Robinhood Cryptocurrency Trading: Legit or Scam?

If you’re not new to the crypto trading scene, you’ve probably heard of Robinhood. Robinhood was formed in 2013 out of two roommates’ friendship at Stanford University, i.e., Vlad Tenev and Baiju Bhatt. The two founded Robinhood out of a market opportunity to provide commission-free trades with no minimum amounts for opening a brokerage account. Initially, Robinhood offered commission-less stock, ETF, cash-management account, and options but has since started offering free cryptocurrency trading supporting some of the popular digital assets

Robinhood also currently offers recurring investments and fractional trades ideal for long-term trading strategies. While the platform packs some outstanding usability features coupled with minimal trading fees, it has faced numerous controversies stemming from technical glitches and security concerns. Another concern is whether the platform is a scam or legitimate. Here’s a look at this controversial financial markets trading platform. 

Robinhood Overview     

Robinhood is a financial service company based in Menlo Park, California, U.S. The company allows individuals to invest in ETFs seamlessly, stocks, and options via a mobile and web-based app, i.e., Robinhood Financial. In February 2018, the company launched a subsidiary Robinhood Crypto which allows users to trade cryptocurrencies. Robinhood Crypto was first available to crypto traders in New Hampshire, Montana, Missouri, California, and Massachusetts.

 Robinhood Crypto is available as a website and mobile apps for Android and iOS. The app enables crypto traders to trade crypto, keep track of market data, and even set price alerts for up to 16 cryptocurrencies, including Bitcoin, Ethereum, Bitcoin Cash, Ripple, and Litecoin. It has since expanded its trading platform to New Mexico and Wisconsin. 

Robinhood amassed widespread popularity among millennials thanks to its user-intuitive apps. The platform is purely online (web and app), with users having to execute trades entirely on the app. Choose any equity, ETF, stock, or crypto supported on the platform and swap swipe to buy or sell. 

Robinhood is registered with the U.S. Securities and Exchange Commission (SEC) and regulated by the Financial Industry Regulatory Authority (FINRA). The company doesn’t charge commissions for options, stock, and cryptocurrency trading. Therefore, the primary revenue sources are margin lending and selling order information to high-frequency trading firms such as Citadel Securities and Virtu. Selling order information to high-frequency trading firms has brought Robinhood under criticism, with experts claiming that its “anti-Wall Street ” lacks transparency.     

Trading Crypto on Robinhood Crypto 

Robinhood Crypto allows you to trade Bitcoin, Ethereum, Dogecoin, and other cryptocurrencies 24/7 without paying trading fees. The platform is yet to roll out its crypto services to the entire U.S. Nonetheless, 50% of the U.S. population have access to Robinhood Crypto and can receive various services apart from crypto trading, including market data and crypto price data. 

Crypto trading on Robinhood is still at very early stages. Accessing Robinhood’s official website, you can tell that the company seems to focus more on the traditional stock market rather than crypto trading. The crypto section is tacked away and not clearly displayed. Nonetheless, after launching crypto trading in February 2018, Robinhood Crypto recorded over 200 000 daily signups, evidencing the service’s apparent uptake. 

Robinhood Crypto Supported Cryptocurrencies    

  • Bitcoin 
  • Ethereum 
  • Bitcoin Cash 
  • Litecoin 
  • Dogecoin 
  • Ripple 
  • Qtum 
  • Ethereum Classic 
  • Stellar 
  • NEO 
  • Zcash 
  • Monero 
  • Dash 
  • Bitcoin Gold 
  • Lisk 
  • OmiseGo 
  • Bitcoin SV 

Pros of Trading Crypto on Robinhood Crypto

Free Trading– Robin Crypto offers 100% free cryptocurrency trading. This comes in handy to save traders a significant amount of their investments. The platform is committed to making the cost of crypto trading extremely low to favor beginner traders or traders with a smaller portfolio. On the platform, you can purchase bitcoin at a fair market price with no hidden charges. Unlike other crypto platforms such as Coinbase, there is no trading commission. Better yet, you can purchase crypto using FIAT currency. 

