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

ProBit Global – A Platform Allowing Traders to Exchange Bitcoin and Altcoins

Cryptocurrencies such as Bitcoin have been around for a few years now. However, a relatively new type of cryptocurrency is quickly gaining popularity: altcoins.  Altcoins are cryptocurrencies that differ from Bitcoin in various ways, including the mining process, distribution, and transaction fees. ProBit Global is a cryptocurrency exchange that offers users a safe and easy way to buy and sell altcoins. With ProBit Global, users can trade altcoins without having to worry about the complicated process of mining or transaction…

WazirX – A Crypto Exchange Investing in Security Developing in the Indian Market

The crypto industry is growing rapidly in India, with new companies like WazirX entering the market. WazirX is a P2P exchange that allows users to buy and sell cryptocurrencies without going through a third party.  This review will analyze how WazirX is currently leading the way in the Indian crypto market growth. What Is WazirX? WazirX is a crypto exchange allowing users to trade cryptocurrencies. It also allows users to store their cryptocurrencies in the WazirX wallet. WazirX’s concept came…

Changelly – A Crypto Exchange for Beginners and Experienced Traders

Cryptocurrency exchanges are the platforms where you can buy, sell or trade cryptocurrencies.  There are many different exchanges, but Changelly is one of the best options for beginners and experienced traders. Changelly offers a quick and easy way to exchange cryptocurrencies and has a wide selection of coins available.  Changelly also has a very user-friendly interface, making it an excellent option for those new to cryptocurrency trading. So if you're looking for a crypto exchange platform, check out our review…

OKCoin – An Exchange for Global Cryptocurrency Trading

Cryptocurrency exchanges are digital platforms where users can buy, sell, and trade cryptocurrencies. The first crypto exchanges appeared more than ten years ago, and OKCoin was among them.  Crypto exchanges let users enter the crypto market and provide a way for investors to get involved in the sector. OKCoin is a famous player in this market, and it offers a variety of features. These functionalities make it a well-known choice for both new and experienced investors. What is OKCoin, and…

Korbit – A Popular Crypto Exchange in the Large South Korean Market

In South Korea, the crypto market is growing rapidly, and one of the leading exchanges is Korbit. Korbit has been operating since 2013 and offers a wide range of coins to trade.  The company has its headquarters in Seoul and has millions of users. Today’s review will look more closely into this popular South Korean platform for all our readers. What Is Korbit? Korbit is a website where you can trade different types of cryptocurrency. You can buy and sell…

Discovering the 0x Protocol Exchange – A Guide for Beginners in Crypto

Through its worldwide DeFi system, blockchain technology provides many people with the possibility to achieve financial freedom. Many assets can have their tokenized versions online, thanks to DeFi protocols. For the 0x protocol, building a tokenized world and unlocking its value are top priorities. Our guide will illustrate how 0x works by looking into its key components. About 0x In order to facilitate decentralized token trading on the Ethereum Blockchain, 0x entered the market as an open-source protocol. Seamlessly and…

Beginner’s Guide to Trade Cryptocurrencies Derivatives on dYdX Crypto Exchange

With the rise of decentralized finance, the cryptocurrency market has seen an influx of interest from investors. Traders hope to profit from interest on their holdings or long- or short-term asset movements.  Traders only need to connect their wallets to dYdX to start using this platform. This mechanism wishes to reduce the overall complexity of the system.  Do you wish to learn more about dYdX? Our team reviewed this platform to provide you with a guide on this popular crypto…

Trading Crypto with the LBank Cryptocurrency Exchange

One of the most exciting aspects of the cryptocurrency sector is the number of exchanges that have sprung up.  Crypto enthusiasts from all over the world have taken notice of the interest in LBank Exchange (or simply "LBank"). This platform is one of the market's most famous cryptocurrency trading systems. Let us learn more about this platform in today’s guide, where we will look at LBank’s main features. About LBank Founded in 2015, LBank is a Hong Kong-based cryptocurrency exchange.…

Gate.io Cryptocurrency Exchange – A Guide for Every Crypto Beginner

Gate.io wishes to become a one-stop-shop for all crypto enthusiasts. The system lets you choose among different features and hundreds of different coins in its catalog. The platform allows spot and margin trading with more than 1,000 trading pairs. Today’s guide will provide more information on Gate.io through a complete review of this platform. About Gate.io Inexperienced traders can use Gate.io to acquire less famous cryptocurrencies. Some nations allow margin trading on some of the 1,300 cryptos offered on the…

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…