Trading Crypto on Robinhood – 17 Pros & Cons

Is trading crypto on Robinhood reliable? The Robinhood is an online investing platform for the millennials that has made trading cryptocurrencies safer and easier.

This platform allows trading free from any commission. You can trade on several other investment types listed in the US apart from cryptocurrency.

Though Robinhood offers individual brokerage accounts, it is a platform that allows much better and high yielding cash management. However, to trade on Robinhood, you will need to meet their eligibility requirements. It includes:

  • Being at least 18 years old and
  • Having a US residential address.

All those individuals with a valid US visa also qualify to trade on Robinhood.

Located in Menlo Park California, Robinhood earned the 7th spot on Fast Company’s ranking in 2017, just 4 years after its launch, as one of the most innovative companies of the world.

According to Crunchbase Report, it has a total funding of $2.2 billion.

Trading Crypto on Robinhood: Can You Do It?

Trading Crypto on Robinhood

Trading crypto on Robinhood, an online investing platform, is safe and easy.

You can trade all types of cryptocurrencies including the meme-based dogecoin via this trading app which is very popular among the young investors. You can buy, sell and stock cryptocurrencies on its platform.

Robinhood actually democratizes investments and makes it much easier for the average users. You can buy coins instantly by using your deposits made and funds gathered from crypto sales.

On the other hand, the funds, such as those from stocks or ETFs, can be used after three business days.

The available cryptocurrencies that you can trade via Robinhood include:

Apart from that, you can also use this online platform to know about the market data and gather information real-time on the following cryptocurrencies, arranged in a chronological order:

  • Bitcoin Gold (BTG)
  • Dash (DASH)
  • Lisk (LSK)
  • Monero (XMR)
  • NEO (NEO)
  • OmiseGO (OMG)
  • Qtum (QTUM)
  • Ripple (XRP)
  • Stellar (XLM)
  • Zcash (ZEC)

The platform however, does not allow withdrawing the assets by the users to transfer them to other wallets.

Though they faced some serious criticism for this, this stopped users from buying crypto securities rapidly due to unstable market conditions spurred by the trading frenzy in the shares of GameStop Corp.

The other features of Robinhood, apart from its exemption of trading fees, that will draw you towards it to trade cryptocurrencies are:

  • The Robinhood Feed, a new feature for the users that will help you to track all news regarding cryptocurrency and discuss its price swings.
  • Its focus on customer acquisition more than making profits to increase their customer base and offer them more functionality and easier access.
  • The simplified systems and interface for trading cryptocurrencies that enhances efficiency and reduces complexity and trading times irrespective of trading volumes.
  • The option offered by it to the users to manage their coins, private keys, and own wallets along with password-enabled access to send and receive crypto.
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You can use Robinhood for trading crypto if you are resident of these following states:

  • Alabama
  • Alaska
  • Arizona
  • Arkansas
  • California
  • Colorado
  • Connecticut
  • Delaware
  • District of Columbia
  • Florida
  • Georgia
  • Idaho
  • Illinois
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Maine
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • Mississippi
  • Missouri
  • Montana
  • Nebraska
  • New Jersey
  • New Mexico
  • New York
  • North Carolina
  • North Dakota
  • Ohio
  • Oklahoma
  • Oregon
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • South Dakota
  • Tennessee
  • Texas
  • Utah
  • Vermont
  • Virginia
  • Washington
  • Wisconsin
  • Wyoming

With all these features and facilities, trading crypto on Robinhood is quite reasonable and a feasible option, provided you do it in a knowledgeable and safe way.

Make sure that you buy the right stocks. For choosing the most lucrative and productive stocks, you can take help of the Stock Advisor or The Motley Fool, its flagship stock-picking service.

The Pros

1. Ease of use

The most significant advantage of trading crypto on Robinhood is its ease of use. The intuitive design of the app is inviting and follows the basic principles of investing.

