Venmo joins the cryptocurrency revolution.
Cryptocurrencies like Bitcoin have taken a number of big leaps this year -- and not just in price. Most recently, popular payment app Venmo announced it would open the door to cryptocurrency. The app that's designed to help you send money to friends and family now lets you dabble in digital currencies as well.
It seems that everybody wants a bit of Bitcoin right now. Bitcoin is the biggest of a host of new decentralized digital currencies. A lot of these coins use something called blockchain technology to process transactions without relying on a bank or financial institution.
Venmo to offer four cryptocurrencies
The 70 million Venmo customers in the U.S. will soon have four coins at their fingertips:
- Bitcoin (BTC)
- Ethereum (ETH)
- Litecoin (LTC)
- Bitcoin Cash (BCH)
And Venmo brings its trademark social twist to the proceedings. When you buy crypto, you can use your Venmo feed to share the adventure with your friends. However, it's worth thinking twice before you share details of your investments on any social network. You don't want to give potential fraudsters easy access to your financial information. To that end, make sure your Venmo privacy settings are not public so your friends are the only ones who can follow your crypto journey.
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You can use the app to invest in cryptocurrencies for as little as $1, and it has some helpful resources for beginners. Venmo says last year's customer survey showed 30% of its customers were already buying crypto, Of those, 20% bought for the first time during the pandemic.
Venmo is the latest in a line of payment processors to move into the crypto world. Paypal, which owns Venmo, has already taken some big digital currency strides. U.S. customers can buy, sell, and hold those same four coins in their accounts and can use cryptocurrencies to pay with Paypal at checkout.
Not your keys, not your crypto
The big issue for both Paypal and Venmo is that you can't transfer your coins out of your account. Imagine you had dollars in one bank account and you weren't allowed to move them to another account; it could be a bit limiting.
This is important for many crypto enthusiasts. There's a saying, "If you don't own the keys, you don't own the crypto." Each bit of crypto that you own has a public and a private key -- think of them as your bank account number and your PIN code. Those keys give you control over your digital assets. That's why a lot of people prefer to set up their own secure crypto wallets and store their digital currency in them. Right now, you can't transfer your coins from Venmo to your wallet.
So how does Venmo stack up against the competition? Well, it's not the only payment app to let users buy cryptocurrencies. For example, Cash App only sells one currency: Bitcoin. However, it lets you transfer your Bitcoin to a third party easily.
Neither Xoom nor Zelle let you buy crypto directly in the app; you'll need to use a third party.
Buying your first Bitcoin
If you're buying Bitcoin for the first time, Venmo could be a great way to dip your toes in the water. Bear in mind that all these cryptocurrencies are pretty new and extremely volatile. The Motley Fool is invested in Bitcoin because -- like many -- it believes in the coin's long-term value.
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In contrast, a lot of speculative investors are buying cryptocurrencies in the hope the value will soar, as it has in recent months, or because they're scared of missing out. That's understandable, given the recent headlines. But it's worth doing your own research and only investing money you don't need in the short term.
If you're considering doing more than dipping your toes into crypto, check out our list of top cryptocurrency exchanges. Some have excellent educational resources to help you every step of the way. Most offer more than just four cryptocurrencies -- and almost all of them will let you move your coins to a secure wallet.
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You Can Now Buy and Sell Cryptocurrencies on Venmo - Motley Fool
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