Unless you still are an extreme skeptic, you’ve thought about buying Bitcoin.
Since its launch in 2010, the cryptocurrency has skyrocketed in price. Particularly in 2020, we saw Bitcoin rise to astronomical prices!
But where are the best places to buy Bitcoin? Most newcomers will use an online web exchange to buy Bitcoin. Seasoned investors prefer using hardware wallets.
But what about buying Bitcoin on Robinhood? Is the trading platform a great option for buying cryptocurrency?
Here’s what you need to know:
Why Is Cryptocurrency Valuable?
Robinhood allows users to buy shares of publicly traded companies. In recent years, it’s expanded its features to allow users to buy and sell cryptocurrency.
But why did Robinhood allow this? What’s the benefit of owning cryptocurrency?
One of the major benefits of cryptocurrency is that it’s a hedge against inflation. All cryptocurrencies have a finite amount of tokens available. Bitcoin, for example, has a maximum of 21 million tokens.
This means that the value can fluctuate but not depreciate as with fiat currency. Bitcoin and other cryptocurrencies can also get used as an alternative form of payment.
Just as gold and silver have been used as currency when fiat currencies have crashed, so can we likely expect the same from cryptocurrency.
One might expect to see Bitcoin in more popular use over failed currencies such as the Venezuelan Bolivar or the Zimbabwean Zim!
As such, one can also use Bitcoin and other cryptocurrencies as an alternative investment. One can use these cryptocurrencies to build wealth in the long term.
How to Get Into Cryptocurrency
So how do you get into Bitcoin and other cryptocurrencies? Before you decide where to buy them from, you must have a basic understanding of how they work.
The first major cryptocurrency created was Bitcoin. Since then, many other “altcoins” have also been created as an alternative to Bitcoin. As an investor, you can own as much of each cryptocurrency as you wish.
Your cryptocurrency gets stored in a digital wallet. This digital wallet has a Public Key and a Private Key.
The former is the information you provide when you wish to receive cryptocurrency in your wallet. You use your private key if you wish to send cryptocurrency to others.
If you give out both your public key and private key, then anyone can access your wallet and use your cryptocurrency. This means they can steal your cryptocurrency or spend it as they please. As such, you should never give out your private key.
Owning cryptocurrency demands greater responsibilities on the owner in comparison to owning fiat currency. But with cryptocurrency, you have more freedom with your money. You don’t have to depend on others to keep your money safe.
But, there are options that allow users to use online platforms to store their Bitcoin and other cryptocurrencies. Robinhood is such a platform.
Now let’s look at whether you should consider buying Bitcoin with Robinhood:
Is It Secure?
The first thing you want to know is what’s the most secure method for buying Bitcoin. We know that Bitcoin is a great investment opportunity, but we also know that it requires a lot of responsibility.
As mentioned previously, what happens if you own 10 Bitcoins and you lose your private key and recovery phrase information? It means that you’ve lost your fortune and cannot recover it.
That’s one of the advantages of using a web platform to buy Bitcoin and other cryptocurrencies.
You can depend on these platforms to keep your Bitcoins secure. There’s less responsibility on your end so you can focus on accumulating Bitcoins.
With Robinhood, you can buy Bitcoin as you would buy any shares of a company. You can buy whole or part of a Bitcoin using Robinhood.
Advantages of Robinhood
Now, what are the advantages of Robinhood that make it a great platform for buying Bitcoin?
Robinhood is one of the easiest platforms to buy shares of public companies. It allows retail investors to buy shares within seconds and grow their investments over time. It also allows for selling shares and liquidating your assets.
Robinhood also provides retail investors with the appropriate tax documents to file their returns. This is especially crucial as reporting cryptocurrencies on tax returns can be a challenge.
If you’re looking for a simple method to buy assets, then you’ll love the simplicity of Robinhood.
Disadvantages of Robinhood
Now, what are the downsides of using the Robinhood platform for buying Bitcoin?
As we discussed earlier, the major advantage of the online platform is that you can’t lose your Bitcoins as easily. The only way it could really happen is if your Robinhood account gets hacked and the hacker transfers your Bitcoin to their account.
But the disadvantage is that you aren’t in control of your Bitcoin’s security. What happens if your Bitcoin does get hacked? What happens if you lose access to the internet and cannot use your Bitcoin?
We’ve also seen Robinhood make some unpopular choices with retail investors in the past year.
When ordinary retail investors were accumulating wealth through Gamestop shares, Robinhood intervened.
The platform prevented retail investors from buying significant shares of the company or selling such shares.
As such, many retail investors are skeptical of what Robinhood might do in the future.
This is something to keep in mind for the future. You never know if the platform will prevent you from buying, trading, or selling Bitcoin. The same goes for any other web platform that offers cryptocurrency investing.
Are You Considering Buying Bitcoin on Robinhood?
Now you know the process and the pros and cons of buying Bitcoin on Robinhood.
You can now decide if you think Robinhood is the best platform for you to buy Bitcoin and manage your cryptocurrency investing. You have to decide if you’re willing to give the responsibility of security to another platform.
You then have to assess the risks of using Robinhood based on previous issues. You might find that the platform is the easiest way to buy Bitcoin and build your fortune!
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