Buying and selling cryptocurrency is easy. All you have to do is pick a currency and complete your trade with a few taps and swipes.

2. New tech and security

The new and innovative technology that users can avail through this online app ensures faster transactions as well as offering adequate security while making each transaction.

Technologies like biometric account security uses the face ID or thumbprint of the users to unlock their account.

3. Simple interface

The interface of the app is also very simple and allows making faster transactions as well to make the most out of the volatile nature of the market.

You can buy coins quickly when the prices are down and sell them even more quickly when prices go up.

4. Fees

There are no trade-based fees on Robinhood. This has in fact helped them to generalize investing and make it easy and fun. This means that there will be nothing to eat away your profits.

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You can even make some easy trades if you are new to crypto, and even if it is a poor trade, you do not have to pay fees for it which will add to your pain of making a mistake.

5. Low account minimum

There is a low account minimum in Robinhood, which means you can get started straight away with a minimal volume.

However, it follows the regulation of the Financial Industry Regulatory Authority like other brokers and requires a minimum balance of $2,000 in the portfolio balance to open a margin account.

6. Fractional shares

The fractional shares feature of Robinhood, like other brokers, allows investing as little as $1 for a part of a share that may cost hundreds of dollars actually.

This allows you to buy several companies without investing a lot of money and create a more diversified portfolio.

7. Fractional trading

This feature of Robinhood complements well with its newest feature, recurring investments. You can set a schedule for your investment as well as a dollar amount and the platform will do it automatically.

This means that you will seldom have uninvested cash at any time.

8. DRIP

The DRIP or Dividend Reinvestment Program, a product of fractional shares, allows building more wealth over time.

9. Better cash management and high-yield savings

Robinhood offers much better cash management and offers higher yields of its accounts. You can use the debit card of the account to withdraw money from over 75,000 ATMs for free.

It also offers FDIC insurance of up to $1.25 million based on its agreements with different banks.

10. Research

Robinhood offers several tools for research which allows the customers to know more about the top movers, analyst ratings, earnings calendars, as well as different links to earnings calls.

It also allows easy access to different data sources such as Reuters, Wall Street Journal Markets, CNBC Business, and more. All these help the users to create their own data sheet to make a more prudent investment decision.

The Cons

11. The account options

Robinhood supports one account option for investing and that too only an individual taxable account. Most investors prefer a separate brokerage account or a taxable brokerage account after having invested 10% to 15% of their total income for retirement in accounts like IRA or a 401(k).

12. Customer support

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Customer support is provided through email basically where phone support is preferred by most of the customers. This makes the process much slower.

It however, offers this to specific users for specific needs such as trading options and assistance, matters related to account security, and helps during transfers and selling.

13. Withdrawal

You will not be able to withdraw your coins which is a serious drawback to the functionality of Robinhood.

However, it allows you to withdraw your investments but only through a US bank account. This means that you will have to pay taxes on your capital gains on any earnings.

14. Number of coins

There is a limited number of coins available in Robinhood in comparison to other exchanges. This limited range of currency options leads to limited ability to diversify your crypto portfolio and holdings.

15. Interface

The interface of the online platform lacks extra features in order to keep it simple for beginners. That is just the way it is – good for beginners. It is certainly not a good platform for professionals who want more.

16. Transparency

There is a notable lack of transparency about the prices in Robinhood. It does not change the prices which the customer can see. Instead, it actually adjusts the buying and selling prices and does not charge an upfront fee to make profit for the company.

This also means that you may miss out on something and even be enticed by the company to buy or sell more often, even if you do not want to.

17. Geographic Restrictions

The online platform can only be used by the residents of the United States. Even then, not all states of America allow using Robinhood for trading cryptocurrency.

Conclusion

Robinhood is a streamlined online trading platform for cryptocurrencies. It offers commission-free trades on a large variety of digital assets. It is a good platform for budding and young cryptocurrency investors with limited crypto skills.