Millions are flocking to Robinhood to trade cryptocurrencies

Shawn Knight

Posts: 13,011   +130
Staff member
The big picture: Robinhood, the financial services company best known for offering commission-free trades of stocks and ETFs, added cryptocurrency to its platform nearly three years ago but it wasn’t until this year that the service really took off. The company this week revealed that it has welcomed more than six million new customers to Robinhood Crypto so far this year.

In comparison, the number of new crypto customers on Robinhood peaked at 401,000 in a single month last year with a monthly average of around 200,000 users trading on the platform for the first time in 2020.

Robinhood bills itself as a platform for all investors, no matter how much money they have to invest. So far this year, the average transaction size has been around $500, or a little more than double what it was on average across 2020, no doubt a result of the increased interest in crypto and Reddit-influenced trading of stocks like GameStop, AMC and BlackBerry.

Robinhood currently supports seven cryptocurrencies including Bitcoin, Bitcoin Cash, Bitcoin SV, Litecoin, Ethereum, Ethereum Classic and Dogecoin.

Bitcoin, the largest cryptocurrency by market cap, topped $58,000 early this week but has since dipped to around $46,750 as of writing. Seemingly undeterred by the fluctuations, companies such as Square and MicroStrategy continue to pump money into the crypto. Square in its most recent earnings report said it bought another 3,318 Bitcoins for $170 million while MicroStrategy acquired 19,452 Bitcoins this week for $1.026 billion in cash.

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terzaerian

Posts: 662   +926
Buying crypto on Robinhood is like getting a voucher for your paycheck that may suddenly become invalid
True. Buying and leaving crypto on any exchange means a hack or decision by the exchange to close your account will take it from you - much like any bank.

Fortunately, it looks like RobinHood is planning to allow for crypto withdrawals and deposits sometime this year:

https://www.coindesk.com/robinhood-crypto-withdrawals-deposits

It could be a powerful tool combined with their relatively simple interface to make limit buys and sells.
 

Irata

Posts: 1,305   +2,086
Why do people still use Robinhood after the crap they pulled on their customers with Gamestop ?

Seems obvious that they will decide against their customers if their financial backers request this.
 

terzaerian

Posts: 662   +926
Why do people still use Robinhood after the crap they pulled on their customers with Gamestop ?

Seems obvious that they will decide against their customers if their financial backers request this.
Louis Rossman did a good post-mortem of the debacle; there were reasons beyond Robinhood's control that they had to do what they did re: GME, but instead of even trying to explain the legal complexities to their users they just lied to them. Still selfish and shitty but not quite as nefarious as it appeared on first blush.
 

brucek

Posts: 745   +1,014
TechSpot Elite
crypto on any exchange means a hack or decision by the exchange to close your account will take it from you - much like any bank.
Not really at all like a US Bank. If you lose your cash deposit in a bank failure there, you are protected by the FDIC and have an excellent chance of getting your money back.
 

terzaerian

Posts: 662   +926
Not really at all like a US Bank. If you lose your cash deposit in a bank failure there, you are protected by the FDIC and have an excellent chance of getting your money back.
Banks will cancel or freeze accounts at requests by law enforcement. As thought becomes increasingly defined as crime the illusion that banked money is your money will become increasingly apparent.
 

Plutoisaplanet

Posts: 394   +546
Banks will cancel or freeze accounts at requests by law enforcement. As thought becomes increasingly defined as crime the illusion that banked money is your money will become increasingly apparent.
If this ever does come to fruition, I will leave the country. While there are signs this may be coming, luckily it's not close to here (yet).
 

VariableSpike

Posts: 44   +55
Really? I actually refuse to use robinhood for crypto lol. Better options out there (Voyager, Uphold, Coinbase, Crypto) just to name a few. Also, after their illegal stunt with GME and AMC I've pulled the little stocks I had their and transferred them.
The worst part with Robinhood is that you never actually own the crypto, you own a quote on quote "ticket" that let's you cash out the equivalent value of the crypto, and that is basically at their whim - with actual exchanges, you own the crypto the moment you buy it, so I have no idea as to why people would use it over something like Binance/Kraken et al.