Legendary commission-free stock trading app Robinhood has announced that they have begun offering Litecoin and Bitcoin Cash trading. The announcement was met with praise on Twitter from Robinhood fans, as well as Litecoin creator Charlie Lee.
According to Lee, he has been “bugging them for months” and so it was not a total surprise to him. Robinhood is not the same as other apps like Coinbase or Abra, however, and we will be going over a few of those details shortly.
I've been bugging them for months and I chatted with them about it a few times. It's not a total surprise, but it caught me off guard as I wasn't sure they were going to do it and I didn't know it would be so soon if they did add it.
— Charlie Lee Ⓜ️????️ (@SatoshiLite) July 12, 2018
What is Robinhood?
Robinhood is a stock trading app that caused a big splash when it hit the market a few years ago. Available to citizens and residents of the United States, as well as to citizens of China that have access to an American bank account, Robinhood was revolutionary because it allowed for users to buy and sell stocks for absolutely no commissions in either direction.
Not only is the app commission-free, but it also allows for instant deposits, and a form of pseudo-instant settlement. Those who have access to the gold program can sell a stock and then immediately use the proceeds of that sale to buy a different stock without needing to wait several days for settlement. The only time users need to wait for settlement is when they want to withdraw their money.
— Robinhood (@RobinhoodApp) July 12, 2018
The system does have anti-day trading measure enabled however, and those who are caught day trading can have their accounts severely restricted.
Several months ago, Robinhood shocked the world of crypto by announcing that they would be soon allowing for users to buy and sell within the app, commission and fee-free.
Not So Simple
It should be noted that Robinhood is not going to be the crypto app of choice for everyone. Instead, it services are tailor-made for a very specific type of crypto investor.
Today, the Robinhood app can only be used for buying and selling four cryptocurrencies within the app itself only. This means that users cannot use Robinhood as a cryptocurrency wallet. They cannot make deposits, nor can they withdraw cryptocurrencies from it. Basically speaking, any crypto bought within the app, stays in the app forever.
So who is the Robinhood app for? Simply put, it’s for those that want to buy and sell cryptocurrencies in order to make a profit on the price difference. It is not for those that want to buy and hold cryptocurrencies in cold storage, or buy bitcoin and exchange it for altcoins, or invest it into an ICO.
Region Locks Galore
Another unfortunate side effect of Robinhood being US-based and complying with all relevant laws is that the app is only allowing cryptocurrency trading in a handful of US states.
Specifically, only customers with a registered address in the following states can participate. They are:
Arizona, California, Colorado, Florida, Indiana, Massachusetts, Michigan, Mississippi, Missouri, Montana, New Jersey, New Mexico, Pennsylvania, Texas, Utah, Virginia, and Wisconsin.
So with only 17 states eligible for participation, more than half of the United States is being left out in the cold. And of course, so is the rest of the world.
Not surprisingly, New York state is not on this list. This is because New York is infamous for its strict cryptocurrency laws, and they require any business that has dealings with citizens of New York to have a so-called “bit license”. Recently, Square’s Cash App was able to secure this license, but they are one of an even smaller handful of businesses to be lucky enough to get this license.
And unfortunately for this author, who is not in one of the lucky 17 states, we are not able to try buying and selling cryptocurrencies on Robinhood firsthand.
Robinhood’s Crypto Future
According to the official Robinhood cryptocurrency section of their website, the company is considering adding the ability to withdraw cryptocurrencies from Robinhood. The company says that while they don’t support withdrawals now, they “plan to do so in the near future.”
In regards to making deposits of cryptocurrency, the company claims that they do not allow this because their “primary concern is to prevent money from illegal activity being used for transactions on Robinhood Crypto.”
For now though, if you’re lucky enough to live in one of the 17 approved states, and your primary goal is just to buy low and sell high, Robinhood could be a dream come true. And with the addition of Bitcoin Cash and Litecoin trading, that dream just got a little bit sweeter.
For the rest of us, patience.