3 Reasons You Should Avoid PayPal and Robinhood When Buying Crypto
Bitcoin has catapulted itself into the mainstream with new all-time highs and mass adoption spreading faster than ever before. With mainstream attention comes mainstream players entering the cryptocurrency market, looking at Bitcoin as an investment for their balance sheets and profitable additions to their products and services. Thus, Bitcoin’s most recent bull cycle has led to traditional payment processors and investment platforms incorporating crypto products into their business models.
While these companies are doing important work by increasing exposure to cryptocurrencies, their crypto purchasing models may be misleading to those who assume buying bitcoin from them is no different from using the other existing avenues.
Purchasing cryptocurrency from platforms like PayPal (plus Venmo, which PayPal owns) and Robinhood is not the same as using CoinFlp or another trusted crypto company. Here are three reasons why you should avoid using these platforms and stick with the most trusted names in crypto.
1. You Can’t Move Your Cryptocurrency
When using payment processors and investment platforms for purchasing crypto, you are very limited in what you can do with those holdings. You cannot move your crypto off of the platform or transfer the funds to another crypto wallet. You can only buy, hold, and sell with these services.
With PayPal, you can use your crypto to pay for some eligible purchases. However, even still, you are very limited in your overall crypto capabilities compared to using other crypto-specific platforms to make your purchases. For example, you cannot move your cryptocurrency outside the platforms, such as sending it to another wallet.
Many people prefer to move their crypto to a non-custodial wallet after making a purchase from a third party to reduce the risk of hackers or a cyber attack. This is not an option when it comes to purchasing from PayPal or Robinhood.
2. They Can Lock You Out of Your Account at Any Time
When using these platforms, your accounts are entirely under the discretion of the company. This means that they can freeze or limit your crypto accounts whenever they see fit or identify what they believe to be suspicious activity. Additionally, earlier this year, Robinhood restricted crypto trading amid some of the market’s highest price surges.
So, not only are you limited in what you can do with your crypto; you are also only able to perform these transactions at the discretion of the companies. Using PayPal and Robinhood could potentially lead to you missing out on a good buying opportunity or profitable trade.
3. You Don’t Actually Own the Coins
The fact that you cannot move the crypto purchased on PayPal or Robinhood violates crypto’s golden rule: not your keys, not your coins. When using these platforms for crypto, you never have complete ownership over the coins you purchased.
We recommend using a non-custodial wallet (that is not hosted by a third party) to hold your cryptocurrency, as it gives you total control over your public and private keys. When using PayPal and Robinhood, you do not own your private keys - they do. So functionally, they own your crypto - not you.
CoinFlip Makes Buying Crypto Easy AND Convenient
When using CoinFlip to buy and sell cryptocurrencies at one of our Bitcoin ATMs or through our Trade Desk, you are always in complete control of your coins. You are free to use it however you please. CoinFlip never takes any ownership of your crypto. We facilitate your transaction at a low price and deliver the funds directly to you.
While I appreciate that major financial platforms like PayPal and Robinhood have increased exposure to cryptocurrency and have done a lot to further mass adoption, I believe that using these options deviates from the true purpose of Bitcoin and other cryptocurrencies - freedom from financial institutions.
When using Paypal and Robinhood for cryptocurrency, that freedom is curbed. You are still relying on a financial institution for your cryptocurrency needs. To get the most out of your digital currency, it is still best to stick with trusted crypto brands like CoinFlip when making your trades.
Financial Advice Disclaimer: Nothing in this newsletter constitutes professional or financial advice, performance data or any recommendation that any specific cryptocurrency, portfolio, index, investment product, transaction or investment strategy is suitable for any specific person. You assume the sole responsibility of evaluating the merits and risks associated with all financial decisions and should seek the advice of a registered financial advisor when in doubt.
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