The Initial Ordeal

Investing in cryptocurrency for the first time is not for the faint of heart. It’s an ordeal that can sometimes take days or longer, assuming that you don’t actually give up before you’ve finally succeeded. First off, you’ll have to upload scans of many personal documents (e.g. driver’s license, passport, credit cards, current utility bills, etc.). This might give you pause, especially when you consider that the blockchain network is touted as providing serious levels of anonymity. Nevertheless, you’ll still have to take photographs of yourself holding your passport or driver’s license with a note attached to it showing the current date and upload those as well. You’ll have to receive transmissions at every step of the way and respond to them to prove the authenticity of your email, your cellphone, your residential address, your credit cards, and possibly more. Deposits of a few cents will be made to your bank account, and you’ll have to locate these online and verify the amounts precisely. Not to mention that you will have to do much of this over again for each account on each exchange you select, as well as for whatever wallet you choose.

Exchange-Level Technical Problems

What’s worse, many of these verifications and transactions will time-out or fail for no apparent reason, requiring you to do some of them twice, three times, or occasionally many, many more. All of this can drag out the process of registering and purchasing cryptocurrency for days or longer. Interestingly, some seem to sail through the process with ease, and have their accounts set up and active within a few hours to a couple days. Others may try unsuccessfully for days or weeks before finally giving up. Why does this have to be so hard?

Emerging Regulations

There is a standard business security protocol called “Know Your Customer” (alternatively “Know Your Client”) or KYC. This serves to both verify the identity of a customer and protect the financial institution from illegal or fraudulent activity such as money laundering, bribery, etc. It makes sense that this would be important to cryptocurrency institutions, given the sketchy reputation they’ve endured from past (and present) indiscretions. In addition, anti-money laundering rules (AML) have been adopted by many exchanges in an attempt to improve their bona fides and possibly stave off governmental regulations designed to rein in illegal activities. Consequently, due diligence on the part of companies involved in cryptocurrency should be expected and perhaps even welcomed, though it certainly makes the registration process more arduous.

Limitations and Conditions

Other disturbing stories are circulating through the blogosphere about exchanges unreasonably limiting the amount of currency a customer can buy, or suddenly canceling purchases without providing any reason or justification. Other problems that can slow or derail the process have to do with the customer’s country of origin, especially for ex-pats. If a customer provides identification indicating citizenship in one country, but resides in another, this can act as a huge monkey wrench in the machine.

Crypto-Level Technical Problems

Most of the problems described above are associated with exchanges, which the cryptocurrency purchaser must utilize for converting fiat money to cryptocurrency, converting one cryptocurrency to another, or cashing in finally to return to fiat money. However, the cryptocurrency companies have their own share of problems that can slow down or even stall the process. For example, the bitcoin network can only complete about seven transactions per second, and it takes about ten minutes to add a new block to the blockchain. For this reason, that network is often swamped with pending transactions leading to long wait times. Companies selling alt-coins may have faster transaction throughput but may also be slowed by inferior technology infrastructures or simple inexperience.

The Devil is in the Details

Knowing which exchanges to use and which coins to purchase can also be a stumbling block to the new investor. Some exchanges only deal in one coin or a limited number of coins, while others are open to many possible tokens. For example, one of the most popular exchanges, Coinbase, only deals in Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. If you are interested in some other alt-coin, you may have to first purchase one of these from Coinbase, then trade it for your ultimate alt-coin using a second exchange. Wallets too can be quite selective, where one popular wallet will easily hold one token or group of tokens, it may not hold the token you are after. Obviously, this complicates the overall process substantially, as you have to obtain one, two, or possibly several wallets.

Retail vs. Accredited Investors

There’s another huge issue that new, “everyday investors”, known as “retail investors”, will encounter, and that is being frozen out of many of the tools, information, strategies, and investment opportunities available to what are known as “accredited investors” (AI). The latter, defined by the Securities and Exchange Commission” (SEC), can be individuals, banks, insurance companies, brokers, or trusts, but all are required to be wealthy and are generally experienced in the marketplace. It’s important to understand that many of the rules and regulations that have been put in place to protect retail investors do not apply to AIs since they are considered much better able, overall, to sustain the economic risks associated with investing. Consequently, many ICOs are only open to AIs. This may not seem fair, and the rules may change at some point, but in many cases, that’s the way it is at present.


So, how much do you really want to invest in cryptocurrency? Your patience and understanding may both be tried, but with over 50 million (rough guess) cryptocurrency investors currently in the market, any hurdles you may encounter should only be temporary. However, it’s always important to remember the caveat: “Buyer beware”. This applies to the crypto market as much, or perhaps more so, than any other. Until you are confident that you fully understand both the cryptocurrency market in general, and all the specifics regarding the coins, exchanges, and wallets you wish to pursue, it may be prudent to spend a little more time on education and understanding.

About Snowball

Snowball is the first Smart Crypto Investment Automation (SCIA) platform that enables access to professionally curated portfolios, empowering everyone to invest like accredited investors.

Written by:

Parul Gujral, CEO-Snowball