Easy is good! That’s where I started, with Robinhood since I was already using it. BUT!
As I’ve learned, it became clear (because it is a crucial difference) that if you order bitcoin on a service, you might be investing in bitcoin’s appreciation over time… but YOU do not “own” any bitcoin unless YOU hold the private keys.
What does this mean? Well, if you get cash and hold it, you just have to take out your wallet to pay someone. No one else stands in the way. The dollars in your pocket or under your mattress are yours.
Your bank balance? That is an IOU from the bank to you.
Same with the bitcoin on your balance in Venmo, Coinbase, Paypal, Robinhood, etc.
Not your keys, not your coins.
You’ll hear this expression over and over from people who have been in the bitcoin world for a long time. Few people start with “self custody” of their keys, unless they have a friend to help, but there are some things to look for as you go forward.
For tax and safety and other reasons, you want to “own bitcoin” in a way you can transfer it to your own wallet. If you buy on Paypal or Venmo, the only choice you have right now (March 2022) is to SELL the bitcoin for your native currency (and perhaps pay taxes on any gain in value).
Can I transfer cryptocurrency into and out of Venmo?
Currently, you can only hold the cryptocurrency that you buy on Venmo in your account. Additionally, the cryptocurrency in your account cannot be transferred to other accounts on or off Venmo.
That is a significant gotcha.
Contrast this with the Cash App by Block (formerly Square) that even though they charge a relatively high fee to buy and sell, once you buy you can transfer your bitcoin to your own wallet. Profound difference.
As of right now, I use Strike.me in the U.S. because $0 fees to buy and send bitcoin and it supports the Lightning network, too. For those wanting to invest more than what they would keep in a wallet they carry, Keys.Casa is my choice. Both allow automatic investments as well.
Robinhood now allows some people to transfer off their app to wallets (still in beta). Coinbase also allows transfers out, but they really do charge a lot. Swan Bitcoin is another favorite. In Canada Bull Bitcoin has a great rep but I’ve never used them.
Rules and process do vary from state to state and country to country. For example, I don’t believe New York residents can use Strike because the financial “elite” block competition quite effectively except for those companies like Cash App that have billions to spend on New York’s legal compliance.
There are also countries like China that have made any owning or transferring cryptocurrency illegal, even criminal. But hey, you’re not allowed to use Facebook, Google, or Twitter there either. Bitcoin can be criminalized in freedom-hating countries. It cannot, though, be “stopped” because as a technology it is decentralized and permissionless.