Robinhood was founded in 2013 and is an online discount brokerage, which does not charge commissions. It makes it easy to trade in the stock markets. Small retail investors can now trade the crypto market without any commissions and test their skills. Robinhood, a pioneer in fintech, offers desktop and mobile apps to trade stocks, ETFs and options as well as cryptocurrency.
Continue reading to find out everything about Robinhood and how you can buy crypto on Robinhood.
Let’s dive in!
Robinhood: What is it?
Robinhood, a mobile application created by Baiju Bhatt & Vladimir Tenev in 2013, was based in Menlo Park. Robinhood is its name because of the desire to disrupt the markets and create products that allow everyone easy access to financial markets.
Robinhood was first brokerage platform to completely eliminate commissions for options and stock trading. The easy-to use trading app and no monthly or minimum account requirements have made it one of America’s most preferred brokerages. The intuitive interface allows you to easily buy or sell stocks, ETFs and cryptocurrency.
Robinhood has also been the subject of lawsuits, scrutiny from the public, and regulatory fines. It lacks the necessary educational tools and trading software to be able to trade effectively, and it provides poor customer service. Moreover, Robinhood doesn’t provide individual retirement accounts (IRAs), which provide tax advantages for those saving for retirement.
Robinhood Features and Services
Let’s look into some of the key features and services Robinhood offers:
Stock Trading
Robinhood supports stocks trading on Nasdaq and New York Stock Exchange and doesn’t support trading OTC stocks (over-the-counter). It doesn’t support retirement funds, mutual funds, and trading in bonds. It allows you to invest in Options, Margin Trade and Initial Public Offerings (IPOs). Robinhood doesn’t charge any commissions for trading options or stocks.
Exchange-Traded Fonds
Robinhood offers ETF trading support on Nasdaq or the New York Stock Exchange. Robinhood’s first service was to provide stock and ETF trading. Robinhood charges no commission for trading ETFs.
Cryptocurrency
Although most cryptocurrency users trade on exchanges, Robinhood has seen a significant increase in users over the last few years. This is due in large part to commission-free trades, as opposed to other major cryptocurrency exchanges who charge a fee to buy crypto.
While Robinhood has only a few cryptocurrency tokens currently available, Vladamir Tenev, the CEO of Robinhood, announced that they will soon add more. Robinhood currently supports Bitcoin Cash (BCH), Bitcoin SV (BSV), Dogecoin (DOGE), Ethereum Classic (ETC) and Litecoin (LTC).
Cash Card
Robinhood is now accepting applications for the Cash Card. It’s a type of debit card from Sutton Bank. According to the company, their cash card “will allow consumers to choose to round up what they pay for goods and services to the near dollar and invest the difference between that amount and the actual price in whatever assets they choose.” Users can also use this debit card to withdraw cash from an in-network ATM.
Robinhood plans to offer additional services in the future, in addition to those already mentioned.
Robinhood – Buy Crypto
Because it is easy to buy cryptocurrency or any other asset, Robinhood has become so well-known among users. You only need a PC or other device to install the Robinhood App.
Here are the steps you need to take in order to purchase crypto via Robinhood App
Register for an account
You can download Robinhood on your phone from either the App Store, or Google Play Store. To create an account at Robinhood, you can use the website on your desktop. Once you’ve downloaded the app, it’ll ask you to enter some personal information, such as your name, address, email, and social security number, to set up an account.
Transfer money from your bank account to Robinhood
Once you’ve successfully entered the information, your Robinhood account should be created. Robinhood allows you to instantly trade and buy crypto. All you’ll need to do is transfer money to your Robinhood account using your bank account and routing number.
Initially, USD 1000 can be transferred instantly to your bank account. Then you can start buying crypto. Robinhood Gold accounts are available to allow you to trade more money, and also benefit from margin trading. To get discount coupons or stock freebies, new users will be able to use the referral codes and promo codes that they received when setting up an account. Robinhood has become one of the most beloved cryptocurrency apps in America thanks to these incentives.
Crypto of Your Choice
After you’ve deposited money into your Robinhood account, you can search for your favorite cryptocurrency tokens and place a market order to buy them at the current market price. It is possible to set a limit on how much you want to buy your tokens. Let’s say you are looking to purchase Bitcoin at a high price. You can then set your limit price and buy the token when that price drops to your liking. You can use the limit price to buy and sell tokens instantly by placing an order before. This allows you to purchase crypto at any price that suits your needs without needing check prices frequently.
Selling your tokens whenever you think you’ve made enough profits and want to take your money out of the market and into your bank account is just as easy as buying crypto on Robinhood.
How to Storing your Crypto
Once you’ve completed your purchase, the next step is to select a crypto wallet to store your coins securely. While Robinhood stores the crypto that people buy in a mix of cold and hot storage, it’s highly recommended to create a private wallet with your own set of keys. Depending upon your investment preferences, you may choose from software wallets, such as CoinStats Wallet or Trust Wallet. Or, you could opt for hardware wallets, like Ledger and Trezor.
To track and move your supported coins to your Robinhood crypto account, you can connect your crypto wallets with your Robinhood Crypto account. This will allow you to quickly monitor your portfolio. You also have the ability to link to your Robinhood cryptocurrency account. To enable crypto wallets, you’d need to verify your identity and enable two-factor authentication. Once you’ve completed this, it’ll take up to 5 business days to review your information and activate your crypto wallets.
Robinhood Shortcomings
Robinhood is still a popular app to trade stocks and cryptocurrencies. However, it has some flaws. These are some of the most popular:
- There are a limited number of cryptocurrencies available: Robinhood has a limited number of cryptocurrency tokens that it supports. This is one of its major disadvantages. The available tokens are extremely popular and have gained a lot of market share in crypto, but they no longer make good investments. The majority of profit is made through altcoins that are available on cryptocurrency exchanges like Binance and Coinbase.
- Inadequacy of mutual funds or bondsIt may be difficult to create a portfolio that is truly diverse due to the lack of bonds and mutual funds.
- Very limited customer support
- Limited Education and Research Tools
- Untimely outages Robinhood’s trade restrictions during market volatility and untimely outages have been criticized. Robinhood, due to the outages and other issues, had to pay US$ 70 million to Financial Industry Regulatory Authority. (FINRA). This was in 2021. This was the biggest financial penalty that FINRA received.
Conclusion
Robinhood may have its flaws but it is still a very popular platform for trading cryptocurrency.
If you don’t wish to trade in small market cap altcoins and are only interested in buying or selling the blue-chip cryptocurrency tokens such as Bitcoin, Ethereum, or popular meme coins such as Dogecoin, then Robinhood is the perfect place for you.