How to trade crypto on Robinhood

Naturally, you will need to open an account with Robinhood to buy and sell virtual currency. 

Once you have an account, follow these steps to buy crypto on a mobile device: 

1. Open robinhood.com and log into your account on the web or mobile trading platform
2. Look up the crypto of your choice in the search bar 
3. Navigate to the Detail page of the crypocurrency of your choice
4. Tap Trade followed by Buy 
5. Select the order type by tapping on Order Types in the upper right corner
6. Confirm your order 
7. Swipe up to submit your order

On the web, you should do the following: 

1. Log into your account under robinhood.com
2. Navigate to the Detail page of the cryptocurrency of your choice
3. Enter the amount you’d like to purchase into the order window on the right side of the screen
4. Review your order
5. Confirm your order

When you buy spot cryptos, an important safety and usability aspect is how you store your private keys. Private keys give access to your cryptos on the blockchain, similar to a password for your bank account. These private keys are held in crypto wallets, which can be an online app or an offline device. 

Providing a crypto wallet is a service that is important when spot cryptos are available. At crypto exchanges like Coinbase or Kraken, this service is almost standard. However, most brokers don’t provide it because either spot crypto trading is not available on their platforms (only other forms, like crypto derivatives or ETN/ETPs) or they simply haven’t developed it yet.

When will Robinhood have a crypto wallet?

Robinhood started rolling out crypto wallets in beta form for some of its customers in January 2022. The service is being rolled out to client accounts gradually, but it is uncertain when it will be available to all customers.  

Robinhood’s crypto wallet will support the deposit and withdrawal of cryptocurrencies including Bitcoin, Dogecoin, and Ethereum.

Below, we analyze some factors on why this service improvement could be important for Robinhood and US retail investors:

1. Most brokers don’t provide crypto wallets

We analyze and compare over 100 brokers from all around the world. Roughly 60% of the brokers we covered provide crypto in some form, such as spot crypto or crypto derivatives. However, only 5% of the brokers provide crypto wallets and these are mostly non-US brokers.

2. Customers could have better control of their cryptos

Some basic services are impossible without a crypto wallet, such as transferring or receiving cryptos. Customers can now decide whether they want to hold their cryptos on Robinhood’s custodial crypto wallet or their own, so-called non-custodial crypto wallet.

3. Another step to becoming an integrated app for financial services

Robinhood offers a wide range of financial services, including stock, ETF, options, crypto trading, and cash management products. Providing a crypto wallet is another step to becoming one single app for all kinds of financial services.

4. The race for customers could heat up between brokers and crypto exchanges

Not only did Robinhood start to provide services that are standard at crypto exchanges, but crypto exchanges also plan to provide services that are considered standard at brokers, such as stock and ETF trading. At the moment, Robinhood gives access to only a few crypto coins compared to the hundreds of coins available at most crypto exchanges. However, more product developments in the crypto area, including the crypto wallet launch, will likely intensify competition between crypto exchanges and brokers.

5. This service can boost account openings at Robinhood

Based on our analysis, overall account openings dropped 7% on average in Q3-Q4 2021 compared to the peak of Q1 2021, and one of the biggest drops was at Robinhood, which saw 87% fewer new account openings on average in Q3 and Q4, compared to Q1. As crypto wallets are really important for customers and most US brokers don’t provide them, this move can have a positive impact on account openings at Robinhood.

There are a number of key differences between Robinhood and a crypto exchange service. Just to name a few:

• Crypto exchange services are recent developments and therefore not regulated by financial authorities. Counterfeit actions can be more common, which is a security issue with these providers.
• Usually, brokers don't provide "real" coins. However, this is not the case at Robinhood, which secures client assets in its own cold storage.
• Crypto exchanges usually charge higher fees and investing in fractions of a coin is not always possible. Robinhood, charges no crypto trading fees.
• Withdrawal and deposit are much more expensive at exchanges than at Robinhood. Also, unused funds are not protected at crypto exchanges

Robinhood vs. Coinbase

Differences

• Coinbase supports a much wider range of coins (70 at Coinbase vs 7 at Robinhood)
• Coinbase can be more expensive, especially when depositing funds with credit card
• Coinbase only offers virtual currencies while at Robinhood stocks, options and ETFs are also available
• End to end costs can be lower at Robinhood

Similarities

• Investors' funds are protected by the Securities Investor Protection Corporation at both providers

Is crypto on Robinhood safe?

The question is twofold. As a service provider, Robinhood is a safe and legit brokerage, being regulated by the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). In this basic sense, it's safe to invest via Robinhood. 
Its crypto trading arm, Robinhood Crypto is licensed to engage in Virtual Currency Business Activity by the New York State Department of Financial Services. Cryptocurrencies offered by Robinhood Crypto are not securities and your cryptocurrency investments are not subject to FDIC or SIPC protections. Your cryptos purchased on Robinhood Crypto are stored in a mix of cold (offline) storage and hot (online) storage. The majority of your coins are held in cold storage, though some coins are held in hot wallets to support day-to-day operations. In addition to a two-step verification process used to heighten the security of your account, Robinhood provides asset protection against losses from theft, including cybersecurity breaches. The policy is underwritten by certain underwriters at Lloyd’s, the world’s leading insurance marketplace, and placed by Lloyd’s registered broker, Aon.

Do you own your crypto at Robinhood?

If you purchase Bitcoin or other coins on Robinhood, you don’t really own these assets. Most users, save the lucky ones that already have been assigned a crypto wallet, cannot transfer their cryptos from Robinhood to another wallet or cold storage. If you want to use your funds invested in crypto, the only option you have is to sell your coins and use the (hopefully) gains from your investments. If you are not keen on transferring your crypto holdings to a crypto wallet or using your Bitcoin for purchases, Robinhood offers an intuitive and user-friendly platform to buy and sell coins and profit from upswings in crypto prices. 

Can Robinhood steal my crypto?

The short answer is no. Robinhood will not deliberately steal your crypto as the resulting loss of trust among its customers would mean the end of business for them. In terms of security, Robinhood holds the majority of your coins in cold storage, which is fully disconnected from the Internet, adding an additional layer of protection. The broker also offers crime insurance that protects a portion of your assets held with Robinhood from theft, including cybersecurity breaches. Since you cannot transfer your crytpo out of Robinhood accounts, there is virtually no way your assets can be stolen. 

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