Webull, a fantastic discount stock broker, even added crypto trading as one of its core features last year. When it comes to crypto and other digital assets ownership matters immensely. So, do you actually own your crypto on Webull?
Unfortunately, you do not own the crypto you buy on Webull directly. Webull holds the private keys to all their crypto wallets and acts as a custodian of your crypto assets. Your crypto is also not withdrawable from Webull to any Web3 address.
In this article, we will cover whether you own your crypto and bitcoin on Webull, whether you can and should buy XRP on Webull, and discuss if and when Shiba Inu will become available on Webull.
Why you do not own your crypto on Webull
Webull owns the crypto. You own a legitimate claim against Webull for the redemption of your crypto. This claim is similar to that you have against your bank. You don’t own any funds directly but simply have a claim on them against the bank.
In crypto, this fact is often described with the phrase “not your keys, not your crypto”. This expression states that if you are not in control of the private keys of your crypto wallet, you have neither direct access nor ownership of those assets.
Here are the main reasons why owning your private keys is a good idea:
- Unrestricted Access: Owning the keys to your crypto wallets gives you complete control of when and how you choose to access your funds. In theory, Webull could restrict access to your crypto assets or limit withdrawals to remain solvent. This is not a situation you ever want to be in.
- Protection against Overleveraging: Banks, brokers, and other entities that manage your money for you frequently take on leverage in order to earn a higher return on their managed funds. In market downturns, this can lead to liquidation risks, as happened with Celsius and other crypto custodians.
- Trustless: Owning your crypto directly removes the need to trust Webull as a third party. In general, removing unnecessary middlemen between you and your assets will give you greater control and security over them.
These are just some of the most important reasons why digital ownership matters. Let’s look at Bitcoin ownership as an example!
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Do you own Bitcoin on Webull?
When you place an order on Webull to buy one Bitcoin, Webull will execute that order almost instantaneously. You will see a decrease in your account’s cash balance and in return an increase in your Bitcoin balance. But what happens on the backend?
Webull will buy the required amount of Bitcoin themselves from a centralized exchange such as Bitfinex and hold the crypto assets either on the exchange or in their own Web3 wallet. Then Webull simply adjusts a few digits in your account’s balance and voila, you now have Bitcoin!
But do you really?
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How to make sure you own your crypto
While Webull offers great features for trading, testing, and learning about investing it is not a safe place to keep large amounts of crypto. Keeping your crypto on any third-party site such as brokers or an exchange exposes your assets to additional risk.
Here are some steps to ensure that you truly own your crypto assets:
- Create your own Wallet: Depending on the crypto asset you would like to own you will need to create your own wallet. In this case, a wallet is simply a public address to which you hold the private keys. For most blockchains, the wallet creation is fast and free.
- Transfer your Funds: The majority of your crypto funds – the ones you don’t use on a daily basis – should be stored in this wallet you own. You may choose to leave a smaller amount on broker sites such as Webull for convenient access and trading.
- Protect your Keys: Write down your recovery phrase on a physical sheet of paper and store it in a secure location. For additional security, I recommend a hardware wallet, such as Ledger.
These are just some of the steps you can take to secure ownership of your digital assets. As we move into this new economy, education on this topic becomes more and more important, so please take some time and do additional research before diving into crypto on Webull.
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You do not own the crypto you buy on Webull. Webull holds the private keys to their wallets and is in control of all of its users’ crypto assets. The only way to truly own your crypto is by keeping them in a wallet to which you own the private key.
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