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What's the best way to pay an online merchant using Crypto for someone who has never bought/used it before? (lemmy.dbzer0.com)

submitted 10 months ago* (last edited 10 months ago) by Melatonin@lemmy.dbzer0.com to c/asklemmy@lemmy.ml

26 comments fedilink hide all child comments

I trust the provider, and it's a small amount I'm willing to risk. Just don't want to throw it away, be frustrated, or get involved with shady people.

Android/Windows user, btw.

For those people who are wondering why I would ask Lemmy strangers about my money decisions, let me tell you my thinking.

I am in the decision making process. One of the things I do when making decisions is gather information from a variety of sources. I then weigh that information as to how useful I find it, research any possible leads, and use it as a launching point for my own investigation. I find that beats the hell out of googling whatever I can think up on my own in a field where I have no experience whatsoever.

For clarification, I'm not telling anyone else how to do anything. You humans live your life however you want, and I respect you as individuals with opinions of your own. Live how you want to live, choose how you want to choose, be how you want to be.

Much peace to all ✌️

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[–] Melatonin@lemmy.dbzer0.com 5 points 10 months ago (1 children)

If you really don't mind I would ABSOLUTELY like a walkthrough. Firstly, because I don't like having someplace I can't go, and secondly, because I may need it sometime and forewarned is forearmed.

[–] subtext@lemmy.world 11 points 10 months ago (1 children)

Sure thing, here's how I would go about it if I needed to buy something using Bitcoin (BTC) and assuming I'm using Kraken. Many of the steps would be nearly identical if you needed a different cryptocurrency or exchange, just switch out the instructions as needed. I'm also writing from a US point of view. Hopefully someone else will come along to peer review this as well so you're not just taking my word for it.

This turned out quite a bit longer than I meant it to since I tried to add some explanations for each item. It's tedious, but not hard once you know what you're doing. I only do it if I get a good discount or if there's an extremely compelling reason to use cryptocurrency. TL;DR at the top, it's split into two comments since it didn't want to post as one comment due to length.

TL;DR:

Sign up for Kraken, get verified
Link your bank account
Deposit funds from your bank account (+ cushion for withdrawal fees) then wait 7 days
Confirm cryptocurrency accepted by vendor + address
Purchase cryptocurrency
Send to merchant's address
Sell any excess cryptocurrency
Withdraw funds to your bank account

Please ensure you get the right website. The website is https://kraken.com. Please do not copy or click on the link I just put in without verifying with additional sources such as Wikipedia, [DuckDuckGo](https://duckduckgo.com/q=Kraken+crypto exchange), or other reliable sources such as Forbes or NerdWallet.
Register an account with Kraken. You'll likely need some identification verification such as sending a picture of your driver's license or other government-issued identification. This is set out by the Know Your Customer (KYC) requirement that most centralized exchanges must follow and it is a requirement set out by the federal government for many services that work with money to fight money laundering and terrorism. This identification is likely required before you'll be allowed to deposit and withdraw actual, fiat money. Still feels a little weird though...
Please note it may take a day or two for their customer service to verify your account.
While you wait, please, please, please secure your account as much as you can with a strong password and 2 factor authentication at the bare minimum. There is additional security that can be had by enabling some extra features, but if you only have a small amount of money, a strong password and 2FA is likely enough for now. Please also ensure it is not a password you have used elsewhere (hopefully you're using a password manager).
Link your bank account with Kraken so that you can deposit US Dollars into your Kraken account. This will likely require you to work with Plaid to link your checking account (note: Plaid is rife with controversy, but there's not much you can do about that... Plaid seems to be everywhere from Venmo to Coinbase). Note that there are other funding options such as wire transfers or using a debit card, but they often have fees whereas an ACH transfer has none. Here is the link that I see in my browser to deposit USD: https://www.kraken.com/c/funding/deposit?asset=USD&assetType=fiat, I would assume yours should be identical.
Deposit enough money to purchase the item you wish to purchase. You will need to deposit a bit more money than the purchase price since there is a withdrawal fee depending on the cryptocurrency you wish to withdraw as well as a withdrawal minimum. you can see Kraken's current withdrawal fees here. Note that fees are rather high for many of the traditional cryptocurrencies, so it would only make sense to use these cryptocurrencies if you're purchasing an item with a large discount. There are other cryptocurrencies with lower fees, but they require a bit more know-how. For example, withdrawing Bitcoin on the Lightning Network is currently free, but should only be done if you know what you're doing. Some of the more mainstream cryptocurrencies that have lower fees include Litecoin (LTC), Solana (SOL), Cardano (ADA) and Stellar Lumens (XLM), but they require that the vendor accept these cryptocurrencies. I will not get into the merits (or negatives) of these specific cryptocurrencies. So long as you're only holding them for the few minutes it takes to make the transaction, it should not matter which one you use. My personal preference is to send a stablecoin on a network with low fees. For example, sending USDC on either the Polygon (MATIC) or Solana (SOL) network. This requires more knowledge, and you shouldn't attempt it unless you know what you're doing.
Wait the required time for Kraken to allow you to withdraw your funds, likely 3-7 days. While you wait, you can just keep your funds as US Dollars to avoid any price fluctuations. As your account gets older or more used, the waiting requirement may go away (I don't think I have one anymore).