Easy to Use– Robin Crypto is straightforward to use thanks to a streamlined interface. The sign-up process and account funding are quick and straightforward. You can link your Robin Crypto to your bank account and fund your Robinhood account instantly. The money reflects almost immediately. The app employs a minimalistic design with quite simple features, thus very easy to use. 

No Minimum Account Balance– Robinhood Crypto doesn’t have a minimum account balance. This means you can start trading right away after you fund your account. You can trade crypto for as low as $5. 

Decent Security Features- Robinhood Crypto packs decent security features. The app employs 2F verification and allows users to add some custom PIN codes to enhance their crypto security.   

Cons of Trading Crypto on Robinhood Crypto     

It’s not all rosy trading coins on Robinhood Crypto. Here are some challenges trading crypto on the platform. 

Doesn’t Support Crypto Withdrawals- The major challenge trading crypto on Robinhood Crypto is that it doesn’t support crypto withdrawals. When you buy bitcoin on the platform, you can neither transfer the coins to an offline wallet nor use them in third-party transactions. The only way to cash out from the platform is to sell your coins and withdraw the USD via your bank account. This is against the entire concept of cryptocurrencies plus fuels speculative trading since it supports only selling or buying crypto using USD. 

High Spreads– While the platform doesn’t charge commissions for trading crypto, the spreads for crypto transactions are relatively wider than other crypto trading platforms. This poses an enormous risk to crypto traders.

Limited Functionality– Robinhood Crypto lacks some tools and features such as leverage trading found in other crypto trading platforms. Additionally, there’s a possibility that real-time market data may delay for up to 20 minutes, making market analysis inaccurate.

Poor Customer Service– Robinhood Crypto has poor customer service. The only means you can communicate with customer service is via email. The platform doesn’t support live chat or phone, making it extremely challenging to contact customer support in case of any challenge. The customer service is essentially disorganized.  

Is Robinhood Crypto a Scam?    

No! There are no pointers that indicate Robinhood Crypto is a scam. The platform was created in 2018 and had less than two years in the crypto space. Being a fairly new platform, it’s natural to be concerned with the platform’s trustworthiness. However, the platform hasn’t had a history of crucial security issues such as hacking, plus no user has complained of losing their cryptos on the platform. Furthermore, Robinhood Crypto is a subsidiary of Robinhood Markets, Inc., which is regulated by the U.S. Securities and Exchange Commission (SEC), and it’s also a member of the Financial Industry Regulatory Authority (FINRA) and SINC. 

Robinhood Crypto is precisely what it claims to be; a commission-free crypto trading platform with no account balance to allow any trader to start trading regardless of their capital. Additionally, the company discloses its means of generating revenue, i.e., through Robinhood Gold subscription fees, interest on cash balances of user accounts, and selling order information to high-frequency trading firms. 

However, this doesn’t mean that the platform is without challenges. In March 2020, the app experienced several outages eliciting fears that the platform may be a scam. Nonetheless, Robinhood Inc. assured its users that the outages resulted from extensive account signups coupled with high orders. 

Closing Words     

Bitcoin live price
price change

Robinhood Crypto is a solid choice if you’re just getting started with crypto trading and have minimal starting capital. The app is straightforward to use, doesn’t charge any trading fees, and has no minimum trading amount. It will surely provide a smooth ramp to your crypto investment experience. However, lack of withdrawal options, limited supported cryptos, poor customer support, and limited functionalities makes Robinhood Crypto appear trash when put up against advanced crypto trading platforms such as Binance and Coinbase. Nonetheless, it’s a great starting point in crypto trading, especially for complete beginners.  

Stay up to date with our latest articles

More posts

BitYard Review: The One-stop Trading Platform with Perpetual Futures

The crypto exchange market has recently seen the birth of new companies to study before entering the sector. With an ever more comprehensive market offer, it is up to the individual investor to understand the industry’s best operator. Keeping in mind that different traders are better suited to different types of investors, today we will impartially talk about BitYard, a Singapore-born trader. BitYard launched in 2019 as a cryptocurrency exchange that offers a range of services to its customers. One…

PrimeXBT – The Next Generation Platform for Leverage Trading

PrimeXBT is a trading platform and cryptocurrency exchange supporting major stock indices, commodities, and foreign currencies. Many of today's crypto traders have entered the industry from traditional trading markets. For example, they come from stock trading, currency exchanges, and commodities trading. However, to maintain their former portfolios and dip their feet into cryptocurrency, they have to register on different platforms. Unfortunately, this practice may come at high costs. PrimeXBT aims to combine trading across different markets on a single platform.…

