The answer is via a practice called payment for order flow. Given the free trades, how does Robinhood make money? Sure, there's Robinhood Gold, but the signup rate is nowhere near enough to warrant the multi-billion dollar valuation. Only seven coins are available: Bitcoin, Bitcoin Cash, Bitcoin SV, Ethereum, Dogecoin, Ethereum Classic, and Litecoin. On a more simplistic level, Robinhood's selection of crypto is also extremely limited.
An oft-repeated (and accurate) piece of advice in the crypto world is that if you don't have the private keys, you do not own the coins.Īll three of these problems directly fly in the face of proper crypto security advice. You do not hold the private keys for your crypto assets. Robinhood does not supply you with access to your wallet or your wallet address. If you own Bitcoin, you cannot transfer it out of Robinhood to your own private wallet. The drawbacks are so severe that we'd strongly urge all users to look elsewhere for your crypto needs.Ĭoin withdrawals are not available. On paper, that's something that Robinhood offers it launched its crypto trading service in 2018.īut the crypto platform has some shocking drawbacks. But we do understand the appeal of being able to do your stock trading and crypto trading in the same place.
We're not here to debate the merits of cryptocurrency as an investment class. That alone is enough reason to switch broker. Users can no longer maintain any reasonable faith in the service being available when they need it most. It is now facing multiple lawsuits over the issue. And Robinhood's response? A "goodwill" payment of $75. It cost people millions of dollars in positions they could not close.
Worse still, all the outages occurred in the space of one week in early March during the most unpredictable days of the COVID-19 crisis. It's not good, therefore, when a broker is inaccessible on some of the most volatile days of the last 50 years. Positions can move quickly and investors need to be able to reliably secure profits or cut losses. We don't want to go into a lesson on investing, so suffice to say that during periods of such extreme volatility, it's vital that people can access their accounts. 2020 was one of the most remarkable years in market history. We saw a record-breaking selloff and recovery, moves of more than 10 percent on a single day, and new all-time highs by the end of the year.
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