Saturday, 30 November 2013

How to get a better and safer BTC/USD exchange rate than bitstamp

Bitstamp has become the main bitcoin exchange site in the last period, after the long time number one Mt. Gox proved its limit in numerous occasions with server failures, money sized by the authorities, impossibility to do withdrawals in decent time intervals and so on.

However Bitstamp reign comes with a price, its fiat/BTC rate is constantly under other exchanges. Of course you are more safe with bitstamp so people will still take this cost, however there is a safer and more profitable way to sell and buy bitcoins and better rates than bitstamp offers.

You can use Virwox service for this and I will show you below why it is better. You can read more on how to buy and how to sell Bitcoins using just your creditcard or ewallet (moneybookers/skrill, neteller or even paypal).

Why it is safer? Well Virwox is an established place to buy and sell Linden dollars (SLL). That is the currency that is being used in online game Second Life by tens of thousands of users. This means that Virwox is not solely (or even primarily) focused on BTC and that make it less vulnerable to the still grey legal area of bitcoins.

However, as you could see in the above links on how to buy or sell bitcoins, Virwox actually allows bitcoin transactions via SLL (meaning you have to buy Linden Dollars first with your fiat and then you can buy bitcoins with these)

But now let's focus on the math part that will prove that Virwox really offer better rates than Bitstamp when it comes to USD/BTC or any other fiat for that matter.

First a few lines on the commissions in the case you want to sell your bitcoins for fiat (USD, EUR etc)

1. Depositing bitcoins in virwox is free of charge (so if you send 1 BTC you will get 1 BTC in your account)

2. when selling your BTC for SLL you will have to pay a commission based on your account history, this can range from 3.9 to 0.78%

3. Then you will have to convert your SLL into USD or EUR, so you will have to pay the same commission for a second time.

4. Last step is to withdraw your new fiat money that you made by selling your bitcoins to your card or ewallet. Here the fees are a bit diffrent depening on the method you want to use. PayPal seems to have the larges fees, while others (like skrill or Neteller or Bank transfer) over a staggering  1 EUR/USD/CHF/GBP per transaction

Now let's do the math, based on the below prices (the printscreens were taken at the same time on virwox and bitstamp)

If you deposit 1 BTC to virwox you will get 1 BTC into your account (as per point 1 from above).

Then you will sell your bitcoin for SLL at a rate of 270008. Beside this you will also pay a fee (let's take the an average commission of 2.34%) so that's 6318 SLL, so in your account you will have 263689 SLL.

The next step will be for you to sell your SLL and buy USD with it. This will require that you pay a new round of fees. So with 263689 SLL you can buy 1127.5 USD (2636689/228.4 and then deduct the 2.34% fee).

Now you can actually withdraw the USD from bitcoins back to your moneybookers, neteller, or bank account for minimal fees.

If you would have done the same operation on bitstamp you would have only got ~1070 USD (depending on your bitstamp fee)             


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