blanket ban on cryptocurrency transactions for consumer protection, I can’t help but think they’ve done more harm than good.
Scroll through Trustpliot for reviews of any number of crypto exchanges and the complaints are the same.
In the past, it would have be easy to argue that it’s the consumer’s fault — if people speculate, they should know the risks and must deal with the consequences.
But crypto assets are no longer just pure speculation.
Real-world-use cases are emerging, from gaming to fashion and the creator economy. Major brands such as Gucci, Adidas, and Hasbro have offerings in the crypto ecosystem, and people should be able to access them if they desire.
A $10 spend from a well-capitalized bank account to a crypto exchange shouldn’t instantly be rejected. Just like a $10 spend on cigarettes, alcohol, or gambling sites wouldn’t get rejected.
It’s time to accept that crypto isn’t going away and that a more sensible and nuanced approach to crypto regulation is needed.
The barriers I faced are just the tip of the iceberg in terms of the number of hurdles people have to work through to gain access to this asset class, yet they continue to do so again and again, after both bear and bull markets.
Another “crypto winter” of long stints of low
volatility
and similarly low prices might not be a pleasant idea for most crypto investors, but it’s probably what’s needed to iron out these issues in the current ecosystem, from consumer protection to the user experience, and could ultimately help push crypto to the next stage of maturity.
Regulators, traditional finance, and crypto players could make more progress in a
bear market
when not every discussion or decision will be analyzed and seen as a bullish or bearish signal that sends the market into a frenzy.
Some of the most well-regarded crypto products in today’s market, such as the FTX exchange and solana, were built in the last crypto winter. Edith Yeung, a venture capitalist at Race Capital, invested in both companies at the seed stage in 2018. By June 2021, solana had raised $314 million in a recent fundraising round, while FTX’s valuation hit $32 billion in December following a Series B-1 round.
So while it’s easy to fear a crypto winter, it might just be the best thing for the industry’s future adoption.