The Problem
I’m seeing a big influx of new users asking questions about where to buy their first bitcoin or Ethereum and how to store it. I didn’t realize this before, but mega-corps such as PayPal, Robinhood, and Wealthsimple do not allow their users actually to withdraw their crypto to their own wallet. You only have the option to buy and sell the coin on their platform. This is terrible for the community and not at all what cryptocurrency is all about. These companies are basically creating gated communities where they are profiting from pure speculation and is detrimental. If you buy on these platforms, you will never have the ability to hold your own coins. Ethereum is also a utility coin, for you to actually interact with the Ethereum network you need Ether. If you are never able to withdraw the coin, how will you ever interact with the network? You’ll never be able to try out these new Defi projects, stake your own coins, or try out any of the cool new Dapps that will for sure come out in the future. You will end up in the same place that spurred satoshi to invent BTC to avoid, which is having an entity or a government that can take away everything you own at any moment. They are also creating a system where they are taking your money to buy more BTC/ETH, but they never sell their holdings.
Why is giving your money to these companies a bad idea?
If you are giving your money to these type of companies, then you are fundamentally misunderstanding the value proposition of BTC/ETH and are making an uninformed and bad investment decision. You are investing in the downfall of the community. You may make money in the short term, but the long term prospects of you surviving in this space is low and decrease the market's potential as a whole. Bitcoin was invented in the first place so that people can transfer value over the internet without corrupt government or malicious companies being able to take that away from you. By giving money to these companies, you are basically signalling to the market that you don’t understand BTC or ETH's value at all, and you’re just here to try to make a quick buck. This, in turn, gives the megacorps more money to market to other newbies that are trying to make a quick buck, and the cycle continues. These megacorps will end up dominating the market and perhaps get to the point where they have an unnatural influence on the direction of the chain. We may end up exactly where we started and then what’s the point of even being on these blockchains?
If capitalism is your religion, money is our prayer, BTC is your denomination, and then you worship the devil by giving your money to these types of corporations.
Can these type of exchanges be good for some people?
I see the value of these types of platforms for a specific type of person: someone who only wants to speculate on BTC/ETH and don’t actually want to use, try, or participate in the community. Using a platform that doesn’t allow you to withdraw means that you will never lose money that the megacorp is unwilling to reimburse in the event you get hacked. But that means that you make no attempt to take responsibility for your personal digital security and never truly own something online that other people don’t have control over. And that’s fine. Someone’s grandma that wants exposure to BTC without any of the risks might choose this route. But if that’s the case, then I would suggest you invest in something else instead, because if you don’t see the importance of owning something yourself online, then you're not investing into BTC/ETH for the right reasons. I strongly implore you to understand what it means to hold your own coin and keys. There is definitely a risk - it’s ALL the risk. But that’s the point, understanding digital identity and digital value to the point where it is absolutely EVERYTHING. There is a saying in the crypto community - not your key, not your coin and that’s exactly what these type of platforms are boxing you into. Crypto forces you to live in the new reality, where understanding the underlying technology is everything.
For those newbies out there looking the next moonshot - if you don’t fundamentally understand what you’re getting yourself into, how do you expect you’re going to find the next 10x 30x thing? Money is not just going to drop out of the sky
Companies that don’t allow for withdraws:
please let me know which companies don’t allow for withdraws, and I’ll continue adding to this list so that newbies can have a quick look at which companies they should definitely not give their business to
PayPal
RobinHood
Wealthsimple
Etoro
So if you are new, where do you buy your BTC/ETH?
This question is going to be heavily dependent on what part of the world you are from. If you are about to post this type of comment, please include which country you are from and what currency you want to buy in, and I'll make a post about it soon. But personally, I use Binance and WazirX for buying cryptocurrency.
What wallet do I withdraw to?
The community consensus for long term holding is hardware wallets. The most popular ones are Ledger and Trezor, which are both multi-coin wallets. ONLY ever buy directly from these websites, and never from resellers as they could have been tampered with. If spending extra money is out of the question for you, consider looking into generating a wallet with a virtual machine that is not connected to the internet. I’m not as familiar with this wallet generation method, so I’ll let more informed people chime in on this. Alternatively, the least secure way out of the bunch would be to use an extension wallet like Trust Wallet.
Ledger has previous had a data breach where their customers' information was leaked to the web. The hardware wallets themselves are still secure, but Google the circumstances of this to make your own informed decision on whether or not you want to continue using this wallet.
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