Sunday, January 24, 2021

PSA to Newbies coming into Ethereum and Bitcoin: Don’t buy from any exchange that doesn’t allow you to actually withdraw your coin

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 to actually 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 because if you buy on these platforms you will never have the ability to actually 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 which spurred satoshi to invent BTC in order 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 have to sell their holdings.

I do see the value of these type of platforms for a very specific type of person: someone that only wants to speculate on BTC/ETH and don’t actually want to use, try, or participate at all in the community. By using a platform that doesn’t allow you to withdraw means that in the event you get hacked you will never lose money that the mega corp is unwilling to reimburse. But that just means that you make no attempt to take responsibility for your personal digital security, and will 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 risk might choose this route. But if you truly understand what BTC/ETH is trying to do, and what the community is all about, then I strongly implore you to understand what it means to hold your own coin and keys. 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.

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 question, please include which country you are from and what currency you want to buy in.

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 potentially have been tampered with. If spending extra money is out of the question for you, then consider looking into generating a wallet with virtual machine that is not connected to the internet. I’m not as familiar with this method of wallet generation 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 Metamask or MyEtherWallet.

Ledger have 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.

I have questions, and I need help!

We understand that crypto is hard, and there are a barrage of information, traps, and scams out there on the internet, but it’s very difficult to help you when you don’t provide adequate information. You are much more likely to get support from the community if you are more specific with your question and provide as much details as possible (never under any circumstance post your private key or 12/24 mnemonic key online while asking for help.)


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