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Here’s Why You Shouldn’t Buy Crypto With PayPal or Venmo

Here's Why You Shouldn't Buy Crypto With PayPal or Venmo
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Just because it’s convenient doesn’t mean it’s a great way to buy cryptocurrency.

As cryptocurrency becomes more and more popular, new ways to buy and sell it have emerged. Last year, PayPal started offering it. In April 2021, Venmo, owned by PayPal, added a feature to buy and sell cryptocurrency.

As these are two of the most popular payment apps, being able to use them for cryptocurrency purchases is a relief. Unfortunately, there are also some downsides that make cryptocurrency exchange a better option.

You cannot transfer your encryption

When you buy cryptocurrency on PayPal or Venmo, you cannot transfer it from that platform; You can either hold on to it or sell it. PayPal also recently introduced an option to pay with encryption at checkout.

From a security point of view, this is not ideal. A common recommendation is to transfer any cryptocurrency you purchase to your own crypto wallets. This way, you are the one who owns your assets. It gives you an extra layer of protection in case something happens, like:

  • The platform where you purchased your cryptocurrency has been hacked.
  • The platform decides to freeze your account.
  • Someone has access to your account.

Think about how stressful it would be if PayPal freezes your account with $5,000 worth of Bitcoin. You will not be able to access this Bitcoin until PayPal opens your account.

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Some people leave their encryption wherever they buy it without a problem. Regardless, you should at least have the option to transfer your encryption. Keep in mind that you also cannot send encryption to anyone else if you purchased it on PayPal or Venmo.

You can’t lend your crypto

The fact that you can’t get encryption from PayPal and Venmo isn’t just a security issue. It also takes a chance to make money from your crypto.

Many cryptocurrency exchanges offer lending programs. By lending your cryptocurrency, you can earn interest on it. For example, the Gemini exchange allows clients to grow their cryptocurrency through the Gemini Earn Program. Another option is KuCoin, which offers a peer-to-peer marketplace where cryptocurrency holders can earn 25% interest from lending coins.

Cryptocurrency lending is an area where you need to be careful and do your due diligence. Not all websites that offer cryptocurrency lending are trustworthy. But again, it’s nice to have the option to do so.

The choice is very limited

PayPal and Venmo both have the same four currencies available:

  • Bitcoin (BTC)
  • Ether (ETH)
  • Bitcoin Cash (BCH)
  • Litecoin (LTC)

Many famous coins, such as Cardano and Polkadot, are missing. To be fair, PayPal and Venmo will likely target new cryptocurrency buyers. For those who dip their toes into the pool of cryptocurrencies, the coins each app offers may suffice.

On the other hand, you may quickly find yourself interested in coins that PayPal and Venmo don’t have. This is why their limited selection is a major drawback compared to Coinbase, Gemini, and other crypto exchanges with dozens of coins.

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Best way to buy cryptocurrency

None of the above means that PayPal and Venmo are horrible apps to use when buying cryptocurrency. It’s just that there are better options out there. With the best cryptocurrency exchange apps, you can have more control, a chance to earn money by lending cryptocurrency, and a much larger range of coins.

So, where should you get your cryptocurrency from? Cryptocurrency exchange is a great option. Two of the previously mentioned exchanges, Coinbase and Gemini, are beginner-friendly and secure. If you are new to the crypto world, either is an excellent starting point. It is also more than enough for more advanced cryptocurrency buyers.

It’s no big deal if you’ve already purchased some cryptocurrency on PayPal or Venmo. You can keep what you bought and hopefully increase its value. Just remember that if you plan to make cryptocurrencies an important part of your wallet, you should buy them through an exchange that gives you complete control.

Buy and sell cryptocurrencies on an exchange chosen by experts

There are hundreds of platforms around the world waiting to give you access to thousands of cryptocurrencies. In order to find the right feature for you, you will need to decide which features are most important to you.

To help you get started, our independent experts have tested the options to bring you some of our best crypto exchanges for 2021. Check out the list here and start your crypto journey, today.

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