If you buy crypto in tastyworks, it will be stored in a custodial hot wallet at Zero Hash. You cannot pull the coins out of the wallet to use or store else where. Nor can you transfer coins into the wallet.
Someone big into crypto will say "not your keys, not your coins" and find this unacceptable.
Someone dabbling in it will probably not care.
Either way, I feel people should know so they can invest accordingly.
Posted Feb 5, 2021, 2:23 PM UTC
I think this only matters for people who actually plan to spend their crypto like real money. Anyone who wants to go long on crypto in order to profit in USD will actually prefer they hold the keys for the simple reason that they're less likely to lose them and they should be storing them more securely than the average person would.
I'm not certain if this is true. But I definitely fall into the category of people that wouldn't care in the first place. Where does it say "custodial wallet?" The text I saw said they create an account on zero hash for you and it goes into that accounts hot wallet.
I talked to them this morning to clarify, as I really couldn't find any information on their site about it.
Copy-paste from the chat:
All of the crypto currencies will be held at the custodian Zero Hash in a hot wallet and cannot be transferred into or out of tastyworks. You can only buy crypto and then sell it here but you cannot transfer crypto into or out of the account.
This is disappointing I was hoping to transfer all my BTC and eth so I could have my trading under one platform.
Same .. but maybe they’ll change it later on .. it’s a new feature
I'm hoping that this means they will produce proper 1099s instead of the ones that Coinbase gives out
In my opinion if you willing to hold crypto for 5-10-20+ years, hold it in your own cold wallet.
Otherwise it is okay to store it in Tastyworks. You don't own shares and contracts neither, do you? Those are just tickers and numbers on a computer screen which makes you money.
I own my Bitcoin and Eth on Coinbase but I am not really a crypto enthusiast, and not a fan of all the fees for using Coinbase.
Besides TastyWorks potentially being hacked, and the lack of out of hours trading, are there any other risks of selling all of my Coinbase holdings and reinvesting on TastyWorks, where I can better respond to the massive dips?
In my completely non-expert opinion, if you are just swing trading you are likely fine with TW's setup. The fees do seem cheaper (I haven't ran or seen a direct 1 to 1 comparison).
Also, I am pretty sure you can trade crypto at any time on TW.
The downsides are related to the fact that you can't take the coins outside of TW. If you aren't buying because you think they have some real world use, that concern is mainly if you decide you want to leave TW you would have to sell and trigger a tax event. Unlike stocks, which you can transfer to another broker and retain your cost basis. (again, not expert, just my take on the setup, I could be wrong about everything).
not sure what you mean about "outside hours" trading. you can trade crypto on tastyworks 24/7
Super helpful thanks!
I think they just started testing waters. I heard Tom told Dylan Ratigan that it could eventually be used for international money transfers to reduce fees. But I suspect it might only be useful for the high rollers.
Does anyone know if we have to hold our crypto investment to keep the $50 bonus? I bought exactly $50 worth to get the bonus, but I have zero confidence in the crypto market and want to dump it as soon as possible.
3 months per the terms and conditions.
that seems to be more about the deposit requirement for new accounts, maybe after selling the $50 can't be withdrawn, but I doubt that tastyworks would discourage trading
51 bucks is all im willing to invest in crypto on tastyworks ;)
there are contracts when you sign up for an account, but yeah you still have to trust your broker
Do you "own" your gemini keys? or your coinbase keys?
I would be very surprised if the number of people who actually do low-level managing of keys is higher than like 5 or 10%
A lot of brokerages do this. I also bet that synthetics are created when somene purchases BTC on TW, much like the current CFDs with GME right now.
The TW platform is clearly geared towards taking crypto trades, not underlying ownership. If you were serious about owning crypto why would you even consider TW......?
What's the point in buying crypto and not owning the keys?
I tend to agree. But if you are just swing trading over short time periods, it probably doesn't matter.
With the $50 bonus, I figured it was worth to buy a small amount and then figure out how to move it. But if I can't move it, I probably won't be using their system much.
And if I am wrong, posting it to the Internet is a great way to find people to correct me.
Did you get the $50 bonus?
Yeah, posted 9 days later. It is for the value of BTC of when it posts, not when you make the first buy.
hmm haven't gotten mine. So I should wait for BTC to drop before asking them to send haha
Can you move it?
It appears not.
Did you get the $50 promotion for the crypto trade on tastyworks??
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If I give them dollars and ask for dollars back, I get dollars.
If I buy stocks and ask them to transfer my stocks, I get my stocks.
If I buy crypto, I can not get that crypto outside their system.
How important that is to you may vary, but I think it is a pretty distinct difference.
Yeah not really important to me thanks
Dollars in your TW account are insured. Crypto in the Zero Hash account is not. If they get hacked or lose the BTC somehow, tough luck basically.
That's what happened to my 750,000 dogecoin back in the day. :(
That's highly doubtful.
If a place that hold your money losses your money and doesn't do anything about it while nobody's going to trust them now are they
This has happened hundreds of times with crypto exchanges. TW is probably safe to trust, but it is a risk. Mt. Gox is still in the legal process of returning some money to it's users 10 years later.
I mean it's not SPIC insured like your stocks/options would be. It says that on the disclaimer on the promo page.
Er.
Speculative investment, dude. Kinda what all of this is all about.
100% agree.
If you want to own bitcoin then you should use a wallet like Coinbase. Which has fees due to how bitcoin works.
If you want to swing trade crypto, then I'd go with Robinhood which has free trades and uses a crypto derivative. Which is clearly not bitcoin but backed by bitcoin.
TastyWorks Zero Hash is literally the worst part of both worlds: fees + no ownership. What's the point???
Robinhood has no crypto transaction fee upfront but they have hidden fees look it up. It’s hidden in the buy/sell price.
Yeah they have a much wider bid/ask spread. I forgot since Robinhood is a scam but the government allows it, very mixed signals.
I’ve been meaning to switch to real Bitcoin. It’s fun to speculate the price, but lately it seems the dollar is failing and a few countries already are divesting away from the dollar. This is a multi-century level world changing event. Within the next 2 years we will see a take over of crypto vs fiat. It’ll be crucial to make sure you own your wallet.
Exactly the same as buying shares of TSLA and not holding the paper stock certificates, or investing in euro futures and not receiving paper euros - convenience and profit.
The disadvantage is clear - not your keys, not your coins.
However, this reduce the risk of theft in case of account breach. And also may reduce the costs for enforcing the AML laws (the only interfaces are the fiat payment methods).
I think it's mainly for people only interested on speculating short\medium term to make a profit. Anyone actually wanting to own the coins usually invests via actual Crypto exchanges like Binance, Kucoin, Coinbase etc