In an update earlier today, global tech conglomerate Meta shared news of its latest moves surrounding digital collectibles. From September 29th, subsidiaries Facebook and Instagram will now allow users to link their virtual wallets with their accounts and also share non-fungible tokens. Users Across 100 Countries Can Access New Meta Feature Everyone on @instagram and @facebook can now share their digital collectibles in the US, and on Instagram in the previously announced 100+ countries,” Meta announced in a tweet. https://twitter.com/MetaNewsroom/status/1575486040349245446?s=20&t=TpIDHfYcRCtVRMNrwYhWiA…
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 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 Cash
- Ethereum Classic
- Bitcoin Gold
- 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.
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.