With bitcoin’s price hitting a new all-time high on Monday, retail investors will inevitably want to get in on the original crypto asset.
That said, for first-time buyers and seasoned investors alike, it is important to be careful about any extraneous costs that might eat into gains. That goes double for the major fintech apps that are likely already on your phone.
Here's how fees stack up on some of the most retail-friendly platforms for buying bitcoin.
The largest app on this list, PayPal (PYPL) is one of the newest entrants to the world of buying and selling bitcoin.
The payments giant has come out with an attractively priced offering for retail buyers. It has a very low fee of $0.50 for starter purchases under $25.00. Its highest fees are 2.3% on purchases from $25.00 to $100, with fees falling in increments from there in two additional tranches until it reaches its lowest rate of 1.5% for purchases above $1,000.
The caveat here is that bitcoin purchases in PayPal live firmly inside the fintech giant’s walled garden. You can cash out to dollars when the time is right, but the actual bitcoin is never yours to keep.
Robinhood is the investing app that has always made trades of all kinds free. This is also true for cryptocurrency purchases.
Robinhood also puts limit orders on all buys and sells so they don't execute if the market moves against the customer suddenly after an order is placed.
Robinhood rolled out BTC in 2018 and has promised withdrawals were coming, but it still hasn't happened. As with PayPal, if a user's holdings become meaningful he or she will just have to trust the company to keep the assets safe.
The downside of Coinbase on this list is it is only a cryptocurrency app so, unlike Robinhood and PayPal, Coinbase is not something users will just have already if they haven't gotten into the industry.
That said, Coinbase made its name making buying and selling cryptocurrency easy, and it's still an app that many tech-savvy retail buyers who haven't yet taken the crypto plunge are likely to know.
Coinbase's fee structure is clearly laid out, starting at $0.99 for purchases below $10 and rising to 1.49% for any purchases above $200.
That said, buyers should also note that it adds a 0.5% spread to all purchases and sales, which means users are always buying a tiny bit over the market price and selling a tiny bit under.
Square's (SQ) Cash App allows people to easily send money to each other, but it has also become a way to buy stocks, pay small businesses and also to buy bitcoin. In fact, Square's Cash App led the way to bringing bitcoin purchases into a mainstream wallet.
The company changed its fee structure for bitcoin purchases and sales last year though, according to the company, the change really only made costs more transparent rather than more expensive.
Cash App doesn't spell out its explicit fees, despite having a bitcoin fees page where it acknowledges both a trading fee and an occasional bump when the price is very volatile. CoinDesk has reached out to Square for a precise structure and will update if we hear back. (When we previously looked, Coinbase started to outperform Cash App for bitcoin purchases around $200 and higher.)
A lot of BTC gets bought and sold on Cash App, but profits on those sales do not represent a meaningful portion of income for Square.
Word to the wise
It's important to note there are other factors to take into consideration for buyers who think they might want to get serious about cryptocurrency investing.
For example, users who want to control their own assets will want to use an app that lets them withdraw bitcoin, which not all of these do.
For new entrants to the space, you will soon come across an adage: DYOR (do your own research). Anyone serious about crypto takes responsibility for double-checking third-party recommendations, and the information above is no exception.
That said, for anyone who just wants to drop in (say) $100 and see what happens, any of these apps will serve the purpose well and more are sure to come. 'Tis the season to be HODLy.
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