Robinhood Crypto Exchange Review
Cryptocurrency exchanges are very popular today. As the interest in Bitcoin and other tokens grows there are more investors attracted to the market. One of the new players on the cryptocurrency exchange scene is a mobile app known as Robinhood. The application was designed to let anyone with a computer, phone, or tablet purchase stocks without a broker or broker fees. Now, the company is preparing itself to let some users buy Bitcoin. Here are a few things you need to know.
About Robinhood Crypto
Let’s take a quick look first at the Robinhood platform and its decision to allow the buying and selling of Bitcoin. Robinhood is a company that promotes itself as a stock trading application for young people. The goal of the platform is really to simplify the process of investing in stocks. This isn’t a bad idea. Many young people have no idea how to buy stocks with a broker. It can be too easy to lose money when you aren’t educated on the market.
It seems only natural that Robinhood would eventually turn itself to Bitcoin. In 2018 the app began to permit buying and selling of Bitcoin on a limited basis. Robinhood is designed to be used by residents of the United States. All US states are not currently supported for trading Bitcoin. If you happen to live in one of the accepted areas, creating a Robinhood Crypto account is as simple as downloading the app from the App Store or Google Play and verifying your identity.
The hallmark of the application, its major selling point, is no fees. That’s right. Robinhood lets users trade stocks and even Bitcoin without fees. That almost sounds like its too good to be true. In the case of Robinhood Crypto it may very well be. Upon serious consideration of the platform there seem to be multiple issues.
Robinhood Crypto VS. Other Exchanges
As we mentioned above, users have to begin by downloading the Robinhood for their device. You can also access the actual Robinhood website with your computer, but the app is much more convenient. The website makes it difficult to manage your account by obfuscating tools to make trades, and it might not be as secure as the app even though it is encrypted.
The app is pleasing to look at. The kids who grew up in the 1980s will love the appearance and graphics. You can use the app to track the price movements of all your favorite digital tokens. This is where the first issue arises. What good is it to track the prices of these coins when you can only buy and sell Bitcoin? You’d be far offer choosing a different exchange where you can buy and sell as well as monitor altcoins.
In Robinhood’s defense, the company has recently made it possible for users in some areas to buy Ethereum. It also states that it plans to offer more tokens in the future.
After you download the app and verify your identity, you have to request to be added to the crypto side of things. The approval can take a little time and the state you live in will ultimately determine whether or not you can use the app for Bitcoin trading.
Once you are approved for cryptocurrency trading you can use the funds in your account to buy and sell Bitcoin.
Let’s take a quick comparison between Robinhood and other crypto exchanges with what we know so far.
Open to those Outside the US?
Trading for multiple tokens?
Others YES, with hundreds of tokens supported
As you can see, Robinhood is already falling behind when compared to exchanges like Coinbase and Kraken. Now, let’s look a little closer at the actual buying experience.
Buying Bitcoin with Robinhood Crypto
Users are allowed to use up to $1,000 of their bank transfer immediately to make Bitcoin buys. It is nice that you don’t have to wait for your money to hit the Robinhood account. This is great for taking advantage of price movements in the market.
When you place a market order for Bitcoin on Robinhood, it will typically be filled instantly. Your account will be credited with the full or fractional amount of Bitcoin immediately. There is no commission charged on the buy.
Here, at least, are two areas where Robinhood might have an advantage over other exchanges.
Fees for buying and selling Bitcoin?
Others YES, with some being on the exorbitant end.
Bitcoin available instantly?
Others SOME, with some others taking up to a week to deliver the tokens
At this point is where the major flaws with Robinhood start to creep in. You may be surprised how these issues affect the safety of your Bitcoin.
What Happens on Robinhood Stays on Robinhood
If you do a lot of Bitcoin investing then this part of the Robinhood Crypto experience will be enough to make you avoid the app. All the Bitcoin you buy on Robinhood stays on Robinhood. You cannot transfer it to another wallet, person, or exchange. It will remain in that Robinhood account until you decide to sell it again.
This means that Robinhood Crypto is exclusively responsible for the safety of your Bitcoin. If there is a hack of the platform, your Bitcoin is likely lost. This greatly lowers the overall value of Robinhood Crypto as an exchange for serious investors.
Robinhood states that it uses a mix of hot and cold storage for Bitcoins in its possession. This, along with “superior operational security” is what Robinhood promotes as the reason to trust it as an exchange.
Can withdraw Bitcoin to other wallets?
The Bottom Line on Robinhood Crypto
Summing up the usefulness of Robinhood Crypto for the average crypto investor is easy. It is a bad choice, even when you consider the no fees. It just isn’t safe to park your entire stash of Bitcoin one wallet. The tokens are yours. You should be able to do with them whatever you like. If you want to buy stocks, choose Robinhood. If you want to buy Bitcoin, give it a pass.