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eToro is an Israeli fin-tech company that pioneered the concept of social and copy trading. A trading strategy that allows you to copy some of the most successful traders on the platform.
They have two variants – eToro and eToro USA, ensuring both variants are both legally operating in their regions. As of May 2020, the service boasts an impressive 13 million global users with a 427% surge of signups at the start of 2020.
It goes without saying that eToro is a big hit in the traditional finance AND cryptocurrency world.
But from a cryptocurrency maximalist’s perspective, does eToro live up to the hype?
Let’s find out.
eToro’s brokerage service allows for the easy purchasing of cryptocurrencies and stocks. The interface is great for beginners, making eToro a fantastic starting point for those on their cryptocurrency journey. As we’ll cover later in the guide, cryptocurrencies are only sold as CFDs (contract for difference). Stocks are also very available on the platform allowing you to diversify your holdings.
Balances on the exchange are then stored in your eToro cryptocurrency wallet which we’ll cover next.
The eToro cryptocurrency wallet is a place for users to you guessed it – store their cryptocurrency. When it comes to storing CFDs, you don’t really need a wallet other than your account. But if you’re using eToroX which we’ll cover next, you can keep your actual assets secure (for the most part).
As you’ll read in many places on our site, we really don’t recommend storing large amounts of currency on exchanges. When you do this, you are trusting the exchange to take care of your assets, and ultimately hold your private keys. This is not optimal for those more advanced with cryptocurrency. Read our cryptocurrency exchange hack database to learn why this isn’t the greatest idea.
Next, we’ll jump into the advanced trading option: eToroX.
eToroX is the brokerages exchange similar to Coinbase’s Coinbase Pro (that’s a mouthful), and Gemini’s Active Trader. It’s pretty common for these beginner friendly brokerages to offer their users advanced trading options. As you become more experience in the cryptocurrency world, these advanced options are much more appealing due to the different order options as well as lower fees.
Social and Copy trading are what makes eToro so unique. These features are a powerful combo that allow you to see what public profiles on the platform are trading as well as the ability to copy their trading strategies. Of course there’s never a guarantee that a given strategy works, but it can be an appealing option to beginner
eToro supports a variety of deposit methods, so there should be something for everyone.
Regardless of the deposit method, account balances on the platform are denominated in USD. From what we can tell, eToro doesn’t charge any withdrawal fees.
As we stated above, all accounts are denominated in USD, but many other currencies are allowed to be deposited and withdrawn after conversion. These include:
It’s unclear how accurate the conversion rate between these currencies are, but we don’t imagine that eToro takes profit on the conversion.
eToro’s trading fees are done in a few ways.
The first is a spread fee between buys and sells of cryptocurrencies. The highest spread from what we can tell across all currencies is 5% with Tezos.
On top of spreads, crypto to crypto transactions on the platform incur a .1% fee.
eToro does take an inactivity fee, which comes in at $10/m. This does seem pretty strange to us, but it should’t be a problem unless you haven’t logged in for over 1 year. Other then that withdrawals incur a $5 fee.
eToro is based around the world, with most of their staff located in Tel Aviv, Israel. Other offices are located in Cyprus, United States, UK, and Australia.
CFDs, also known as contracts for difference, are a trading vehicle used to speculate on the price of an asset. For example, say 1 Bitcoin was worth $1000 and you buy a CFD for that amount. Your price is locked in. Now, next week when Bitcoin hits, $2000, you can sell the rights to the contracts, and claim your $2000. At no point in time did you own Bitcoin on the network. Only the rights to the contract in which you were speculating on price.
For the most part – yes. They have a second service called eToro USA. This service only allows CFDs (contract for difference) and is used to trade price discrepancies of cryptocurrencies. You’re not buying any actual coins when you use this service.
Also, it’s currently only available to 40 US states. You can learn more in our official guide.
Social trading is a concept introduced by eToro allowing you to view the trades of friends or other traders on the platform. It is something you have to opt in for, with users being private by default.
Copy trading piggybacks on top of Social trading, allowing you to you guessed it – copy – the trades of anyone with a public profile on the platform. eToro explains their copy trading feature better than we ever could:
Overall, eToro is for anyone wanting to enter the cryptocurrency world in a beginner friendly way. Social and copy trading allow beginners to adopt successful strategies by proven traders.
eToro is not for die hard cryptocurrency owners who want to actually hold cryptocurrencies. Whenever you purchase cryptocurrency on eToro, they are CFDs and not the actual coins. This distinction won’t matter for everyone, but at Bitpremier we recommend our readers be first class Bitcoin citizens and holding their private keys.
Remember, always HODL