Crypto-currency

Basics

Some basics

A cryptocurrency may use several or all of these:

• A database:
  • Blockchain: a distributed public write-only database.
• Fees to operate the currency:
  • Mining fees.
  • Stake fees.
  • Transfer fees.
• Store of something:
  • Store of monetary value.
  • Store of something else (contracts, files, etc).

For example, Bitcoin (BTC) uses blockchain, has mining and transfer fees, stores value.

Stellar uses blockchain, has transfer fees, stores any data ? Also Filecoin ?

Ray King's "Understanding the Different Types of Cryptocurrency"
Nicholas Rossolillo's "Types of Cryptocurrency"
Bitcoin Insider's "The Different Categories of Cryptocurrencies"

Coinbase

• Coinbase is the biggest exchange.
  
  
• Crypto-currencies supported: Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH), and Litecoin (LTC).
  
  
• You can have Coinbase hold your wallet ("Hosted Digital Currency Wallet service"), which is simpler for you but means you have to trust them more than if you were holding money in your own wallet yourself. For fairly small amounts (thousands instead of millions), I think this is fine.
  
  
• "Coinbase holds all customer fiat currency in custodial bank accounts, on behalf of customers. So, if you have fiat currency in Coinbase, in a USD wallet, it is covered by FDIC insurance up to $250,000 (just like a "regular" bank). This protects customer assets (so long as they have been converted to fiat currency) even in the event of Coinbase becoming insolvent." from Jake Frankenfield's "Coinbase: What Is It and How Do You Use It?".
  
  
• Coinbase pays no interest on money (fiat or crypto) held in your Coinbase account.
  
  
• Coinbase does only market orders, not stop or limit orders where you specify a rate and then your order either executes at that rate or doesn't execute at all.
  
  
• Coinbase fees/costs:
  • Fee when sending money from bank acct into Coinbase: 0.
  • Fee when sending money from Coinbase to bank acct: $0.15.
  • Coinbase fee when buying/selling a crypto-currency: 1.49%.
  • Miner's/transfer fee when buying/selling a crypto-currency: varies by currency, could be $16 for BTC, $1.50 for ETH, approx $0.20 for BCH, etc.
  • Points shaved off the exchange rate when buying or selling a crypto-currency: 0 to 200 basis points (0 to 2% of the total, I think). Apparently there are only market orders in Coinbase, and they may not give you the full market rate at the time when you enter your order. You may get an exhcnage rate up to 2% less than you expected.
  • Days of "float" when buying/selling a crypto-currency: 0 for Europe, more for USA ?
  • Days of "float" when transferring money between Coinbase and bank account: 2-3 days for Europe, up to 7 for USA ?

GDAX

• Crypto-currencies supported: Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH), and Litecoin (LTC).
  
  
• "Customer USD funds in GDAX are FDIC insured, meaning your balance up to $250,000 is protected." from Alex Moskov's "GDAX Review: Is GDAX a Safe Way to Buy Cryptocurrency?".
  
  
• GDAX pays no interest on money (fiat or crypto) held in your GDAX account.
  
  
• GDAX fees/costs:
  Vamshi Vangapally's "How to trade Cryptocurrency without fees?"
  

  • Fee when sending money from US bank acct (ACH) into GDAX: 0.
  • Fee when sending money from GDAX to US bank acct (ACH): 0.
  • Fee when buying/selling a crypto-currency at market ("taker"): 0.25% to 0.30%.
  • Fee when buying/selling a crypto-currency but order not executed immediately ("maker"): 0.
  • Miner's/transfer fee when buying/selling a crypto-currency: 0.
  • Days of "float" when buying/selling a crypto-currency: 0 ?
  • Days of "float" when transferring money between GDAX and bank account: 2-3 days for Europe, up to 7 for USA ?
  
  
  

Stop loss = market sell when stop price is reached.

Stop limit = set a limit; sell at limit price when stop price is reached.

...

You should be very careful when using stop orders. They are open to "slippage" and since the order book is effectively a queue of orders, your stop loss activates when a certain price point is crossed (when a match occurs between a buyer and seller, if I'm not mistaken) and your order goes in as a market order. This has higher associated costs/fees but also, if the price point was crossed as the result of a huge sell off, your (sell) order can execute at a much lower price point since you're effectively at the back of a long queue.

My experience

• 4/19: I'm a US citizen residing in Spain. Was connected through a VPN in Spain. Went to GDAX and clicked "Sign Up" and it redirected me to a coinbase.com page with GDAX in it.
  
