Friday, March 31, 2023
HomeTechnologyRobinhood App Steps Into Crypto Investing

Robinhood App Steps Into Crypto Investing

Robinhood is releasing a new tool that allows users to invest in cryptocurrencies automatically on a daily, weekly, or monthly basis. The investing software claims that this service will allow you to invest in cryptocurrencies such as Bitcoin, Ethereum, Dogecoin, and others without paying a commission charge.

But, before we go any further, I should point you that nothing in this post is intended to be taken as qualified or professional financial advice. It’s usually a good idea to speak with a professional who can assist you in developing an investing plan that’s suitable for you.

Robinhood’s strategy is to invest automatically rather than trade. It will not sell your cryptocurrency for you if an algorithm determines that it is profitable to do so. Instead, it’s simply a matter of consistently increasing your crypto holdings.

This is marketed by Robinhood as a method to conduct “dollar-cost averaging,” which is financial jargon for not worrying about the market and instead investing the same amount on a monthly basis, letting the profits and losses wash out. To put it another way, you’re following the financial adage that “time in the market beats timing the market.” Of course, the market in this case isn’t an index fund or anything like that; it’s cryptocurrencies, which are notoriously volatile. Whether the technique works for Bitcoin and other cryptocurrencies is a subject that should be addressed by more finance-focused publications and professionals.

In the bitcoin and WallStreetBets communities, the notion of “HODLing,” or holding, has long been a cliché. They’ll occasionally push customers to hold on to their stocks despite any losses in the hopes of selling them for a profit later.

Other cryptocurrencies attempt to compensate consumers in various ways for keeping them. Since 2019, Coinbase has started rewarding consumers with additional money for storing specific cryptocurrencies. This type of system is the foundation of proof-of-stake, an alternative mining method that aims to reduce the energy needs of more typical proof-of-work systems. Miners put up their crypto as collateral for a chance to generate a block in proof-of-stake systems, and if they’re picked, they earn a payout.

Robinhood’s approach, on the other hand, is much more in the line of conventional finance approaches, but with a modern twist. It’s odd, therefore, that the function isn’t accessible in New York, a major financial hub in the United States. The functionality will be “gradually” sent out to customers over the month, according to the firm.



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