Robinhood is a trading app and platform that was founded in 2013 by two entrepreneurs named Vladimir Tenev and Baiju Bhatt. Their goal was to create a user-friendly app that would be free and accessible.
Today, Robinhood is one of the most-used financial apps in the world. At first, the app was for trading stocks and ETFs. Today, users can also trade cryptocurrencies.
You might be wondering: Is Robinhood crypto any good? Can you buy Bitcoin on Robinhood, and is it safe to buy Bitcoin on Robinhood?
Robinhood’s crypto trading fees are low when compared to others on the market for crypto assets. Here’s an example of what you’d get spending $100 on Robinhood vs other sites that allow for crypto trading.
As you can see, you’d get 2.41% more crypto for your money on Robinhood crypto than you would on Kraken, and 2.35% more than you would on Coinbase.
If you’re considering trading crypto on Robinhood, we’ve got the answers you need. Before you start buying cryptocurrency on Robinhood, it’s important to know about the app’s features, security, and user experience purchasing crypto assets. We’ll cover all that and more, so keep reading to get the details!
What is Robinhood Crypto?
Robinhood started as a stock and ETF trading platform. In 2018, with a waitlist of more than two million customers, they launched commission-free trading of Bitcoin and Ethereum in multiple states.
Robinhood is an electronic brokerage and as such, is regulated by FINRA and registered with FinCEN as a money services business.
By 2021, Robinhood was providing cryptocurrency trading to users in every state plus the District of Columbia, Puerto Rico, and the US Virgin Islands.
Crypto offerings started with just Bitcoin and Ethereum, but have since expanded to include Dogecoin, Litecoin, Shiba Inu, and 14 others for your crypto wallets. Keep in mind that state law may prohibit trading some coins, so you should always check to be sure of the rules. For example, trading of USD coin is prohibited in New York and Texas.
What we like about Robinhood Crypto is that it uses the same, user-friendly interface as Robinhood. That means that it’s easy for beginning crypto investors to add cryptocurrencies to their portfolios.
We should note here that Robinhood Crypto holds users’ cryptocurrency in cold storage, meaning it’s not connected to the internet. We’ll go into more detail about the safety and security measures Robinhood uses later in this review.
Pro Tip:
Receive up to $1500 in free stock per year when you refer friends on Robinhood!
Can I Buy Crypto on Robinhood?
If you’re asking if Robinhood is good for crypto, then let us help you out. We already showed you an image illustrating that you’ll get more crypto for your money when you trade through Robinhood than you would with other crypto trading platforms.
One of the features we like best about Robinhood Crypto is that it’s possible to buy fractional amounts of the coins you’re interested in.
For example, as of November 18, 2024, a single Bitcoin opened at $89,601.77. Most beginning investors don’t have that amount to spend. However, you can still buy Bitcoin on Robinhood. For example, you could invest $100 per month to increase your Bitcoin holdings over time.
Here are some of the features of Robinhood Crypto that we like best.
- Any US citizen or permanent resident with a Social Security Number and a permanent residence in the US can trade crypto on Robinhood.
- Robinhood allows for trading of 19 different cryptocurrencies, more than many other online brokers.
- Robinhood is regulated by FINRA and registered with FinSEC.
- You can invest as much or as little in cryptocurrency as you want. (The one exception is Dogecoin, where there’s a minimum purchase requirement of 1 Dogecoin.)
- Robinhood allows investors to move cryptocurrencies out of secure storage and into a separate crypto wallet if they choose.
Robinhood is not a cryptocurrency recommendation service. That means you’ll need to make your own decisions about which coins to buy and how much to spend. If you see people sharing crypto performance charts for Robinhood, those are showing personal results and not overall or statistical results.
Is Robinhood Safe for Crypto?
One of the most important considerations before using any digital trading platform is safety. Is Robinhood crypto safe for the purchase of crypto assets?
Here are the measures that Robinhood has put in place to make sure that crypto investors are protected.
- As we stated above, they hold the majority of investors’ coins in cold storage, which is “entirely disconnected from the internet.” That means that even if Robinhood were to get hacked, hackers wouldn’t be able to get to your coins.
- While Robinhood accounts and crypto investments aren’t insured by the FDIC or the SIPC, Robinhood carries crime insurance that protects, as they say, “a portion of the assets held across our storage systems.” The insurance policy is underwritten by Lloyd’s syndicates, which is the world’s leading insurance marketplace.
- Robinhood Crypto has a dedicated security team that conducts regular reviews of the app’s and website’s code and infrastructure. They’ve also stated that they pay for regular third-party testing.
These things are all good. We do want to point out language that may be of concern to some investors, specifically that “some” coins are held in cold storage and “a portion of the assets” are protected by insurance. Robinhood hasn’t provided any other information, so you’ll need to decide if you feel that their protection is adequate.
On a related note, Robinhood has recommended some security measures that users can take to protect themselves. These include the following:
- Set a secure password that contains at least 10 characters, ideally a random combination of upper and lowercase letters, numbers, and symbols. It should be a unique password that you don’t use for anything else.
