In the ever-evolving world of finance, more and more people are looking to invest in cryptocurrencies. Robinhood, a popular trading app, offers users the ability to buy and sell a limited selection of digital assets. However, the platform has limitations, and investors may find better options with specialized cryptocurrency exchanges. Let’s explore how to buy crypto with Robinhood, discuss the platform’s drawbacks, and introduce a superior alternative for those seeking a more comprehensive crypto investing experience.
Summary
Buying cryptocurrencies directly through Robinhood is possible but comes with significant limitations. The platform offers a narrow selection of digital assets and charges high fees compared to dedicated crypto exchanges.
Our research recommends Kraken as a top alternative for Robinhood users looking to expand their crypto investment options. Kraken adheres to strict U.S. regulatory standards, provides a secure trading environment, and boasts a diverse selection of over 200 cryptocurrencies for trading and staking.
Can you buy crypto with Robinhood?
Yes, Robinhood allows users to buy and sell 18 digital assets, including popular options like Bitcoin, Ethereum, Solana, and Avalanche. However, the transaction spreads can be as high as 1.5%, making Robinhood one of the most expensive investment platforms in the country. For this reason, we recommend considering dedicated cryptocurrency exchanges when investing in digital assets.
Pros and Cons of Buying Crypto on Robinhood
| Pros | Cons |
| Easy-to-use interface | Limited selection of cryptocurrencies (only 18 available) |
| Commission-free trading | High transaction spreads (up to 1.5%) |
| Convenient for existing Robinhood users | No option to transfer crypto to external wallets |
| Lacks advanced trading features and tools |
Step-by-Step Guide on How to Buy Crypto with Robinhood
If you decide to buy crypto on Robinhood despite its limitations, follow these steps:
Step 1: Create a Robinhood Account
Download the Robinhood app or visit their website to sign up for an account. You’ll need to provide personal information and verify your identity.
Step 2: Link Your Bank Account
Connect your bank account to your Robinhood account to enable deposits and withdrawals. This process may take a few days to complete.
Step 3: Deposit Funds
Once your bank account is linked, deposit funds into your Robinhood account. There may be a waiting period before you can use the deposited funds to buy crypto.
Step 4: Navigate to the Crypto Section
In the Robinhood app, tap on the magnifying glass icon and search for the cryptocurrency you want to buy, or navigate to the “Crypto” section to browse available options.
Step 5: Place Your Order
Select the cryptocurrency you want to purchase, enter the amount you wish to invest, and confirm your order. Remember that Robinhood charges high transaction spreads, so the price you pay will be higher than the market price.
Step-by-Step Guide on How to Buy Crypto with Kraken
If you’re looking for a more comprehensive and cost-effective alternative to Robinhood for buying cryptocurrencies, Kraken is an excellent choice.
Step 1: Create a Kraken Account
Visit the Kraken website (https://www.kraken.com/) and click on the “Create Account” button. Provide your email address, create a strong password, and complete the registration process.
Step 2: Verify Your Account
To comply with Kraken’s Know Your Customer (KYC) requirements, you’ll need to verify your identity. Navigate to the “Get Verified” section under your account settings and follow the prompts to submit the necessary documentation, such as a government-issued ID and proof of residence. The verification process typically takes 1-2 business days.
Step 3: Link Your Bank Account
Once your account is verified, click on “Funding” in your account dashboard. Select your preferred currency and choose the “Bank Transfer” option. Follow the instructions to link your bank account to your Kraken account for seamless deposits and withdrawals.
Step 4: Deposit Funds
After linking your bank account, initiate a deposit by entering the desired amount and confirming the transaction. Kraken offers free USD deposits via FedWire and ACH transfers. Deposit processing times may vary depending on your bank and the chosen method.
Step 5: Buy Cryptocurrency
With funds in your Kraken account, navigate to the “Trade” section and select the cryptocurrency you wish to purchase. Choose your preferred trading pair (e.g., BTC/USD for buying Bitcoin with US Dollars) and enter the amount you want to buy. Review the transaction details and confirm your order. Your purchased cryptocurrency will be credited to your Kraken account balance.
Also read:
What is Robinhood’s status on cryptocurrencies?
Robinhood provides direct cryptocurrency services, allowing users to buy and sell a limited selection of digital assets. The platform currently offers 18 cryptocurrencies, including Bitcoin, Ethereum, and various altcoins. However, Robinhood imposes high fees in the form of wide transaction spreads, and users cannot transfer their crypto holdings to external wallets.
What do I do if Robinhood doesn’t meet my crypto-investing needs?
If Robinhood’s limited crypto offerings and high fees don’t align with your investment goals, consider exploring dedicated cryptocurrency exchanges. One top alternative we recommend is Kraken.
Conclusion
While Robinhood offers a convenient way to dip your toes into the world of crypto investing, its limitations and high fees make it a suboptimal choice for most investors. By opting for a dedicated cryptocurrency exchange like Kraken, you can access a wider range of digital assets, benefit from lower fees, and enjoy a more feature-rich trading experience. As always, approach cryptocurrency investments with caution and be sure to educate yourself on the risks and best practices associated with this exciting asset class.
FAQs
Is it safe to buy crypto on Robinhood?
While Robinhood is a regulated platform, it’s important to note that cryptocurrencies are not protected by SIPC insurance like stocks and options. Additionally, users cannot transfer their crypto holdings to external wallets, which may be a security concern for some investors.
What cryptocurrencies can I buy on Robinhood?
Robinhood currently offers 18 cryptocurrencies, including Bitcoin, Ethereum, Litecoin, Bitcoin Cash, Bitcoin SV, Dogecoin, Ethereum Classic, Solana, Shiba Inu, Polygon, Compound, Chainlink, Uniswap, Stellar, Avalanche, Tezos, Cardano, and Zcash.
How do Robinhood’s crypto fees compare to other platforms?
Robinhood charges high transaction spreads on crypto trades, which can be as high as 1.5%. This makes it one of the most expensive platforms for buying and selling cryptocurrencies. Dedicated crypto exchanges like Kraken typically offer lower fees and better pricing.
Can I transfer my crypto from Robinhood to an external wallet?
No, Robinhood does not currently allow users to transfer their crypto holdings to external wallets. This means that you can only buy, sell, and hold cryptocurrencies within the Robinhood platform.
