Abra is one of the leaders in a new class of decentralized investment apps. It lets you invest in worldwide assets from your mobile phone.
The service is particularly attractive due to its low trading fees, low minimums, and global availability. Let’s take a closer look.
What Is Abra?
Abra is a decentralized, non-custodial wallet on your mobile phone. Depending on where you live, you can use it to hold crypto, 50+ fiat currencies, stocks, and exchange-traded funds (ETFs). And in addition to making investments, you can also use Abra to send and receive crypto tokens, just like any other crypto wallet.
Which Cryptocurrencies Does Abra Support?
At the time of writing, Abra supports 30 coins (though more are continually being added).
The currently supported coins are: Augur (REP), Basic Attention Token (BAT), Bitcoin (BTC), Bitcoin Cash (BCH), Bitcoin Gold (BTG), Cardano (ADA), Dash (DASH), DigiByte (DGB), Dogecoin (DOGE), EOS (EOS), Ether (ETH), Ethereum Classic (ETC), Golem (GNT), Litecoin (LTC), Lisk (LSK), Monero (XMR), NEM (XEM), NEO (NEO), OmiseGO (OMG), QTUM (QTUM), Ripple (XRP), Siacoin (SC), Status (SNT), Stratis (STRAT), Stellar (XLM), TRON (TRX), Verge (XVG), Vertcoin (VTC), Zcash (ZEC), and 0x (ZRX).
There’s a caveat, however. The only coins which you can own outright via the Abra platform are Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. Abra refers to these as “native coins.” The other non-native coins are all synthetic assets which use crypto as collateral via smart contracts.
But don’t worry, the approach doesn’t carry risk. In practice, Abra is hedging every investment you make. When you fund your wallet, you are effectively shorting the native coin and longing the asset you purchase. Abra, therefore, goes long on the native coin and short on the hedged token.
The only significant downside to the synthetic approach is that you won’t be eligible for airdrops, forks, or other payouts. For example, holding NEO will not accumulate GAS.
Note: Abra claims it is in the process of adding more coins to its native list.
Abra is the only place you can invest in the popular Bitwise 10 crypto index fund without needing to meet Bitwise’s own $25,000 minimum investment threshold.
As we explained in our article about the best crypto index funds, investing in assets like Bitwise 10 is a great way for passive investors to gain exposure to the crypto sector without needing to worry about checking the price every day.
The minimum investment for the Bitwise 10 fund via Abra is a mere $5.
Because Abra is non-custodial, the company does not have any access to your funds. The app operates on an entirely peer-to-peer basis.
When you open the app for the first time, you will be prompted to set a PIN code. Thereafter, every time you open the app, you will need to enter the PIN before you can interact with your wallet.
During the initial setup, Abra will also issue you with a recovery phrase (also known as a seed phrase). You are the only person who has the phrase—if you lose it, you will not be able to restore your wallet on a new device (for example, if your phone gets broken or stolen). You would lose access to your assets. Similarly, if someone else gets hold of your phrase, they would be able to transfer your crypto out of your wallet.In both cases, Abra would not be able to help you.
What Are Abra’s Fees?
Abra’s fees are some of the lowest in the industry. It is free to add funds to your account via ACH in the United States, and it is free to fund your account with Bitcoin, Litecoin, Bitcoin Cash, or Ethereum. Funding via credit card carries a small fee.
Fiat withdrawals to banks are also free, but you’ll pay network fees to withdraw crypto. The network fees vary depending on the coin and the demand.
Finally, it is free to trade between different tokens, stocks, currencies, and ETFs. Abra does have an exchange spread, but Abra always makes you aware of them before you complete a transaction. As with network fees, spread fees can vary based on a number of factors.
Where Is Abra Available?
Abra isn’t the only service that offers commission-free trading on stocks and crypto.
Robinhood is arguably the most famous—but it’s only available in the United States. There are also services like M1 Finance, DriveWealth, and Acorns, all of which offer variations on the same theme. And we’re also expecting to see StockTwits’ new commission-free app to go live soon.
However, all those are heavily geo-restricted. And that’s where Abra shines. Its list of supported countries is unparalleled. It is available in more than 150 countries, with the only exceptions being the usual suspects like Cuba, Iran, Syria, and North Korea.
What About American Users?
Unfortunately, the stringent regulatory environment in the United States means that Abra was forced to introduce new restrictions on American residents in July 2019:
“For Abra users in the United States, we have to make some system modifications around our smart contract-based synthetic assets. As a part of this effort, we are migrating any synthetic assets to a native hosted wallet solution. On Abra, these are defined as anything other than Bitcoin (BTC), Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH).”
US-based users can no longer hold QTUM, BTG, EOS, OMG, or SNT, and anyone in the state of New York will only be able to hold Bitcoin, Ethereum, Litecoin, and Bitcoin Cash.
Furthermore, Americans can not buy stocks or ETFs through the Abra app.
Should You Use Abra?
Abra’s native support for more than 50 fiat currencies provides an unparalleled on-ramp for people outside of the European and US regions. And for anyone who’d like to explore investments beyond crypto, the company’s offering of low-minimum ETFs is one of the most appealing propositions that you’ll find on the market.
Disclaimer: This is not investment advice. Bitcoin and other cryptocurrencies are highly speculative. Nothing is guaranteed in cryptocurrency. Always perform your own research before investing and never commit more money than you are comfortable losing.