[–] subtext@lemmy.world 10 points 10 months ago* (last edited 10 months ago) (1 children)

(2/2 Continued)

Confirm with the vendor which cryptocurrency they accept. We will proceed with BTC for this example.
Confirm the address to which you are supposed to send the cryptocurrency. I'll assume you're using a desktop computer. The vendor will likely have a QR code with a line beneath it that has the address in text form. You will copy this address in text form.
On Kraken, add this address as an approved withdrawal address. Go to Transfer crypto → Withdraw → select Bitcoin → Network: Bitcoin → Add new withdrawal address. The direct link on my browser is https://www.kraken.com/c/funding/withdraw?asset=BTC&assetType=crypto&network=Bitcoin&method=Taproot, please confirm that your link matches. Provide a description of the address.
Important: you must ensure the address you enter is correct or else the funds will be lost and irrecoverable. Ensure that you copy and paste the address exactly. Once you've copied and pasted, go back and verify character by character that the addresses match (or at least the first 5-7 characters and the last 5-7 characters, ideally the whole address, though). This is the number one step where people mess up and it's really heartbreaking because there's nothing that can be done about this.
Save the address in Kraken.
Now, confirm the amount that must be sent to the vendor. Depending on their rules, they may have ~30 minutes of time where the price is locked. If not, you may have to buy more BTC than you need just to be safe when sending to ensure you have enough. Remember that the total amount you must buy is the amount requested by the vendor PLUS the withdrawal fee, currently 0.0004 BTC for Kraken.
Purchase the required amount of BTC. Remember that you must purchase enough to cover the vendor price plus the withdrawal fee. This can be done as either a market order (gets filled immediately, but at whatever price the market is currently at, plus slippage), or as a limit order (price certainty, but not immediate). This is a matter of risk tolerance and the size of your purchase. If your purchase is rather small, it might be okay to just do a market order. If you're buying thousands of dollars of BTC, you should use a limit order. You can read about the different types here. You can read more about market and limit orders on Wikipedia.
Edit: You may need to change the interface to be able to do a market or limit order. You can use either the classic or the pro interface. The classic interface is likely all you need. I got to it by clicking the nine dots in a square next to the account symbol and navigating to Kraken Classic → Trade → either Simple or Advanced depending on what you wish to do... Simple is probably fine. The link shown in my browser is https://www.kraken.com/u/trade/new-order. If it's showing the wrong cryptocurrency, you can change which cryptocurrency is shown with the spyglass just under the Trade menu option. It should show some cryptocurrency pair like BTC/USD or ETH/USD.
Once you have completed the BTC purchase, send the cryptocurrency quickly to ensure there is not too much price change between purchase time and sending time. Once again, head to the withdrawal page in Kraken (for me it's that same link as above where we added the vendor's address), and select the proper withdrawal address for the vendor.
If you're paranoid like me, confirm once again the address to which you're sending the funds as they are truly and utterly non recoverable once sent.
Confirm again that the amount of BTC that must be sent to the vendor and copy and paste it into the Withdrawal amount field.
Select Withdraw BTC and review the transaction information to ensure everything looks correct. You should see the name you entered for the vendor's wallet, the beginning and end of the vendor's address, the network should read Bitcoin, the withdrawal amount should be correct, the withdrawal fee should match the fees posted by Kraken at the link above, and the total should be the sum of the two BTC amounts.
Once you're happy with the transaction (and once again, you know that it is all correct because it is impossible to undo cryptocurrency transactions), you can confirm the withdrawal.
Different cryptocurrencies have different processing times that are a function of their technology. Just know that it likely won't be instantaneous. Wait the required time and verify with the vendor that they received your payment. You'll likely get a notification before it's confirmed that it is pending while they wait for the proper verification time. BTC, as an example, has a waiting time of approximately 40 minutes.
Once you are done with your transaction, assuming you don't wish to use cryptocurrency ever again, you can sell off the rest of your BTC and transfer the rest of your US Dollars back to your bank account.
Ensure you keep a record of your transactions for tax purposes, and be sure to check the box on your tax form that says you transacted cryptocurrency in the year so Uncle Sam doesn't ask any funny questions. You shouldn't have too much in the way of capital gains or losses, but if you only did one transaction in the year, you can likely use a free cryptocurrency tax service to calculate any numbers you need to put on your 1040 / into your tax software. An example would be Koinly or Crypto.com Tax (again, please be sure to verify you're on the correct URLs, don't take my word for it).

[–] Melatonin@lemmy.dbzer0.com 3 points 10 months ago (1 children)

WOW. It's really nothing like anything else.

[–] subtext@lemmy.world 6 points 10 months ago (1 children)

I promise I put in about 20 times as much detail as is necessary to try to distill a bunch of knowledge into a Lemmy comment lol. If I needed to pay a merchant in crypto now, it’d be a 5 minute affair.

Hope I at least helped!

[–] Melatonin@lemmy.dbzer0.com 3 points 10 months ago

I appreciate you! This reply is exactly what I hope for and almost never get. Many thanks, it would be stickied if I had such power!