Robinhood, an American financial services company, pioneered the commission-free stock trading system, which most brokerages have embraced. The company’s spirit of innovation also saw it become the first mainstream Robo-advisor platforms to adopt cryptocurrencies in January 2018. In so doing, the firm offered its customers an opportunity to trade stocks as well as leading crypto assets.
At the moment, the Robinhood app offers support for seven cryptocurrencies. These are Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC), Bitcoin SV (BSV), and Dogecoin (DOGE). Apart from adding support for cryptos, Robinhood has been introducing features to help streamline the crypto experience for its users.
For instance, the platform offers tools to monitor market data for cryptocurrencies, view candlestick charts to track price changes over a specific time, and set stop-loss limits for orders. On top of this, the platform launched a fee-free recurring buy feature, which allows users to buy as little as $1 of crypto daily, weekly, or monthly.
Advantages of trading crypto on Robinhood
The Robinhood platform offers multiple perks, including an intuitive interface that makes it easy for beginners to trade cryptos. On top of this, crypto adopters on Robinhood get to enjoy the zero-commission trading model, which means they don’t have to pay any fees to complete transactions.
The commission-free model makes Robinhood relatively cheaper than its competitors. For instance, Coinbase, the largest American crypto exchange, charges a 1.49% fee for most transactions. While this fee might seem negligible, it is worth noting that sending $1,000 would see a customer part with $15 on top of the exchange’s spread on a coin’s current market price.
On the other hand, Robinhood makes its profits from the spread between the buy and sell prices of the digital assets on its platforms.
Robinhood boasts a decent security model to help customers shield their crypto holdings against malicious actors. The app features a two-factor authentication (2FA) system, which enables users to bolster account security. Additionally, Robinhood offers a cold storage facility for investors that own large amounts of crypto.
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Downsides of using Robinhood
As a member of the Securities Investor Protection Corporation (SIPC), Robinhood insures investor funds with up $500,000. However, the company does not extend this insurance policy to its crypto users.
On top of this, Robinhood does not support third-party wallet transfers. While most crypto exchanges allow users to transfer digital assets to external wallets, Robinhood only lets users buy, hold, or sell digital assets.
Robinhood also offers limited access to the crypto market. At the time of writing, the crypto market has over 8,000 digital assets. While no exchange has listed all these coins, Robinhood’s support for only seven coins limits traders that want more exposure to the rapidly growing crypto space.
Should you trade crypto on Robinhood?
Trading cryptos on Robinhood depends on how much exposure you want in the crypto space. The platform eliminates the complexities of dealing with crypto wallets and private keys. While this might be an appealing feature for beginners and small-scale traders, it might not be ideal for professional traders that deal with large-scale transactions.
