Investors usually take notice when a particular asset experiences a sudden and dramatic spike. This is exactly the case with Dogecoin, which is up over 400% in the last week.
For those interested in adding Dogecoin or other cryptocurrencies to their profile, you may wonder if Robinhood is a good place to get started.
In this article, we will review what Dogecoin is and how to buy it on Robinhood.
Robinhood is a commission-free trading platform that has exploded in popularity in recent years. They currently have over 13 million members on their platform. With its simple platform and fractional shares, Robinhood truly caters to any level of investor.
In early 2018, Robinhood announced to investors that trading cryptocurrency would be available on the platform. They first offered Bitcoin and Ethereum, but now, they have 7 cryptocurrencies available for trading. One of those is Dogecoin.
Seven crypto options may sound small, but many other platforms do not currently offer cryptocurrency trading at all. Some competitors offer less, like Webull with 4 cryptocurrencies on the platform.
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Cryptocurrency, or crypto, is a type of currency. Like the US dollar or Chinese Yuan, crypto is a currency that can be used to buy goods and services. However, there is one key difference. Crypto is not held by a central bank, but rather by cryptography, which is made possible though blockchain technology.
Cryptocurrency is managed across many computers in an online ledger. This appeals to many as it makes it nearly impossible to counterfeit.
Some think of crypto like an arcade token. You can exchange other money for coins or tokens and use them for a variety of games. Today, companies are starting to accept various forms of cryptocurrency as payment for their goods and services.
The value of a crypto moves up and down due to spectator beliefs and scarcity of the currency. Unlike a company that produces a product or offers a service, there is no inherent value of a cryptocurrency, which adheres to the Greater Fool Theory.
The Greater Fool Theory is an economic principle that states money can be made when buying overpriced assets. This is possible as there is typically someone else who would be willing to pay more for that same asset.
Dogecoin was created in 2013 as a joke. It was named after an internet meme which featured a Shiba Inu dog. Since, it has risen to be the 5th largest cryptocurrency by market value. So what has caused this cryptocurrency to explode recently?
Earlier this year, Elon Musk began mentioning Dogecoin in Tweets. This has caused many to take notice of the hot crypto. Musk's most recent Tweet about Dogecoin read, "Doge barking at the moon." Other high profile individuals such as Mark Cuban and Snoop Dog have also commented on Dogecoin.
Dogecoin has experienced extreme volatility due to this internet banter.
Buying Dogecoin on Robinhood is actually very simple. It follows the same process as buying other assets on Robinhood.
Before buying Dogecoin or other assets on Robinhood, you'll need an account. This can be done quickly and easily by downloading the Robinhood app. After downloading the app, setting up an account is done simply by inputting personal information such as name, email, address, social security number, and employment information.
After creating your account, you will need to fund it by linking a bank account and transferring money.
Robinhood currently allows instant deposits of up to $1,000, meaning you can start investing up to $1,000 immediately before your fund clear. They also offer a premium account, Robinhood Gold, which costs $5 a month and increases the instant deposit amount to $5,000.
Once your account is funded, you are ready to make a purchase. In order to buy an asset on Robinhood, you will click on the magnifying glass icon in the app and search for Dogecoin. After you select the cryptocurrency, you will see the current market price followed by a line chart and news about the crypto.
To buy Dogecoin, you will click the button "Buy." You will then select your order type and the dollar amount you would like to buy. Rather than buy a certain number of Dogecoins, you will enter in a dollar amount, which is possible through fractional shares. For example, you can enter to purchase $20 of Dogecoin, which at $0.37 per Dogecoin, you would have 54 coins.
Selling Dogecoin on Robinhood is done just like buying. When in the app, and after selecting Dogecoin from your list of cryptocurrencies, you will simply select "Sell." Once again, you will select your market type and enter in the dollar amount you wish to sell.
Cryptocurrency does not have standard trading hours like other stocks because it does not trade on a regulated exchange. Rather, cryptocurrencies can be traded 24/7.
Robinhood does not allow users to transfer cryptocurrency in or out of the platform. This means that should you choose to transfer your cryptocurrency to another platform, you would have to sell your crypto in Robinhood and buy it in another platform. Robinhood does this as a way to prevent theft or fraudulent behavior.
This means that you cannot transfer your cryptocurrency to a cold wallet or offline storage.
Many crypto traders want a more secure way to hold their cryptocurrency. This can be done through a cold wallet, or a storage device that is not connected to the internet like a thumb drive. If you want the ability to transfer your cryptocurrency into a cold wallet, Coinbase may be better suited for your needs. Learn how to move funds from Robinhood to Coinbase.
With an ever growing number of trading platforms with various features and benefits, many investors are looking for a place to house all of their investments. Robinhood makes this possible by offering cryptocurrency on the platform.
Without commissions for stocks or cryptocurrency, Robinhood could be a great place to get started with crypto. In addition to offering the most popular cryptocurrencies, they also have a few of the lesser known options available in the platform.
Buying Dogecoin comes with a certain level of volatility. In December of 2020, the crypto was trading for less than a penny. In the last few days, it has nearly reached $0.50! With influential Tweets from Elon Musk and other notable individuals, this crypto will certainly continue to be volatile.