What’s wrong with the eToro ad & why to avoid CFD trading

eToro, an investment and trading platform, has been trying hard to get new users among Bitcoiners lately.

They’ve released an ad for Bitcoin that uses the “hodl” meme as well as a Game of Thrones reference – and for some reason Reddit went crazy about it:

etoro ad promoted reddit

To score even more PR among Bitcoiners, their CEO has given an interview where he made a controversial statement “regulation … will accelerate mass adoption”:

etoro ceo interview bitcoinist


The ad itself is basic and predictable, but the main point that many are missing here is eToro has little to do with actual Bitcoin. Even though they claim that when opening a long position you are buying the actual underlying asset, Bitcoin, there is NO way to withdraw it right now. You can only withdraw profit you’ve made in USD:

Can I transfer BTC from Etoro to another Bitcoin wallet? from BitcoinBeginners

Can i withdraw btc directly from etoro ? from Etoro

eToro used to offer strictly CFD trading services that let people place bets on Bitcoin to USD rate price change without owning the underlying asset, i.e. Bitcoin.

This changed in May 2018 – right now eToro actually supposedly sells Bitcoin to its’ users if they go long – but you will NOT have BTC in your eToro wallet.

There are no Bitcoin wallets in eToro at all. The whole platform is denominated strictly in USD and the wallets are “coming soon”.

As for using leverage or shorting Bitcoin – eToro users are still trading CFDs there. Keep that in mind, as with CFDs predicting movement is hard.

65% of retail investor accounts lose money when trading CFDs with this provider.

That’s the official disclaimer on eToro’s website and all their marketing materials.

To sum up – here’s the main problem with eToro’s ad: it’s not really HODLing if you can’t see your Bitcoin in your wallet that you have private key for. You can’t withdraw your Bitcoin from eToro, and until that is possible we recommend staying away from eToro.

 

Why you should avoid CFD trading platforms

eToro aside, make sure you understand what most of the regular CFD trading websites offer.

Most CFD trading platforms are very similar to gambling websites that look smarter than the usual slot machines. The term they use for themselves is “social trading” while in reality it’s often harboring addicts who max out their credit cards before they max out their relatives’ credit cards.

Almost all the major CFD companies have added betting on Bitcoin, and they are spending insane budgets on advertising. As a result many newcomers get confused and sign up only to slowly realize they are not buying any Bitcoin there.

Here’s a quick list of CFD trading platforms that may mislead you into betting on Bitcoin:

  • Plus500
  • UFX
  • XTB
  • IG
  • Oanda
  • 24Option

Once again, we will be seeing more and more ads from these providers, and more and more media coverage.

They have a) large budgets b) lucrative affiliate programs, which means you will see more and more CFD trading platforms reviews on crypto blogs. As an example – the popular crypto mag 99Bitcoins suggests trying eToro for simplified Bitcoin investment:

99bitcoins misleading title investing in bitcoin

The good thing about their review is that 99Bitcoins is openly stating that withdrawing Bitcoin from eToro is not possible yet. Ofir Biegel from 99Bitcoins reached out to us (see comments below the post) to point out a factual mistake we’ve made in the article and also stated that

For investing purposes only (i.e. buying low selling high) and not hodling for the long term, eToro is actually a good solution as it removes a lot of barriers to entries for newbies such as getting a wallet, storing the private keys, etc.

We would disagree with the statement as we think immersion into Bitcoin infrastructure is necessary, but Ofir has his reasons for thinking that and we respect that it is openly expressed.


Ironically, after this article went live eToro contractors started trying really hard to defend eToro, emphasizing the fact that customers are buying actual BTC while going long. None of them mentioned the inability to withdraw Bitcoin though:

etoro employee/contractor defending etoro

 

What are the eToro alternatives

Our opinion on this is – eToro has set out after newbie Bitcoin users and naturally wants them converted to traders on their platform.

While you will be able to buy Bitcoin on eToro and eventually transfer it away to your cold wallet, we recommend getting familiar with services that have been centered around Bitcoin since the inception of this cryptocurrency. After all, Bitcoin is an all new thing that challenges the existing financial system.

If you want to actually buy Bitcoin then use the following methods:

Credit card purchases: use Cex.io (worldwide) or Bitpanda (EU).

Buy altcoins: exchange BTC into anything @ Coinswitch or buy altcoins directly.

Anonymous Bitcoin purchases: Localbitcoins or Paxful.

 

2 Comments
  1. Ofir Beigel says

    Hi Coinvigilance, Ofir from 99Bitcoins here.
    Just read your eToro review and I wanted to point out have some misinformation in it. I believe your article is an honest attempt at investigative journalism so hopefully you’d appreciate the feedback:

    1. When you buy Bitcoins with eToro (i.e. go long or Hodl), you’re not buying a CFD, you’re buying the actual asset. The only time you’re buying a CFD is when using leverage or shorting Bitcoin. Therefor the Hodl does have meaning. If you want to go deeper into this then read this article: https://www.ccn.com/buy-cryptos-outright-or-trade-cfds-on-etoro/ (yes it’s a sponsored article but it’s mainly about explaining how eToro works).

    2. We don’t do sponsored posts at 99Bitcoins (at least not for the past 2 years or so). A simple request to our customer service would have made sure of that. So while we do utilize the affiliate program (as I see you do as well for CEX, Bitpanda, LocalBitcoins and Paxful) we always conduct our own due diligence and make sure the words aren’t put in our mouths.

    3. For investing purposes only (i.e. buying low selling high) and not hodling for the long term, eToro is actually a good solution as it removes a lot of barriers to entries for newbies such as getting a wallet, storing the private keys, etc. Personally I’m bullish on Bitcoin so I don’t think this is a good fit for me but for many people it is. BTW – we explicitly state that in our review (that you don’t own the coins).

    So that’s my two cents, I think for next time it would be better to do some more research and actual outreach before putting things online, especially when pointing fingers at others. I say that because I have done the same mistake in the past and quickly understood that in the words of Ben Parker “with great power comes great responsibility”.

    In my opinion the disclaimer on your footer stating “We cannot check all news and commentary for accuracy and thus are not responsible for any direct or indirect damage caused by misinformation” seems like an attempt to avoid necessary responsibility.

    Best of luck.

    1. Staff says

      Thanks for the comment, Ofir.

      Looks like you are right about buying Bitcoin on eToro – all the company info states customers are buying the underlying asset, i.e. Bitcoin. There is still no way to access it in your wallet or withdraw it to another wallet, but we acknowledge eToro is moving in that direction.

      We have just changed all the inaccurate wording in the article, thanks once again!

      However, having an opinion on whether our readers should or should not avoid a certain service is absolutely legal. We still think people interested in Bitcoin rather than just making money in general should stick to other services, and we have all rights to voice that. Just like you have a right to say eToro is OK because it lets people skip wallet creation and the responsibility of storing private keys.

      Again, thanks for taking your time to comment on this and have a great week.

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