AOFEX – An Advanced Exchange Ecosystem with Top DeFi Features

AOFEX is a blockchain-based exchange and ecosystem. The network provides crypto traders with the ability to effortlessly trade, stake, mine, and more. AOFEX entered the market intending to provide a more transparent and regulated option. As such, the platform received its MSB license for digital currency trading from US regulators. Today, it seeks to become a vital bridge for institutional investors seeking to gain exposure to the digital economy.   AOFEX operates as a centralized exchange that offers low fees and…

Beginner’s Guide To Bitrue – Get More Features from Your Exchange

Bitrue is a digital asset management platform that combines the benefits of a decentralized ecosystem with the convenience of a centralized exchange. The protocol enables users to buy, sell, trade, lend, and stake an array of digital assets with ease. As such, the network continues to expand its market position. Notably, Bitrue currently has over 4 million users.   What Problems Does Bitrue Solve? The developers behind the Bitrue concept sought to reduce or eliminate a variety of issues faced by…

Introducing Vdollar: A Platform Turning Transaction Fees into Assets

Vdollar is a crypto contract exchange platform introduced to provide crypto enthusiasts with the best income opportunities and make contract trading easy. This Colorado registered network has several services like digital currency exchange, a wallet, and trading mining.  The Vdollar network possesses some excellent features, including a mine trading mechanism. In addition, Vdollar has one of the best mining features for its native token, Vdollar. So, how does the Vdollar token operate? This guide will look keenly into the Vdollar…

A Closer Look at an Emerging Crypto Exchange, MEXC

According to the Coinmarketcap platform, more than 366 registered crypto exchanges offer services in different jurisdictions. Every other month, more exchanges join the crypto world with the promise of making things easy for crypto traders and investors. Most of these exchanges prove to be unique by providing top services at affordable rates and fast speeds.  This guide will be reviewing one such exchange, MEXC, a one-stop shop for all crypto exchanging services. Keep reading to know what products and features…

1inch Exchange Review – A Fierce Rival to Uniswap’s Hegemony

Soon, it will be a year since decentralized finance rose to widespread popularity in the crypto industry and beyond. Many of the protocols emerging in 2020 are still on the rise, and the 1inch Exchange leads the pack. More so, it is challenging the superior positions of better established DeFi platforms. 1inch Exchange is an aggregator for decentralized exchanges. It launched in the summer of 2020 and has developed rapidly into one of the most promising DeFi protocols. Furthermore, it…

Binance.US: The American-based Exchange From Binance

The Binance Coin has seen an explosive price action this month, leading it past the $300 mark. Currently trading at slightly over $200, the coin can account for its boom due to its parent company's continued advances. Looking behind its success story is the crypto exchange Binance, founded in 2017 by Changpeng Zhao. The exchange ecosystem operates as a centralized exchange to solve low market liquidity, platform insecurity, and many more. The exchange managed to make massive strides ever since…

Coincheck Review: Asia’s Biggest Cryptocurrency Exchange

Coincheck is a Japanese-based cryptocurrency exchange that provides bitcoin storage services and several crypto exchange operations as of 2014. The multilingual exchange is headquartered in Tokyo, Japan, and offers several trading instruments, including both popular and liquid tokens and a few altcoins. The platform also offers margin trading with a maximum leverage of 1:5, Bitcoin spot trading, crypto lending, and a crypto payment system that automatically converts cryptos to Japanese Yen. Coincheck has the highest Bitcoin trading volume in Japan,…

Luno Full Review – Upgrading the World to a Better Financial System

The crypto is definitely upon us. To say the least, Bitcoin has more than 100 million owners, 400 000 daily users, 200 million Bitcoin wallets, and over 53 million traders. Cryptocurrencies have also emerged to have the highest trading volume compared to fiat currencies.  However, despite the widespread usability of cryptos, mainstream adoption is still a challenge, especially in developing countries in Africa and South Asia due to a lack of supporting infrastructure. Most crypto exchanges and other products are…