Seeking BTC/Bitcoin Wallet/Exchange Advice

Science, Engineering, & Tech Cryptocurrencies
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I’m a newbie in the crypto realm but recently bought some on Robinhood (RH). Since then, I’ve learned that there are some issues with using RH, the most important, as I understand is that you don’t have the ability to download the BTC to your own wallet but seem to own “shares” of BTC that RH actually owns and your shares are treated something like stock options allowing you to only convert them back to cash. There may be other RH issues that I am not familiar with.

I think that I understand there to be three main types of BTC wallets: software, mobile, and hardware. I don’t fully understand the difference between these, but what I think I did learn is that each of these have “flaws” via which it is possible for either someone to steal the BTC or for you to otherwise loose access them.

Being a bit of a coward in this realm, I felt safer with going with an exchange and an SEC regulated brokerage such as RH – yes, I know that the SEC doesn’t yet regulate/illegalize BTC – would be safer than one of the three (that I know of) that have absconded with their user’s assets.

Believing that BTC will appreciate, it is my intention to hold long term, but I don’t know to safely or efficiently convert what I have at RH to something that will be entirely in my control.

Also, I don’t know of an exchange that is trustable, permits me to download to a wallet, and has low fees.

Can anyone offer advice/education on wallets and exchanges?

Brian

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Addendum:

Thank you to all who have replied.

Regarding “trustable exchanges”: I meant that I want to avoid scam exchanges such as KuCoin, Mt.Gox, BitMex, Lukki, Gate.io, Negocie, Coinplace, IQFinex, Hotbit, FEX, WCX, EzBtc, Fedlio, etc. Both RH & Coinbase seem to be as safe as I can expect from an exchange.

Regarding “efficiently convert” and “has low fees”: It seems that exchanges like to add percent based fees to transfers in, buys/sells, and transfers out. RH seems to only charge me when I transfer out, but I’ve heard that they manage to make the buys/sells cost more as something of a hidden fee. Coinbase seems to have transfer fees as well as buy/sell fees and I’ve heard that it is one of the more expensive in fee structures.

Also, I may be a newbie but I’m not so naive to think that anyone but me risks when the market/coin falls.

It seems that most recommend that I move from RH to Coinbase. Though RH enforced an unreasonable delay (up to 2 weeks) to let me use money transferred directly from my bank account, at least they didn’t charge me for it or for any of the buys/sells. I know they will take a cut when I attempt to transfer out of RH. I expect they will also take an unreasonably long time to actually send the money out to me.

I am concerned about the fees that Coinbase charges, which in the U.S. are “4% for all transactions”.

$4000 seems like too much to demand from me for each 100k that I want to invest. And of course this doesn’t take into account the gas, transaction fees, flat fees, variable fees, or “spread”.

So, speaking to the efficiency and cost, I’m facing

  • the typical RH delay in transferring the money out to a bank account
  • RH taking a cut when I do so
  • some delay in transferring to Coinbase from my bank account
  • Coinbase taking 4% (or more) off the top

Admitedly, I am unable to determine Coinbase’s actual fees. I may have misread Coinbase’s information, but some of it seems contradictory and almost deliberately confusing:

  • “Base rate of 4% for all transactions”
  • “US Bank Account: 1.49%”
  • “ACH Transfer: Free”
  • “The base rate does not apply to US Dollar deposits and withdrawals made by ACH.”
  • “For US customers only: cryptocurrency conversions ending or starting with USDC are treated as cryptocurrency purchases and cryptocurrency sales respectively, and are charged a spread and Coinbase Fee as stated above for ‘Buy/Sell Transactions.’”
  • “… the Coinbase Fee will always be the greater of the minimum flat fees described above or the variable fees described below.”
  • “Coinbase charges a spread of about one-half of one percent (0.50%) for cryptocurrency purchases and cryptocurrency sales.”
  • “In some cases, we may charge an additional fee on transfers to and from your bank account.”

Again, Coinbase may be as reputable as crytp exchanges come, but based on their fee description, I have no idea how much I would be charged. It seems that transferring from RH to Coinbase would kick my money out of the market for a couple to a few weeks. And it would cost me both to leave RH and to enter Coinbase.

This may be unreasonable to wish for, but what I really want is to create a wallet to which I can transfer BTC that I can purchase without exhorbitant delays or fees and without having to surrender my money to an exchange.

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Coinbase is a publicly traded company based out of the United States. They undergo all of the same SEC scrutiny as any publicly traded company, and possibly more so because of the legal uncertainties surrounding crypto. They comply with Anti-Money Laundering and Know Your Customer requirements. They are licensed by various states are money transmitting businesses.

Cash balances are insured with FDIC-passthrough insurance but you are not insured from losses due to Bitcoin decreasing in value. Nobody does that, anywhere, full stop. Anybody claiming to is scamming you. Neither the FDIC or SIPC insure against declining values, and this is true of stocks and ETFs, too.

You are also not covered in the case of identity theft if your account credentials are breached, but would be if Coinbase’s security is breached.

I don’t know to safely or efficiently convert what I have at RH

The only way to get what you have out of Robinhood is to sell it. Crypto isn’t covered under account transfers, either. As you noted, you don’t actually own real crypto to withdraw.

to something that will be entirely in my control.

Being somewhat pedantic for the sake of education, your values are in conflict here. Just like depositing cash in a checking account, you’re intentionally surrendering control of it in order to benefit from the bank’s professional security, regulatory scrutiny, insurance, and the transaction infrastructure around it.

If you want total control of your money, you’re also totally responsible for its safety and transmission. Most people are okay accepting that we won’t get our exact bills back from a bank, and we’re okay not being able to make thousands of dollars worth of cash withdrawls in person at 3am because the bank is closed.

The same is true of crypto exchanges. If they keep your crypto safe, your access to it is determined by their policies. If you want total control, you’re responsible for security, too.

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So any BTC wallet is just a pair of public and private keys. The public key is your wallet address, it is where people can send you money. The private key is what allows you to spend money from your wallet. All a wallet application does is keep track of your public/private keys and provide a neat interface to show you how much you have.

In short, anyone can send money to your wallet because that key is public, but only the owner of the corresponding private key (that’s you) can send any money from that wallet.

This is a pretty good guide on picking out a wallet. Just download and install whichever you are comfortable with, create a new wallet/key-pair, send your BTC to your address, and don’t forget to backup your wallet somewhere safe. Some folks scan their wallet file to a QR code and leave that in a safety deposit box, some use encrypted cloud storage, whatever works for you.

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Just to add on what the other’s have said: I also would move from RH to Coinbase, since you are much more in control of your cryptos (i.e. you can transfer them to other wallets).

There are other wallets and CEX (centralized exchange) lile Binance, Kraken, etc - most of them have some benefits or drawbacks over Coinbase so it comes down to personal preference.

A minor but still interesting technically I would like to add regarding CEXes is that apparently sll/buy orders don’t move the coins immideately from your wallet (this can be tracked on ehterscan) but usually wait a while. (Probably to minimise fees.)

As you have also said, there is also the possibility to own and manage your private keys yourself. How you decide to do that is up to you, you could use a HW or SW wallet or even a paper wallet.

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Get a Coldcard kit with metal plates to store your seeds. There is nothing better in terms of security and anti-tampering.

Signing is done in sneakernet mode and the coldcard itself will never ever touch the internet. You can even generate your seeds from dices if you don’t trust the device.

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