Despite only offering 7 cryptocurrencies on its platform, Robinhood Markets Inc. (NASDAQ: HOOD) reported that crypto made up 21% of its transaction-based revenue in the 1st quarter of 2021. Robinhood Crypto, as well as cryptocurrency itself, is still in its infancy stages, but that doesn’t mean there aren’t a good cryptocurrencies available to invest in. From Ethereum (ETH) to Dogecoin (DOGE), this is the guide to the best cryptocurrencies on Robinhood.
What is Cryptocurrency?
Cryptocurrency is an asset class based on blockchain technology. At the core of blockchain is the concept of decentralization. Taking control from governments and corporations and distributing it to the people of the world. At the core of modern money is trust. Fiat currencies like the dollar haven’t been backed by gold for 50 years; they are backed by trust in the government to cash in your piece of paper for something of real value.
Blockchain decentralizes trust across a network of individuals who make money for maintaining the network. These people are known as miners, and if they act truthfully, there are economic incentives in place to reward them. If they attempt to process false transactions, they will be denied by the majority vote and end up wasting a significant amount of energy.
Bitcoin’s code is entirely open source, meaning anyone in the world can read the code and learn the rules. No need to place trust in a system of politicians, instead you can place trust in a set of hardcoded rules designed by some not-so-shadowy super coders.
Every Cryptocurrency on Robinhood Ranked
- Bitcoin (BTC): Bitcoin was the 1st digital currency that used blockchain to create a distributed ledger. A ledger is a database that contains records of all wallet balances and historical transactions. By distributing the entire ledger across the network, no one person can create money out of thin air without being immediately discovered by all the others.
- Ethereum (ETH): Ethereum was connected by Vitalik Buterin, who was an early member of the Bitcoin community. Buterin saw the power of decentralization on the blockchain and the success of Bitcoin as digital gold. He decided to make a more general-purpose blockchain. While Bitcoin’s blockchain is essentially a shared ledger, Ethereum’s chain acts more like a computer. The Ethereum network is actually a virtual machine – capable of much more than a simple ledger. Ethereum can run complex smart contracts, enabling a potentially infinite number of new decentralized financial (DeFi) applications. The DeFi industry is brand new and quickly evolving on the Ethereum blockchain. Billions of dollars have been locked in all sorts of DeFi protocols from automated market makers to lending platforms.
- Dogecoin (DOGE): For quite a while, Robinhood was the easiest way for retail investors to get their hands on Dogecoin. During the Dogecoin craze of early 2021, everyone and their mother were looking for exposure to their favorite dog coin, and Robinhood was the easiest place for crypto beginners to get access.
- Litecoin (LTC): Litecoin is the 4th fork of Bitcoin available on Robinhood and was created as a payment currency similar to Bitcoin Cash. In crypto years, Litecoin has been around forever. Despite its relatively antiquated technology and its own founder selling out in 2017, Litecoin still hangs around the top 20 cryptocurrencies by market cap. More than likely, this is because of its lingering notoriety and widespread availability.
- Bitcoin Cash (BCH): Some early Bitcoiners thought Bitcoin’s throughput was too small to scale effectively as a global payment method. The community decided to fork away, and create their own blockchain designed for scale. They increased the size of each block from 1 megabyte (MB) to 32 MB, allowing for way more transactions per second. An increased block size comes at the cost of a more rapidly growing ledger, which becomes harder and harder for small-scale miners to store. Eventually, the database may become so large that only a few powerful miners control the network. If this were to happen, a 51% attack on the network would become a serious threat.
- Ethereum Classic (ETC) Ethereum Classic is a fork of the Ethereum blockchain resulting from the decentralized autonomous organization (DAO) hack in 2017. The DAO was a crypto fund that was breached, and millions of dollars of Ethereum were seized by hackers. The tight-knit Ethereum community came together, and the majority was able to pass a vote to return the stolen Ethereum. However, some people in the community didn’t approve of this intervention. These folks decided to remain on the old branch of the chain where the hack was still relevant. This old branch is known as Ethereum Classic and still has some developers working on it today. While there remain some die-hard loyalists to Ethereum Classic, most of its relevance today is because of its availability on Robinhood.
