You can buy cryptocurrencies from Robinhood. But should you?
To prove the growing investor interest in cryptocurrency, look no further than the financial apps already on your phone. We want to help you make more informed decisions. Certain links on this page – clearly marked – may direct you to a partner website and earn us a referral commission. For more information, see How We Make Money.
But even if you feel more secure buying crypto with an app you may already be using on a cryptocurrency exchange you’ve never heard of, the risk and volatility remains. Some of these traditional players are also much more limited in their offering than traditional cryptocurrency trading platforms.
Digital payment giants PayPal, Venmo, and Cash App – along with the Robinhood mobile stock trading platform – are making it easier than ever to invest in cryptocurrency, with options to buy and trade coins in their stores. applications.
Here’s what you need to know about buying crypto outside of cryptocurrency exchanges, and how to decide what makes the most sense for you.
Integration of cryptocurrency
Apps like PayPal and Venmo are making accessible entry points for crypto novices to dip their toes in the water. And, depending on how you already use the apps, their offerings may be well suited to your knowledge base and interests.
For example, a person with no knowledge but a few dollars to spend may find an exchange like Gemini confusing, but may be willing to buy Bitcoin through their Venmo account just to experiment as they begin to learn.
While using a more traditional exchange may seem complicated, you can just log into your account and buy whatever you want without having to worry about it, says Tyrone Ross, financial advisor and CEO of Onramp Invest, a platform of crypto investment for financial advisers. “For newbies, I really suggest going to the PayPal, Venmo, Cash App types of places because they make things as easy as possible.”
In general, experts say these apps can be great places to start if you’ve decided it makes sense to invest in cryptocurrency, but don’t understand all the different types of crypto very well. how an exchange works or the different storage options.
Even for investment professionals, cryptocurrency can be intimidating. Personal finance expert Suze Orman recently told NextAdvisor about her first attempt. “To be honest, I didn’t really know how to buy a large amount of Bitcoin and crypto,” she says. “Coinbase annoyed me, I bought a bit and then sold it, but it was just too complicated for me – although not at all complicated.”
Instead, she decided to invest indirectly, through shares in companies with crypto holdings, but recently reverted to buying crypto, this time on PayPal. “I now own $ 5,000 in Bitcoin, and I’m doing it through PayPal because it was just plain easy to do,” she says.
How these apps differ from crypto exchanges
There are some important distinctions between using a fintech app to buy crypto versus using a traditional exchange like Kraken or Crypto.com, largely involving ways in which you may (or may not) transact. , and limitations on where you can keep the crypto you buy.
Payment platforms and cryptocurrency
PayPal, Venmo (which is owned by PayPal), and Cash App each work a little differently when it comes to crypto. Each of these apps offers different coins and different fee schedules for buying and selling crypto. While the Cash App allows you to move your coins off the platform or move Bitcoin you hold elsewhere in your account, it is not an option on PayPal or Venmo.
Robinhood offers different cryptocurrencies (like Bitcoin, Ethereum, Bitcoin Cash, and even Dogecoin), which you can buy and sell in the app. Like its other investment options, one of the main advantages of crypto trading on Robinhood is the lack of fees, which can vary widely between traditional exchanges.
Payment ApplicationTypes of cryptoCan you withdraw? Fees? PayPalBitcoin, Ethereum, Litecoin, Bitcoin CashNoYesVenmoBitcoin, Ethereum, Litecoin, Bitcoin CashNoYesCash AppBitcoinYesYesRobinhood Crypto
When it comes to crypto specifically, Robinhood also has limitations similar to PayPal and Venmo. Unlike traditional exchanges, Robinhood does not allow you to move your coins off the platform or transfer coins that you already have in your Robinhood Crypto account. This means that you can’t move your private key (the encrypted code that gives access to your cryptocurrency) into your own wallet, nor trade on an exchange like Coinbase. For believers in the crypto mantra “not your keys, not your coins” this can be a major drawback.
Its accessibility as an investment platform is a big draw to many – whether they invest in crypto or the stock market – but it is also what can make Robinhood so risky. He has been criticized for making trading too fun and encouraging volatility through active trading, rather than growing long-term investments. Much like stock trading, approaching an already speculative asset like crypto with this mindset can make your investment even riskier.
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