- Turn on two-factor authentication, also known as 2FA. All you need to do is look for 2FA under Security and toggle the button from Disabled to Enabled.
- Review devices that have accessed your account. If you have gotten rid of a laptop, tablet, or phone, make sure to remove it from your account.
- Set up a PIN or password for changes to your SIM card. Sometimes, hackers may attempt to swap the information on your phone for a new SIM card, but if you set up a PIN, they won’t be able to do that.
- Consider transferring your coins from Robinhood to a cold wallet of your own.
As a point of comparison, Coinbase adds state-of-the-art encryption and a multi-level withdrawal system to protect investors’ cryptocurrency holdings and crypto assets.
Overall, we think that Robinhood crypto security measures are adequate to protect most investors if they take the additional recommended steps outlined above.
We’d be remiss if we didn’t point out that cryptocurrency investments are inherently risky. There’s a lot more volatility than what you’d expect to find with traditional stocks or ETFs, so keep that in mind.
Pro Tip:
Receive up to $1500 in free stock per year when you refer friends on Robinhood!
Buying Crypto on Robinhood
You’re probably wondering by now how to buy crypto on Robinhood. We’ve created this quick, step-by-step guide to help you boost your crypto wallets and crypto trades.
- Open a Robinhood account. To do so, you’ll need to be at least 18 years old, have a valid Social Security Number, and be a legal resident of the United States, including the District of Columbia, Puerto Rico, or the US Virgin Islands. Keep in mind it may take up to a week to get your account approved.
- Fund your account. You’ll be asked to provide and confirm your bank account number. In order to make trades on Robinhood, including cryptocurrency, you’ll need at least $1 in your account.
- Choose a cryptocurrency to buy. You can choose any one of the 19 coins offered by Robinhood. Keep in mind there’s a minimum of one DOGE if you want to invest in Dogecoin. All other coins allow for fractional purchases.
- Choose the amount you want to buy. You can specify any amount of a dollar or more.
- Specify whether you want to make a one-time trade or a recurring one. Some investors choose to buy additional coins once a week or once a month, for example.
- Place your order. The final step is to click the “Submit Buy” button to complete the transaction.
You would use this exact same process to sell cryptocurrency on Robinhood. The only difference would be that the button would say “Submit Sell”.
Is Robinhood the Right Choice for Your Crypto Journey?
Should you use Robinhood to buy crypto?
We think Robinhood is a good choice for investors who want to get their feet wet with crypto investing. Robinhood doesn’t have the same number of coins as some dedicated crypto trading platforms such as Coinbase, but if you’re already using Robinhood, then it’s easy to add crypto to your holdings.
Here are a few pros of using Robinhood for crypto investing:
- Set-up is easy and intuitive, and your part of it can be completed in just a few minutes.
- Crypto makes its money from volume rebates from trading venues, but it doesn’t charge commissions to investors.
- Robinhood’s mobile app is well reviewed and accessible.
- You can buy fractional shares of most crypto coins.
- Robinhood has insurance and security measures in place to prevent investors’ crypto holdings.
As we noted above, cryptocurrency has more volatility and higher risk than some other investments. You should only spend as much buying cryptocurrency as you can afford to lose and always reach out to Robinhood support with any questions.
Pro Tip:
Receive up to $1500 in free stock per year when you refer friends on Robinhood!
Conclusion
Is Robinhood good for crypto? We think there are some pros that may appeal to many investors, particularly those wanting to get their feet wet in crypto investing. These include commission free trading, the ability to buy fractional shares, and the accessibility of Robinhood’s mobile app.
Some potential cons to consider include that a Robinhood account only makes 19 coins available for purchase, far fewer than some other crypto trading platforms. While there are some articles to read, it’s also not the place to research which cryptocurrencies to buy. You’ll need to spend some time investigating your options and deciding which coins to invest in.
The bottom line is that we like Robinhood for crypto, especially for beginners. Intermediate or advanced crypto investors may prefer a platform with more advanced features and more coins available.
Robinhood has put a number of security measures in place for crypto trading. They allow users to enable two-factor authentication, requiring a code to be entered for buying, selling, or transferring their crypto holdings. They’ve also got insurance to protect some of investors’ holdings, and most holdings are kept in cold storage where they cannot be accessed from the web.
No. Robinhood doesn’t charge trading fees for crypto. They make their money on rebates from crypto trading venues. If you decide to upgrade to Robinhood Gold, you’ll pay $5 per month.
Yes, Bitcoin was one of the first coins on Robinhood and is still available to buy. There are 18 other coins available, including Ethereum, Dogecoin, and more.
We’ve all read the stories of hacking and data breaches. There’s no place online that’s 100% safe from breaches. That said, Robinhood stores most of investors’ crypto holdings in cold storage, which means they’re safe from hacking. As a user, you should create a strong password, enable 2FA, and keep track of which devices access your account.
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