- Bitcoin Satoshi’s Vision (BSV): Bitcoin Satoshi’s Vision was created by Craig Wright, who claims to be Satoshi Nakamoto. However, Satoshi Nakamoto owns 1 million marked bitcoin and could easily verify his identity by moving some of these funds. Obviously Wright is not Nakamoto, or he would have proven it. Similar to Bitcoin Cash, BSV is a fork of the Bitcoin blockchain. It comes it at the bottom of this list for not having unique or innovative features on its blockchain, and it has vastly underperformed the general crypto markets in recent years.
Robinhood Crypto Review
With the expansion of the cryptocurrency markets in 2021, Robinhood is hard at work to add features regarding the asset class. While there aren't many coins available on Robinhood at the moment, more may be added soon. Even with just a few coins, important cryptocurrencies like Bitcoin and Ethereum are accessible on Robinhood, and many investors choose to only invest in the top few coins, anyway.
Robinhood is currently working on adding crypto wallet functionality for its customers to send, receive, stake and loan their crypto assets. There also have been preliminary conversations with the Uniswap team, which could eventually lead to the decentralized exchange being plugged right into Robinhood, allowing access to every Ethereum token on the market.
With the amount of revenue that Robinhood has generated with the current version of its crypto product, you can be sure there’s more to come in the near future.
Cryptocurrencies You’re Missing out on
There are plenty of great digital assets to invest in that aren't supported on Robinhood. Here are some coins that might be worth opening up a Coinbase account for:
- Uniswap (UNI): As mentioned earlier, Uniswap is an Ethereum-based decentralized exchange protocol. Just like Coinbase and other cryptocurrency exchanges, Uniswap allows users to tap into liquidity pools and trade between pairs of assets. The key differences are that the Uniswap protocol is made entirely of smart contracts, and it operates entirely decentralized.
- Chainlink (LINK): Chainlink is a fan favorite among crypto investors for its game-changing business model. Chainlink is another Ethereum-based decentralized application for integrating real-world data into smart contracts. The use cases of Chainlink are nearly limitless, and the LINK token powers it all.
- Aave (AAVE): Aave is like a bank, but — you guessed it — decentralized on Ethereum. Users of Aave can tap into smart contracts to take out loans or lend their assets. All loans are trustless, require no credit and are obviously overcollateralized. This allows crypto holders to take out large USD Coin (USDC) loans while avoiding capital gains tax on their profits.
Store Your Crypto Safely
Crypto security is of the utmost importance as a long-term investor. Robinhood is a very secure platform, as it holds custody over users' digital assets with industry leading encryption. However, if you decide to dive deeper into the crypto ecosystem, you’ll want a wallet to take custody of your own assets. Crypto wallets store the private key needed to authorize access to your wallet address on the blockchain.
A typical crypto enthusiast will combine a cold storage, hardware wallet like the Ledger Nano X with a hot, software wallet like ZenGo. The hardware wallet is like the safe in your basement, while the hot wallet acts as a daily carry wallet for trading and interacting with DeFi protocols like Uniswap and Aave.
Cryptocurrency Price Movements
As of January 2022, major cryptocurrencies are still below all-time high prices. While some investors see this as the start of a long-term bear market, others believe this is yet another buying opportunity for digital assets. Even with price run ups at the start of last year. cryptocurrency prices have remained relatively flat, making the case for a parabolic rise sometime in 2022. However, this is far from certain and investing in digital assets should be taken with caution. For up to date crypto prices, check out our table below.
Other Cryptocurrency Exchanges Available in the U.S.
If you’re only using Robinhood for crypto, then you should consider opening an account with a dedicated, full-featured crypto exchange. Just make sure that it’s U.S. based or working with local governments and holds at least 90% of its assets in cold storage. Listed below are a couple good choices, but always remember to do your own research before jumping into any speculative investments.
- securely through eToro's websiteBest For:Demo Accounts
Don’t invest unless you’re prepare to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins and learn more. Cryptocurrency is offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk.
- Exclusive Crypto Airdrops
- Altcoin of the Week
- Insider Interviews
- News & Show Highlights
- Completely FREE