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  • Home
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  • >Venmo Just Put Cryptocurrency in the Hands of its 40+ Million Users

Venmo Just Put Cryptocurrency in the Hands of its 40+ Million Users

Roughly 40 million Venmo users are about to be exposed to cryptocurrency. Many of these users will be experiencing cryptocurrency for the first time. If you needed a more bullish indicator for cryptocurrency, this is it. 2020 was full of companies jumping aboard the crypto train. This is different from a company that is holding cryptocurrency as an investment.

If you don’t already know this, Venmo is a payments company. They are responsible for more than $159 billion dollars of payment volume in 2020 alone. For reference, Bitcoin did between $1 and $2 billion worth of volume every single day in 2020. What should we expect from Venmo, the latest company to enter the crypto space?

Venmo users can now buy, sell and hold cryptocurrency directly in the app.

The Supported Cryptocurrencies on Venmo

Venmo is primed to support Bitcoin, Ethereum, Litecoin, and Bitcoin Cash from the start. It’s a fine selection of cryptocurrencies to start with, however there is always the possibility that more will be added later. If you’re scrolling through coinmarketcap.com then one thing you might notice is that Venmo has neglected to add a number of other top 10 coins. One is forced to ask, why those cryptocurrencies and not others?

Adding Bitcoin and Ethereum is obvious. But why Bitcoin Cash and Litecoin? Maybe they were just easy-wins from a tech standpoint. They are all built off of basically the same codebase, so adding Litecoin is simple once you’ve integrated Bitcoin. But if simplicity was the motive, then Dogecoin also should have been added. The Dogecoin codebase was also modelled off of Bitcoin’s. Maybe there is an aspect of reputation risk that these coins have that other cryptocurrencies do not.

Another top 10 coin that didn’t quite make the list is XRP. This could be because of the ongoing lawsuit between Ripple and the SEC. Alternatively, it could be that Venmo sees XRP as a competitor to its own business model. Both Venmo and XRP are competing for market share in the payments industry, albeit different sectors

How Will it All Work on Venmo?

Users will reportedly be able to buy and sell cryptocurrencies from within Venmo. This includes the ability to buy and sell cryptocurrency using money from a connected bank account. One question on everyone’s mind is whether or not Venmo will allow the withdrawal of cryptocurrency from their platform.

With PayPal (the owner of Venmo), users are unable to move their cryptocurrency off of the platform. Venmo did enable users to purchase as little as $1 worth of cryptocurrency at a time. This is a really powerful feature because it lowers the barrier to entry for users with less money in their account. It also promotes trading on a smaller scale, which is good for business.

Dollar Cost Averaging on Venmo

At the $1 level, virtually everyone can utilize a “Dollar Cost Averaging” strategy from within Venmo. Dollar cost averaging can be done by purchasing an amount of cryptocurrency on a regular basis. This can be once per month, week, or day. With Venmo lowering the bar to $1 for users wishing to purchase cryptocurrency, a daily $1 purchase starts to look like a very appealing and doable option.

Dollar cost averaging reduces overall risk by purchasing regardless of what the current price is. While this feature has not explicitly been discussed by Venmo, you can accomplish a DCA strategy by logging in once per day and buying cryptocurrency through Venmo.

No Support for “P2P Trading” on Venmo

Venmo has opted to label “moving your cryptocurrency off of the platform” as P2P Trading. According to the Venmo FAQ, in order to engage in P2P trading and transferring, users must first convert their cryptocurrencies to USD. This is just a fancy way of saying you cannot withdraw your cryptocurrency as such.

Sorry folks, your Bitcoin on Venmo will first have to become the USD before you can move it. This is the same way that WealthSimple and PayPal have designed their systems. It is for this reason that we suggest that you explore other cryptocurrency exchanges, if you are interested in owning your cryptocurrencies directly. This includes being able to hold your cryptocurrency in a wallet that you control.

Millions of Potential Crypto Users

Venmo is made up of individuals and businesses that transact with one another. Here at CryptoVantage, we get excited anytime a large company with a big user base decides to adopt cryptocurrency in some way shape or form. It inherently created more economic action between these groups.

Even though we promote a crypto philosophy of directly owning your assets (which you cannot do on Venmo), we celebrate when a reputable company such as Venmo offers cryptocurrency to their users. It is likely the case that established cryptocurrency users won’t turn to Venmo to buy cryptocurrency. However, it is still very positive to have these turned onto the crypto phenomenon.

Payment Companies are Adopting Cryptocurrency

After years of fighting against cryptocurrency, PayPal (and thus Venmo) have made an abrupt course correction over the last 12 months. With cryptocurrency adoption on the rise this seems like a matter of “adopt or die”. I believe this to be the lesson that global payment companies are learning at this moment.

The adoption of cryptocurrencies as a means of payment is evidence that these companies have realized that cryptocurrencies aren’t going anywhere. It is ironic to see a centralized third-party payment provider such as PayPal or Venmo adopt Bitcoin as a payment option from within their platform. Many cryptocurrencies are designed to be antithetical to the very core of the business model of these companies.

What this shows is that users ultimately have the power in the market. If their market wants cryptocurrencies, then that is where the business must go. What this might end up spelling, is the end of these companies altogether. The companies may be the catalyst to their ultimate demise. This may be the trigger that ultimately causes users to flee their platform in search of cheaper fees, and faster settlement.

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About the Author

Keegan Francis

Keegan Francis is a cryptocurrency knowledge expert and consultant. He recognized the opportunity in cryptocurrency early in his career and has been invested in it since 2014. His passion led him to start the Go Full Crypto, a project that documents his journey of totally opting out of traditional financial services. Keegan has been living entirely off of cryptocurrencies since 2019.