  Set username and password, got verification link in email, asked me for Spanish phone number "so account can be protected with two-factor authentication". I do have a Spanish phone, but I said "skip for now". Got GDAX dashboard. But it turns out you can't go any further without giving a phone number; it's mandatory. And as soon as I gave the phone number, it sent an SMS, without any warning. Had to type in the code it sent.
  
  Then it asked for ID, and although it seemed to allow either using the laptop's webcam to take a photo of the ID or uploading a JPG of it, as soon as I told the browser not to allow this site to use the webcam, the web page said "error, fail, close your browser or reboot your computer and try again". So I guess you HAVE to use the webcam.
  
  Restarted my browser, logged in, and because cookies were cleared, had to do SMS message again. Said "allow webcam", it gave me a page saying I could use webcam or upload a JPG. I tried uploading a JPG, nothing happened. Tried using webcam to photograph driver's license, didn't work. Maybe script-blockers are preventing it.
  
  Switched to another browser with no blockers. Uploading JPG for front of ID worked, then they wanted back of ID, so I used webcam for that. Then a picture of my face, using webcam. Then it said "ID verification usually takes 3-5 minutes", and starting counting off seconds ! Then after 4-5 minutes, it said "failed, try again" ! I did it again, and immediately it said "taking longer than expected, check back later". So I guess the verification is in progress.
  
  Sent them a Support ticket explaining that I'm a US citizen residing in Spain. Then saw I had two emails from them saying my ID photo wasn't clear, try again.
  
  Support responded within 10 minutes. Gave me a link (https://www.coinbase.com/verifications/identity) that showed two fails because "Reason:Your document was valid, but was from a country that didn't match your profile." Support wants a utility bill, lease or mortgage to prove my residence. Used another link they gave to send a bank stmt showing my name and address. And they have my driver's license, showing same.
  
  Support got back to me in 10 minutes, said my country has been changed, try again. My bad, I should have VPN'd from the country that matched my documents.
  
  Fed in more data, did photos again. Waited 4 minutes, verification succeeded, says add a bank account. Showed a list of about 200 banks, mine was not in it. Put in routing and account numbers, said they'll do two small deposits, come back and tell them the amount when the deposits show up, might take 2-3 days.
  
  
• 4/23, two tiny deposits showed up in my bank account. Logged onto GDAX, verified my bank account by typing in the numbers from those deposits. Changed a few other account settings such as timezone.
  
  Initiated a transfer of $5K from my bank account, and page said "transfer is instant, you have $5K in USD account now". But my bank account doesn't show a $5K transfer out; it should take a while. Then noticed I was in a Coinbase page, not a GDAX page, when I initiated the transfer. Hope that doesn't cause a problem. Got an email from Coinbase saying "transfer started, bank account debited, here's a reference number, no fee, funds available now in your Stored Value Account". But if I go to GDAX dashboard, it shows USD balance as zero. Logged into GDAX again half an hour later, still zero USD.
  
  About 5-6 hours later, another email from Coinbase saying "we've received your money".
  
  12 hours after starting the transfer, still no transaction in my bank account. Logged into GDAX, zero USD there.
  
  
• 24 hours after initiating transfer from my bank account, I do see the transfer recorded in my bank account, the money has left there. Logged in to GDAX, it says my USD account has $0. Tried to do a deposit to that account, selected Coinbase USD account as source. But the Coinbase USD account shows "balance $5000, available $0". Tried the deposit to GDAX anyway, got an error message something like "$0 in account".
  
  
• I'm using a VPN and my browser clears cookies when I quit out of it. This means that the first time I log in to GDAX each day, I have to verify my login via both SMS and email.
  
  
• 
  
  
• I log into GDAX, do some stuff, click on "Sign Out", close the tab. Later, I open a new tab, go to GDAX, click "Sign in", get logged right into my account without being asked for password !
  
  
• I see a note "Bank transfers are limited to $2,000 per week" in the Deposit / Deposit Funds / Bank Account dialog. Yet I was able to start a bank transfer of $5000.
  
  
• 4/30: no change.
  
  
• 5/1: my phone died, moved the SIM into another phone, got everything working, logged in to GDAX. Still can't transfer funds from Coinbase. Sent an email to Coinbase Support, got a response within 15 minutes, they said "I just checked in your account and your hold will clear on Wed, 02 May 2018. I'm sorry for the inconvenience this has caused - we are actively investigating an issue where holds will be longer than after the funds have cleared from your bank.".
  
  
• 5/2: now the money is "available" in Coinbase account. Initiated a transfer of all of it to my GDAX account. A couple of minutes later, my GDAX account shows the money is there.
  
