eToro is a popular international securities brokerage that allows US clients to trade cryptocurrencies. If you are looking to buy Bitcoin, this can be a good option, depending on where you live and your priorities. Here are some questions to consider.
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1. Is it easy to use?
For first-time investors, eToro’s platform is not as intuitive as other options in the market. For example, if you just want to buy Bitcoin, eToro does not offer the type of straightforward instant purchase functionality that you will find with many other exchanges.
It offers a practice trading account so that you can experiment with fake money and test different investment strategies. And the eToro academy has some useful information. But it’s uneven and several stories haven’t been updated recently.
To open an account with eToro, you complete a questionnaire about your risk tolerance, income, and level of financial literacy.
2. How easy is it to deposit and withdraw money?
Comparing cryptocurrency exchanges can be frustrating as they all have different fee structures and deposit / withdrawal options. There are several ways to deposit US dollars on eToro – including credit and debit cards and wire transfers – and all of them are free, which is unusual.
However, eToro charges 0.5% on crypto transfers up to a maximum of $ 50, which means you pay to withdraw your tokens from the exchange. Non-US customers also have to pay a withdrawal fee of $ 5 when withdrawing money. And there’s an inactivity fee of $ 10 per month for people who haven’t accessed their account for a year.
3. What are the trading fees?
Trading fees vary depending on the cryptocurrency you buy. For Bitcoin, eToro charges a 0.75% spread – so to buy $ 500 worth of BTC you would pay $ 3.75 in fees. Since eToro doesn’t charge you for depositing money, it’s quite competitive.
However, the fees for other cryptocurrencies can be more expensive. At 5%, Tezos (XTZ) is the most expensive, but fees on other popular parts range from 1.9% to 3.9%. It’s not very expensive, but you’ll find cheaper options on our list of the best cryptocurrency apps and exchanges.
4. How secure is it?
eToro says it follows the highest standards when it comes to protecting client assets, but its website is sparse. Several major exchanges inform users of specific actions they are taking, such as which security audits have been performed or whether they require employee background checks.
In contrast, eToro says it can’t share more information for security reasons. It keeps most of the crypto assets offline in cold storage, which makes it difficult to hack. And it also says it keeps client funds in a separate account, providing some protection in the event of eToro going bankrupt. U.S. customers who hold dollars on eToro are given additional FDIC insurance against platform failures, although this does not apply to crypto assets.
What is disappointing is that eToro does not purchase additional third party insurance on crypto assets. Since a number of cryptocurrency exchanges have been hacked, some platforms that wish to keep your Bitcoin safe purchase specific insurance against crime such as hacking.
5. What parts does it support?
eToro supports around 30 cryptocurrencies for US customers. If you are only interested in buying Bitcoin, you won’t need a platform that offers a wide variety of coins. However, if you want to diversify into altcoins (any crypto that is not Bitcoin), you will find several popular tokens, although the range is still relatively limited.
6. Can I earn interest?
eToro does not give customers the opportunity to earn interest on Bitcoin. Some exchanges do this through loan / earning products that use the interest earned on decentralized loans to pay competitive rates to investors.
However, it allows customers to wager a handful of coins. Without getting too technical, here’s how staking works: some tokens pay rewards to investors who are willing to “stake” – that is, tie up their coins – and contribute to the wider security of the network. Bitcoin cannot be staked.
7. Does it work in my condition?
One limitation to be aware of is that eToro does not work in all US states. If you live in Delaware, Nevada, Minnesota, Tennessee, New York, or Hawaii, you will need to look for another exchange.
eToro is available in over 100 countries, but services and fees differ from country to country. US clients cannot trade stocks on eToro, and advanced options, such as leveraged trading, are not available in the United States.
8. Are there any additional features?
One of the great attractions of eToro is its “trade copy” function. Users can follow the traders they like and even automatically copy their trading movements. It’s easy to watch the gains or losses of individual traders and – with a minimum of $ 200 – to emulate the trading decisions of investors you admire. Be careful who you follow though – traders who are making high profits can do so by taking more risk.
Should you use eToro to buy Bitcoin?
If you’re only looking to buy and hold Bitcoin, two aspects of eToro are of concern: the monthly inactivity fee and the lack of security details. You can mitigate this to some extent by transferring your funds to an eToro wallet, but there are other – easier – options. Check out our list of cryptocurrency reviews for more alternatives.
Both copy trading and practice account are great features for those who want to expand their crypto investments. But copying someone else is not a substitute for researching individual cryptos and making informed decisions.