Users of the investment platform Robinhood can take advantage of commission-free trading while relaxing on their mobile devices. Robinhood added a cryptocurrency section to their platform in the midst of the 2017 crypto asset bubble, despite their primary focus being on enabling their customers to invest in the conventional stock market.
The integration of cryptocurrencies by Robinhood may be appealing to users who want to manage all of their assets in a single app, but this platform still has a long way to go before it can be considered a true bitcoin bank because users cannot yet withdraw their own crypto holdings to private wallets in which they have the private keys.
What Is Robinhood?
The Menlo Park, California-based company Robinhood offers a mobile app and website that enable users of all net worth levels to invest in stocks and other assets. As there are no physical storefronts or bank branches connected to Robinhood, this is an example of a business at the forefront of the financial technology revolution. One of the best platforms for trading stocks and cryptocurrencies under one (virtual) roof is Robinhood.
American financial institutions are subject to regulation, including Robinhood. They are registered with the US Securities and Exchange Commission and are subject to FINRA regulation as broker-dealers. Since the platform is free to use, Robinhood derives the majority of its income from margin lending, selling user activity data, and earning interest on users’ cash balances. Over 1,250 people will be working for the business in 2022.
Pros & Cons Of Robinhood
- Very easy and simple to use
- Commission-free cryptocurrency trading
- Good cash management and recurring investments features
- 4 U.S. states do not offer it. states
- Limited investment offerings
- Lack of transparency around payment for order flow
How Does Robinhood’s Crypto Feature Work?
Bitcoin and other cryptocurrencies are treated equally to other assets on the Robinhood platform. Through Robinhood, users can trade cryptocurrencies like bitcoin, ethereum, litecoin, dogecoin, bitcoin cash, and bitcoin SV. It should be noted, though, that crypto trading takes place in a separate account from a regular Robinhood Financial account. This separate Robinhood Crypto account is with them.
The ability to transfer cryptocurrencies to and from Robinhood has not yet been implemented because it is a trading platform that focuses primarily on the traditional financial sector. In other words, because users of Robinhood are unable to currently acquire the underlying assets, they are not actually purchasing real crypto assets when they use Robinhood. Instead, users are getting exposure to the changes in the value of the different cryptocurrencies that the platform supports.
Is Robinhood Easy to Use?
It’s very simple to set up and use Robinhood. For investors who primarily use devices to manage their accounts, Robinhood is a simple choice thanks to a mobile app with a simple design that concentrates on the essentials. You can also use the web-based platform, which resembles the app in both appearance and functionality. Similar order types and asset classes are supported by both platforms.
You’ll see a line chart that displays your portfolio value and purchasing power once you log into the app. The main menu can be found at the bottom of the screen, and using the search feature, you can quickly access a stock’s chart across various time frames. The stock’s highs and lows, market capitalization, and P/E ratio are all displayed for your perusal. In addition, Robinhood offers a company profile, a news feed, and a ranking of analysts’ rankings. The trade button scrolls with the page so that you can place an order whenever you’re ready to buy or sell.
The Robinhood app runs smoothly and offers a generally pleasant user experience. One drawback is that there isn’t much you can do to tailor the app to your preferred trading environment. Additionally, the mobile app is devoid of any charting or in-depth research tools.
How To Sign Up For Robinhood
Downloading the app instead of using Robinhood’s website is the best way to get started. You’ll probably carry your phone around with you more frequently than your laptop or desktop computer because this is a mobile-first platform.
After downloading the Robinhood app, you must launch it and select the “Sign up” button that appears on the screen. During the setup process, you will be required to provide quite a bit of personal information because Robinhood is required to adhere to a number of rules in order to continue operating legally in the United States. law. You should be able to get your account approved in a matter of minutes after sharing your social security number and other personal details.
After creating an account, you must link your bank account to Robinhood in order to use the platform. Because you can choose your bank based on its corporate logo, the procedure is incredibly straightforward.
The final step is to fund your Robinhood account using your bank account and to begin investing.
How Secure Is Robinhood Crypto?
The security of cryptocurrency funds isn’t as high as it is for the company’s other services. For instance, Robinhood covers the value of stocks up to $500,000. The company does not, however, insure cryptocurrency funds. You are not able to easily notify the company about the incident and request reimbursement if someone gains access to your account and steals money.
With Robinhood, you don’t actually own your coins or private keys, just like with other centralized exchanges like Coinbase. This is viewed by many as Robinhood’s main drawback. Additionally, without additional verification procedures, you are unable to transfer cryptocurrency from your account to a wallet outside of Robinhood.
Overall, none of Robinhood’s services have ever been the victim of a significant hack. However, users on various social media platforms have reported individual account hacks. There are several ways to improve the security of your account if you decide to use Robinhood Crypto. You could enable Touch ID or Face ID on the mobile app, for instance. Furthermore, you can enable two-factor authentication or add a unique PIN code.
Robinhood Supported Crypto Wallets
The financial platform of Robinhood does not currently support native crypto wallets. This indicates that after making a purchase, users cannot withdraw bitcoin to their personal wallets. Additionally, customers cannot add bitcoin that they already own to their Robinhood accounts.
Having said that, it’s possible that additional cryptocurrency will eventually support deposits and withdrawals through their underlying networks. According to Robinhood, at the very least, users should be able to withdraw cryptocurrency to native wallets. It may take the company a lot longer to feel secure with cryptocurrency-based deposits because they are also concerned about money being deposited to the platform from illegal sources.
Before it can be ranked as one of the top cryptocurrency exchanges in terms of trading options, Robinhood still has a ways to go. It’s a good choice for people who just want to trade cryptocurrencies on a user interface that is very practical.
However, if you’re an active trader or investor, there are much better options available since Robinhood does not support robust charts, screeners, etc. You will receive access to research, data, trading tools, customer service, and educational offerings in exchange, even though the majority of brokers charge for options contracts and some still impose ticket fees for equity trades. Other zero-fee brokers with more resources are deserving of serious consideration, even if you are a novice investor only interested in purchasing and holding stocks.