Cryptocurrency is one of the hottest topics in finance right now. Bitcoin, Ethereum, and other cryptocurrencies have seen an explosion in value this year. However, with all of the hype surrounding crypto, it can be hard to find reliable information on how to buy them.
Many popular platforms, such as Robinhood and Paypal, are now making it easier to invest in cryptocurrencies. While you might feel more secure purchasing through a well-known platform since you may already use it for other services or think it's a reliable brand, these applications can actually be very limiting to use due to their stricter rules.
If you've been wondering if you should use PayPal or Robinhood when buying crypto, you'll first want to understand some of the reasons why most crypto holders do not use these platforms to home their investments. Continue reading to learn the top 4 reasons you should avoid both services when buying cryptocurrency!
1. Your Crypto Can't Be Moved
With most platforms, you're able to move around your cryptocurrency as you want, meaning you can trade between crypto wallets, making it easy to send to your friends, family members, or move between personal wallets. However, when you use platforms like Robinhood or Paypal to purchase your cryptocurrency, you're limited in what you're able to do with your crypto. You'll only be able to buy cryptocurrency, sell your cryptocurrency, or keep it in your wallet.
While you might be able to pay for some purchases with cryptocurrency using PayPal, that's where the flexibility ends. Other cryptocurrency platforms make it simple to transfer between wallets and use your crypto as you please, which is the point of purchasing it in the first place.
2. You're Not the Owner of Your Cryptocurrency
When you purchase your cryptocurrency using PayPal or Robinhood, ownership of that cryptocurrency is owned by the platform. Unfortunately, this means if they were to go bankrupt tomorrow, there's a possibility your crypto could be lost with them. While this might not seem like much of an issue now, it can become one later on down the line as more and more platforms fall victim to hackers who are attempting to steal cryptocurrencies for their own gain.
This also means that you're not able to move your coins as you please, which means you'll never have complete ownership over your crypto. Many people see owning their own cryptocurrency as a way to gain control over the value of their investment, but platforms like PayPal and Robinhood don't allow you to do that!
3. You Can Lose Your Money to Fees
When you purchase your crypto through PayPal or Robinhood, there are fees attached to every transaction. While this might not seem like much now, it can become problematic when you realize how expensive these transactions can be. This is especially true if you're interested in purchasing multiple types of cryptocurrencies.
While some other cryptocurrency apps may also charge small amounts in order to process payments, they often pale in comparison to the fees you'll find with platforms like PayPal and Robinhood.
4. Your Account Can Be Restricted at Any Time
When you purchase your cryptocurrency through PayPal or Robinhood, there's a possibility that the platform will choose to restrict your account at any time. Even if they don't have a reason to do so, it can still happen for no apparent cause—and as mentioned above, this could spell disaster for those who see their coins as just another way to invest in themselves.
Restrictions on these platforms are often arbitrary and may be used when someone reports something suspicious going on with one of the accounts without providing evidence of an issue. This means you might not only lose access to funds already deposited into your account but also all future money being sent until such a problem is resolved by either party involved—which can take months!
Conclusion
While using PayPal and Robinhood might seem like a safe way to invest in cryptocurrency, you'll soon realize that the restrictions on your account will only cause more problems than they solve. And with fees constantly adding up throughout time, it may not be worth using these platforms when there are so many other options available!
Suppose you're interested in purchasing cryptocurrency but don't want to deal with all of the hassle associated with PayPal and Robinhood. In that case, you should strongly consider opening an account with another platform instead, like Payperless, for your crypto wallet to purchase your cryptocurrency on Paydepot. The platform is easy to use and makes transferring between wallets straightforward while also allowing users to buy cryptocurrencies without spending unnecessary amounts of money on high transaction fees!
FAQ Section
What is a Crypto Wallet?
A cryptocurrency wallet is a place where you can store your coins and tokens, so that you have access to them when needed. There are two different types of wallets: hot storage (online) or cold storage (offline).
- Hot Storage Wallet - A crypto wallet that allows for quick transactions with minimal fees but also has the possibility of being hacked if not appropriately secured.
- Cold Storage Wallet - A crypto wallet that takes longer to transact as it requires an internet connection in order to purchase cryptocurrencies but has no chance of being hacked due to its offline nature.
Do I need a Crypto Wallet to purchase Crypto?
Yes, in order to purchase cryptocurrency, you'll need a crypto wallet. Some exchanges allow for direct purchasing of coins and tokens while others require that users open an account with another platform in order to send money there in exchange for their desired types of cryptocurrency!
Why should I avoid using Paypal and Robinhood to buy Crypto?
While you can purchase crypto with PayPal and Robinhood, there are several reasons you should avoid doing so. For one, both platforms charge transaction fees for all purchases made through them—and this can quickly add up over time! Furthermore, these accounts may be restricted at any given moment without warning or explanation, resulting in lost funds altogether! Plus, you won't have total control of your purchase, which is the point of purchasing cryptocurrency.
The information provided contains opinions of the author or editorial staff regarding investment, tax, or financial information. Such articles are provided for general informational purposes only and do not purport to provide specific legal or other professional advice. This information provided is in no way a solicitation to sell or purchase cryptocurrencies in any way. The recipient agrees that the authors, owners, and publishing agents of this article have no liability whatsoever for the material presented here, as we do not offer any brokerage or advisory information.
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