  
• So, now I'm ready to buy some cryptocurrency. But all four of them are up significantly in the last 30 days. Have to wait for a downturn.
  
  
• On vacation for a couple of weeks, and SMS to my phone didn't work, so couldn't log in. Also some problem where GDAX on Firefox just gives a blank page; on Chrome, gives a proper page.
  
  
• Got home, SMS worked, changed account to use Google Authenticator instead of SMS.
  
  
• 5/16: Placed a maker order for BCH at $1250; market is at about $1280.
  
  
• 5/17: Price dipped, order executed at exactly $1250. No email notification, as of about 4 hours later. Also nothing in GDAX's Notification list on the site. [Filed a Support ticket, got "We currently do not have the option to receive email notifications about orders. We realize this is a major shortcoming, so our engineering team is working on implementing this going forward."]
  
  
• 5/17: Tried to initiate a transfer of another $5K from my bank account to GDAX. Page gave a warning "transfer exceeds daily limit of $2K, so the money won't be available instantly". I clicked OK, and got the same warning again. Clicked OK again, got same page again. Now I'm unsure if I've started 0 or 2 transfers. Can't tell from GDAX/Coinbase.
  
  
• 5/18: No sign of the $5K transfer anywhere, so I think it didn't happen. And I think I misread it, the $2K limit is per week, not per day. Initiated a $2K bank transfer, and GDAX said okay. Got an email from Coinbase saying "transfer started, bank account debited, here's a reference number, will complete 5/26".
  
  
• I notice that GDAX doesn't remember what "product" I'm interested in. Every time I log in, I have to select "BCH/USD" again in the Dashboard.
  
  
• 5/19: $2K transfer appears in my bank account.
  
  
• Sent a request to Support about the daily/weekly transfer limit, and within 24 hours got response "You can apply to increase your withdrawal limit".
  
  No explanation of why Coinbase and GDAX are showing different limits to me. And it turns out that page is for "daily withdrawal limit from GDAX", not what I want.
  
  Sent message to Support, got "The limits you see now are not permanent, and they will increase automatically over time as you accumulate successful purchase volume. When your payment method is brand new or if it hasn't yet accumulated much trading volume, our system can sometimes adjust ordering levels based on the information at hand. You can keep track of your current limits and expected upgrade dates on verifications."
  
  That page says my "Bank purchases / deposits" limit is "$1,000 /day". But I go to GDAX's "Deposit Funds" dialog and it says "Bank transfers are limited to $2,000 per week." Sent another message to Support.
  
  Got response "That is correct, the limits between Coinbase and GDAX are different. Your withdrawal limit is shared between the two platforms, but your deposit limit is different for each. Once you start to generate a longer account history and a larger volume, your limits should automatically start to increase. I am going to forward your account for limits review, but I cannot provide a timeline on this."
  
  
• 5/23: I see a notice in my account that the $2K transfer will complete on 5/26.
  
  
• I see news articles that GDAX will be replaced by Coinbase Pro.
  
  
• 5/25: Got email that they received my deposit yesterday (probably in last 12 hours) and have funded my Coinbase account. Logged into GDAX, and Accounts shows USD with $2K available, $2K total.
  
  
• 5/25: Placed a maker order for BCH at $1060; market is at about $1065. Had to calculate the number of BCH myself; GDAX doesn't let you say "buy $2K worth" and calculate for you. And you have to round the number down to 8 digits after the decimal point. BCH crossed that price within a couple of minutes. Order was filled.
  
  
• 5/25: Initiated a $2K bank transfer, and GDAX said okay. Got an email from Coinbase saying "transfer started, bank account debited, here's a reference number, will complete 6/3".
  
  
• 6/10: Maker order to buy for 2 BCH at $1000 was filled.
  
  

Trading

Miscellaneous

User sends some coins of currency A to a blockchain for currency B

I hear about this kind of error happening often, and apparently it's irreversible, the coins are lost.

But I don't understand: wouldn't this kind of error be EXTREMELY easy to prevent in software ? Software can simply check that types of currency match, before doing the transfer ? Maybe the addresses or transactions can have type of currency specified in them ? Or the exchange (which knows the originating currency type and destination blockchain type) does the comparison ? Is this not easy ? But maybe no exchange is involved, if doing a direct wallet-to-wallet transfer, or user-to-user transfer ? I don't know the right terms, I guess.

Jon Southurst's "Coins Sent to Wrong Address? Easy User Mistakes Mean Profits for Exchanges"
Jamie McKane's "Sending Bitcoin to the wrong address isn't always the end of the world"
JP Buntinx's "What Happens if I Send Bitcoin to a Different Blockchain?"