Does Robinhood Offer Crypto Trading?

Can You Trade Crypto On Robinhood?

Yes, you can trade a select number of cryptocurrencies on Robinhood. The platform is a favorite among beginners as it offers a user-friendly interface for crypto trading. What’s more, its commission-free trading model also applies to cryptocurrencies, and traders are not required to pay any fees to the platform for making transactions.

Compared to its competitors, Robinhood features much cheaper charges. Coinbase for instance, charges a 1.49% trading fee for most transactions. This means that a $1000 worth of Bitcoin purchase will attract about $15 in fee on top of Coinbase’s spread or markup on the current market price. Robinhood on the other hand, only makes money from the spread between the buy and sell price of the crypto assets you trade on the platform.

In terms of security, Robinhood supports a 2-step verification process that users can use to add a layer of security to their accounts. Robinhood also offers a cold storage facility, and as a member of the Securities Investor Protection Corporation, investors’ funds are insured by up to $500,000.

The downside however is that while there is protection for cash claims, Robinhood’s crypto branch is not protected by SIPC’s coverage. Also, unlike most crypto exchanges that enable third-party wallet transfers, users trading crypto on Robinhood cannot withdraw their crypto to an external crypto wallet. Therefore, all you can do with your crypto on Robinhood is buy, hold or sell and there is no option to send or receive crypto on your account.

What Cryptocurrencies Can I Trade On Robinhood?

As of publishing this article, Robinhood allows its users to buy and sell seven cryptocurrencies, including the following:

• Bitcoin: Robinhood’s support for bitcoin comes as no surprise as the digital currency is the pioneer coin and the leader of the market.
• Ethereum: Already a popular cryptocurrency, and the world’s largest blockchain for the development of decentralized applications, Ethereum arguably offers the most utility in the crypto space, thus giving Robinhood a greater reason to include it in its list.
• Bitcoin Cash: Like Bitcoin, Bitcoin Cash offers an alternative to fiat currencies and is touted as the Bitcoin sibling and a rival against other peer-to-peer transactional crypto projects.
• Litecoin: Litecoin is also supported by Robinhood. Throughout its existence, Litecoin has established a reputation of being the silver to Bitcoin’s gold. Litecoin offers cheaper transactional fees and higher transactional throughput compared to Bitcoin.
• Bitcoin SV: Created as a result of a hard fork from the original Bitcoin blockchain, Bitcoin SV is designed primarily to preserve the original purpose of Bitcoin as created by Satoshi.
• Dogecoin: Developed from an internet meme, dogecoin has been popularized as one of the most affordable cryptocurrencies in circulation. Throughout 2021 the coin gained a massive following with the support of public figures such as Elon Musk and Mark Cuban.
• Ethereum Classic: In its move to support most of the coins in Bitcoin’s family, Robinhood has also made efforts to list other Ethereum forks such as Ethereum Classic. Ethereum Classic is a blockchain platform built on the original Ethereum code to maintain its initial purpose of allowing decentralized applications to run as programmed without any third-party interference.

Other Features on Robinhood

As part of its mission to make trading more accessible, Robinhood has also included additional features intended to ease the process for newbies. These include the ability to monitor market data for stocks, options, and cryptocurrencies, view candlestick charts to track price changes over a specific time, set stop-loss limits for your orders, among other things.

Having started its journey as a no-fee stock trading app, Robinhood now offers many additional features, including zero-fee crypto exchange. This trend will likely continue as the company is expected to branch out into other areas such as lending and margin trading. Robinhood has already secured a patent for an automated cryptocurrency purchasing system that could make its way to market in the future.

However, according to reports, Robinhood Crypto is just as volatile as the market with some quarters criticizing the company on its dependence on crypto trading to increase its crypto users base. So far, crypto accounts for about 17% of the company’s revenues, with Dogecoin accounting for 34%. The report claims that the number of users trading crypto on Robinhood has contracted by 80% since launch.

The platform is also struggling with its ability to retain its initial IPO value as well as its existing customer with every volatile swing of the crypto market. Robinhood’s centralized approach gives it a negative reputation among crypto enthusiasts who cherish decentralized autonomy above everything else.

Should you Trade Crypto on Robinhood?

The decision to trade crypto on Robinhood boils down to whether you are only looking for exposure to the crypto market’s price movements without the complexity of handling crypto wallet private and public keys. The biggest benefit of trading on Robinhood is 0-fee transactions which are suitable for small-time traders and beginners alike. Whether you are looking to make huge gains by trading professionals or are just learning the ropes, this platform could be a good place to start with.

However, since all of your trades will be executed through Robinhood’s accounts, you do not have the luxury of owning your private keys. This means that all your crypto purchases and sales are done by Robinhood on a centralized wallet, which can be very risky for large-scale transactions.

Alternatives to Robinhood for Crypto

There are a large number of options for people looking to trade crypto beyond Robinhood.

If you’re looking for a very similar experience to Robinhood (with a strong emphasis on stocks) than you might check out something like SoFi or Wealthsimple. If you decide to go the full-crypto approach than an exchange like Coinbase or FTX might more optimal.