Many have often wondered where to store their cryptocurrencies. Often, this question has been met with confusion about cold vs. hot wallets and how to make sure these wallets are secure. For users who trade crypto on Robinhood, the answer is not as clear as one would like. The solution? Both.
Robinhood is a commission-free stock and crypto trading mobile app that is hugely popular. Though most users of the app are among a new generation of traders, it appeals to a very large audience. Known for its sleek user interface and completely free trading, Robinhood has amassed over 13 million users who are passionate about investing simply.
Known for its free stock trades, Robinhood also allows its members to transact in cryptocurrencies. There are currently 7 tradeable cryptocurrencies on the app and an additional 10 that are available for tracking.
Currently, users can trade Bitcoin, Bitcoin Cash, Bitcoin SV, Ethereum, Ethereum Classic, Litecoin, and Dogecoin. Users can also track price movements and news for the 7 tradeable coins and 10 additional cryptocurrencies.
As mentioned earlier, Robinhood utilizes both cold and hot storage to take care of your cryptocurrencies.
Cold storage, otherwise known as offline storage, is where the majority of the coins are held. Keeping them safe from cyber-attacks and malicious traders. Just like with physical coins, if stolen, they cannot be returned. That is why an offline storage solution is important. Think of this offline storage such as a thumb drive or a hard drive that has no connection whatsoever to the internet and is therefore impenetrable to hackers.
Robinhood holds these coins under strict security and protocols to prevent the misuse or theft of coins. In the case that there are losses from theft, including cybersecurity breaches, Robinhood carries crime insurance to indemnify those impacted by these events.
Robinhood additionally has a rotating list of individuals who are allowed to authorize the transfer of coins. This list is not divulged internally or externally so as to keep those ‘in the know’ protected.
Robinhood mainly utilizes hot storage (online storage) in order to support day-to-day operations. This involves the sale and purchase of coins and other activities. Hot wallets, unlike cold wallets are connected to the internet and allow cryptocurrency users to store, send, and receive coins. If coins are not stored in hot wallets, they cannot be transferred.
While hot wallets are more susceptible to cyber-attacks, there are security measures in place that prevent the theft of coins. Robinhood has taken advanced steps to secure their hot wallet but for convenience and accessibility, it is still necessary to store some coins in a hot wallet. For this reason, many experts recommend using a combination of hot and cold storage to keep your coins secure but also maintain some functionality.
In addition to storing your cryptocurrency within the app utilizing Robinhood's hot or cold storage, you can also join the waitlist for Robinhood's crypto wallet.
With this wallet, transferring coins from one place to another is highly simple. The new wallet features 2 factor authentication, email and phone verification, and more to ensure security.
So, how can we transfer coins into and out of Robinhood?
Selling your coins on Robinhood is relatively straightforward. Simply locate your position within the app and select ‘Sell’. You’ll have to wait up until 5 business days to see the cash arrive in your account, similar to an equity sale.
Unfortunately, the transfer of coins into or out of Robinhood is not possible when using their hot and cold storage. From Robinhood’s perspective, this is done for its users’ safety. By allowing the transfer of coins, Robinhood would open itself up to an even greater risk of hackers attempting to interrupt a transfer.
However, you will be able to transfer your Robinhood Crypto to your own Robinhood crypto wallet once the feature is fully available.
When using Robinhood's hot or cold storage, you will need to sell your positions in order to transfer funds out of the app. Likewise, in order to transfer cryptocurrency into Robinhood, you will need to sell your positions elsewhere and then transfer those funds into Robinhood using your bank.
Because this is not ideal, Robinhood recently launched their new crypto wallet. This wallet will make transferring coins in and out of Robinhood simple and safe!
Crypto is a word that is interchangeable with cryptocurrency, a virtual currency that is not issued by a government.
While cryptocurrencies are not issued by a central authority, they are secure and managed on decentralized networks utilizing blockchain technologies. Cryptocurrencies are unique because they are almost impossible to counterfeit.
These coins, like your account balance on Venmo or PayPal, can be sent directly to another individual. More recently, they are even able to be sent to some businesses as payment for goods or services. These transfers are also completed without processing fees that frequently sully the transaction.
In summary, Robinhood is a premier place for users who are looking for a sleek and simple experience. Robinhood offers an easy user experience for first-time crypto buyers. In order to safeguard your assets but remain functional day-to-day, Robinhood utilizes both cold and hot storage.
While the majority of the crypto is kept in cold storage, Robinhood also uses hot storage so that the app can continue to service new and existing users. Robinhood also recently launched a new feature: Robinhood Crypto wallet. This wallet will make transferring coins both simple and safe.