How to turn “real” money into Litecoins / Bitcoins and back again
Posted by Kate Craig-Wood on July 3rd, 2013
Following our media interest I’ve had quite a few people ask how to buy Litecoins and Bitcoins, especially since Mt. Gox is still having problems (their bank is overloaded, basically).
First off, although you don’t need a local wallet I strongly recommend that you do get one; you’ll need it to purchase things really. If you leave all your cryptocoins on a site they are potentially vulnerable. That said, I do often have quite a few LTC, BTC or USD on exchanges like Mt. Gox and BTC-E for convenience, but that’s your choice to make. I have found that it is safe to transfer funds directly from, say, a Mt. Gox account to a BTC-E account to a LTC Global account, but again that is strongly unrecommended; you should make the cryptocoins pass through your local wallet ideally.
If they are in a local wallet all you need to worry about is someone stealing that computer; of course you need to take appropriate security precautions but you should be anyway! I do not recommend you keep your wallet on your phone; it is too steal-able and frankly not very convenient (you need to do a lot of copying and pasting with cryptocurrencies).
You should download the latest versions your wallet of choice listed on the official Bitcoin and Litecoin sites:
Personally I use Litecoin-QT and Bitcoin-QT. I do not advocate trusting your money to a third party site if you can avoid it.
Converting fiat money to bitcoins and visa versa
Personally and for CipherMine I use BitStamp to convert fiat money (USD, EUR, GBP etc) into Bitcoins. They are good and fast compared to some other services I’ve used. I would not recommend the likes of Intersango, PerfectMoney or OKPAY. The latter two don’t offer exchange services but they are routes into exchanges like BTC-E.
Bitstamp bank in Poland so if you’re in the EU you have the added convenience of SEPA bank transfers. They welcome international bank transfers too though.
You can use their simple buy system safely but if you want to get best value you can place a limit order. I won’t go into the details here though. Once you’ve bought your BTC, transfer them to your wallet address!
To reverse the process, simply transfer the BTC back to Bitstamp, or your exchange of choice, sell them for USD, then request a withdrawal. Simples! Does it work? Well I’ve certainly managed it; just this week I’ve withdrawn about EUR €10,750 (USD $14,000) via Bitstamp. The cash is in my bank account, and took 2-3 days to arrive.
Note that Mt. Gox is currently experiencing severe delays with fiat withdrawals, hence why I’m advocating BitStamp even though they have lower volumes.
Getting hold of Litecoins and other alt-coins
Now, BitStamp is not a fully-fledged crypto-exchange since it has low volumes and only does Bitcoins/USD, so once you’ve got your Bitcoins if you want Litecoins or another cryptocoin you’ll probably want to move them somewhere else. Again, personally, I like BTC-E since it does most of the major cryptocurrencies (eg. BTC, LTC, Feathercoin, TerraCoin, etc) and also EUR and USD. Mt. Gox is a bit limited by comparison and also has fiendish transaction fees (>0.5% vs. BTC-E’s 0.2%).
I have tried paying money directly into BTC-E using PerfectMoney, OKPAY and VirWoEx (via Second Life Linden), but all were outrageously expensive; up to 10% transaction fees in total.