Am I being ripped off?

Question

I am business man but I am not tech savvy. Recently, I have needed to use bitcoin for a few business transactions and so I asked my IT guy to buy the bitcoins for me and take care of the transactions. He told me that due to various fees the $2000 dollars that I gave him only amounted to $1,400 after said fees. My question is: am I being ripped off?

Answer 1

Fees usually are around 1% for each side (the person trading fiat for Bitcoin and the person trading Bitcoin for fiat).

Exchanges which directly trade with the user usually have different prices for selling and buying, usually 2% to 3% of by each other (1% to 1.5% from the middle so you're slightly worse off than trading with another person through an exchange).

However, there are exchanges which take much higher fees. Many charge extra depending on the payment option chosen on the fiat side. The most expensive serious one I was able to one has a 10% fee when paying via PayPal and a few weeks ago, someone on this site asked a question about how an exchange with a ludicrously high fee (it was around a third of the value exchanged, like in your case) could exist. Well, its existence of course doesn't mean that it's used a lot ... or at all.

You can easily find exchanges for your country by selecting it here and looking for the fees of a few exchanges listed for it.

Answer 2

Fees depend on where you buy bitcoins, if you buy on Bitstamp fees range from 0.25% of the transaction down to 0.1% depending on the volume.

In your case it would have been 0.25% which in $ would have been 5$. Well looks like the fee you've paid is way too high.

But not everybody buys on a market like bitstamp unless you are trading, thus your other option would have been something like localbitcoins, if you compare prices there you will be paying around 20$ more for each bitcoin so since one bitcoin is around 900$ and you needed to change 2000 you would have paid much more in fees here (around 65$) but not even close to the 600$ you have paid.

The thing is, how do you know you have 1400$? haven't you changed your $ to bitcoins? In case you are just converting the value of the bitcoins to $ then you may not be being ripped off by anyone. Price of bitcoin is too volatile, for instance the price went from 1100$ one single bitcoin to 750$ in just 1 week, so if you bought your bitcoins on january 4th you would have almost 2 bitcoins, after a week on january 11th your 2 bitcoins would be worth 1500$ that is pretty much the amount you are claiming to have been ripped of from you so if this is the case you have only been ripped off by the market itself :).

If you think bitcoin has future keep your bitcoins and on June you might have doubled the amount of $ you will be paid for those bitcoins, on the other hand the price may drop and you might get half the $.

Playing with bitcoins is not for the faint of heart, but if you need to do business with bitcoins you have other options that will be safe for you. There are places like coinbase where you can be paid on bitcoins and receive the dollars (except for the fees which are not abusive), or you can pay with bitcoins if you need to. Transactions are almost immediate and you won't be suffering the volatility of the market.

You will need to do your research though and see what is the best option for your business.

Answer 3

Check your transaction id on https://blockchain.info/. Take those number of bitcoins and multiply by the price you see on https://tradeblock.com/markets/index/ (depending on the date of the transaction). That would be the fair value of what you sent and what they received.