If you have traded crypto assets on Robinhood, you probably already know that those aren't really crypto assets. There are only limited amount crypto assets or currencies like bitcoin, litecoin, ethereum, dogecoin, and bitcoin cash available to be traded on Robinhood. When those are bought on Robinhood, they cannot be transferred to any external wallets. Hence, these crypto coins bought there are merely the representation of them or their value.
For this reason many in the crypto world pointed out on Twitter or other platforms that if you bought bitcoin on Robinhood it is not really bitcoin. One of the best if not the best features of bitcoin and other currencies that they come with wallets that people can have full ownership of without a need to trust any third parties.
Now Robinhood is working on intergrading wallets to the crypto assets purchased on their platform with a goal to provide its users an ability to send coins to other wallets and receive coins from external wallets. I just received an invitation to join their waitlist and here is what they say:
Starting today, you can join the crypto wallets waitlist. With wallets, you’ll be able to send your coins to your other crypto wallets and receive supported cryptocurrencies into your Robinhood Crypto account. Be one of the first to get access!
That is great. Robinhood has ruined its reputation as of late by its actions that benefited the rich and made its users lose money during GameStop - WallStreetBets saga. Perhaps, they can find reinvent themselves going forward, fix the mistakes of the past, and embrace their original idea of democratizing trading and investing.
If/when they can successfully intergrade crypto wallets and give the ability for users to deposit coins from external wallets and send coins out to external wallets, I think this can be huge. Since Robinhood maintains zero trading fees, and if they can continue that with crypto wallets integration, this may create a competition in the space and make other services like Coinbase to consider lowering their fees and maybe also go zero fee model.
I don't know how this will work out in the end. But it is a positive step forward. When Robinhood added options trading, initially they had waitlist as well before opening this feature for everybody.
As they are working on this new feature, they are trying to gameify the process in order to increase their userbase. By joining the waitlist users will secure a spot. But then if these users invite friends to Robinhood they can move up the list.
Invite friends and move up the list. Jump the list by half for every friend that you successfully invite to Robinhood.
Take a look behind the scenes. A handful of Robinhood customers will get an early peek at what we’re building.
One of the benefits of trading crypto on Robinhood is they make it easy to produce reports at the end of the year for tax purposes. Keeping all trades within the same platform can be simpler to calculate taxes when that time comes. Sending coins out of the wallet or receiving coins from external accounts into the Robinhood wallet, may make calculating tax obligations. I am not sure. But this is something to consider when using this feature. They probably work out some easy to follow guides for this as well. It is a win for crypto regardless.
Another benefit of wallet integration can be airdrops. I don't know if Robinhood would support airdrops for supported coins. They may need to figure that out too, since many major crypto exchanges do. Even if they don't users will have an option of moving their coins to wallets that would support airdrops.
Let me know what you think in the comments. Can Robinhood redeem itself by integrating crypto wallets and win back the users they have lost due to the past mistakes? Is such new feature good for crypto?