Here's What Buying Bitcoin On Robinhood Is Really Like
I bought bitcoin on Robinhood Crypto. Here's how it works.
As a cryptocurrency investor on Coinbase, I’m used to being hosed with fees. So when I got early access to Robinhood Crypto, I was ecstatic.
What’s Robinhood Crypto, you ask? It’s a new-for-2018 service being offered by Robinhood, the hottest stock brokerage app for millennials, and it allows you to buy and sell bitcoin without paying fees. It’s only been rolled out in a small handful of states so far, my home state of California included.
Buying bitcoin without fees sounds too good to be true, right? Well, in a sense, it is -- Robinhood Crypto has some big issues. But overall, being able to buy and sell without fees is a game changer.
Here’s how it works.
It's the simplest buying experience yet
Pardon me if this reads like a love letter to Robinhood. It’s everything I want a crypto buying experience to be. Well, almost.
The Robinhood app itself is pretty slick. The Robinhood Crypto side has a Tron-esque, ‘80s-inspired neon aesthetic. It’s easily my favorite user interface of any crypto app.
It’s fun to use to track price movements in Ripple, Dogecoin and other major altcoins. Unfortunately, though, Robinhood only supports purchases of bitcoin and ethereum. Minor bummer.
I’d been a Robinhood account holder for about a year before I got access to Robinhood Crypto, so the app was already connected to my bank account. Transferring money to Robinhood is as simple as logging in to your bank and choosing a dollar amount. The money shows up immediately (up to $1,000), so there’s no waiting when you want to BTFD.Unlike my experience with the shifty, treacherous bitcoin ATM, Robinhood quoted me a fair, market price for bitcoin without any hidden fees. I can either buy a specific amount of bitcoin, or a specific dollar amount's worth. I chose to buy $10 worth of bitcoin.
I placed a market order, so it was filled immediately at the April 2 bargain price of $7,065 per BTC. I was immediately credited 0.00141689 BTC. Unlike my experience at Coinbase, there was no commission. (Coinbase would have charged me 99 cents for this same buy.)
Best of all, the bitcoin was available in my account immediately. At Coinbase, I needed to wait over a week to take delivery of my coins.
Here’s Why Bitcoin Purists Will Hate Robinhood Crypto
As I said, though, Robinhood Crypto is not perfect. The best evidence: the lack of coin transfer capability.
When I buy bitcoin on Robinhood, I have to keep it on Robinhood. I can’t transfer coins to an offline wallet, and I can’t use my coins to make third-party transactions. In short, I have to depend 100 percent on Robinhood to keep my investment safe from hackers.
Robinhood Crypto says it practices “strict operational security,” using a mix of hot and cold storage for its assets. Which means it’s secure … until it isn’t anymore.
To be fair, Robinhood says withdrawals are coming in the “near future.”
Don’t get mislead into a false sense of security by Robinhood’s status as a stock broker app, either. Robinhood Financial and Robinhood Crypto are two different entities. The shares of stock I purchase via Robinhood are protected by the Securities Investor Protection Corporation (SIPC) up to $500,000. There’s no such insurance policy for crypto assets, so if Robinhood Crypto fails or gets looted, I personally could be left holding the bag.
And that’s scary as hell.
… and here’s why you should use Robinhood Crypto anyway
Sure, buying bitcoin on Robinhood Crypto is risky. But everything about bitcoin is risky.
If I were buying millions of dollars worth of bitcoin, I’d want to take personal possession of my digital treasure. But that safety costs a lot money for small-time investors like me. For purchases of $10 here, and another $10 there, Robinhood makes perfect sense. Its level of convenience and value trump the risk.
And visually, Robinhood Crypto makes the other options such as Coinbase look like trash, so there’s that, too.
Even with its problems, I’m all in on Robinhood Crypto. I highly recommend it to anyone who wants to get started and join me on my private moon resort someday.