Good day everybody,
Welcome to CryptoGod-1's blog on all things crypto. Today we are going to look at the latest developments happening with the Robinhood App.
Today's Developments
As of Wednesday the 9th of September 2021, Robinhood, a US-based trading exchange, has begun offering a service to its users known as DCA. This is based upon the common trading strategy of Dollar Cost Averaging to balance out the cost of your investments over a long-term period of time, minimalizing the risks of loss, but all reducing the potential of exponential gains.
With fintech increasing globally, Robinhood, has begun offering its users the option of investing in a DCA strategy from as little as $1 reoccurring on a daily, weekly, or monthly basis. The company has reported this is to increase its holdings withing Bitcoin, Ethereum, and Dogecoin while intuitively trying to reduce volatility within its markets. (I often wonder why Doge is always included but I guess that's a post for another day)
Pros
The DCA offered on Robinhood means that users get the maximum amount of crypto they have ordered, without the hassle of fees on their purchases. This ensures that within the DCA model if a consumer sets up a DCA strategy to purchase $50 a week, then they will get the full value of $50 of that chosen crypto, no fees!
Cons
As outlined on the Robinhood website the strategy of DCA means you can see your investment rises as you catch the market in a low zone, while you may also end up buying at higher prices than you normally would if you entrust an automated service to purchase for you.
Info that most Robinhood users should be aware of but many may not be, is that the exchange does not own any of its own Bitcoin. That's right! When you purchase on Robinhood you are basically buying a contract off Robinhood for the equivalent of the amount you invested in a coin price derivative exposure.
You also cannot withdraw your crypto off Robinhood, being forced to sell and creating a taxable event in the US as you do so.
Conclusions
Personally, I would avoid Robinhood. I am not based in the U.S. so I cannot confirm what it is like to use, but the majority of users feedback seems to centre around blackouts at major price spikes. Feeless transaction on DCA is a very appealing side to Robinhood, but make sure you're happy with where you're keeping your money before just thinking about zero fees.
Along with the fact you cannot withdraw your crypto like other exchanges allow, creating a long-term investment strategy with a service that is not based around long term growth (owning your own keys) seems like a band-aid covering over the cracks. Only time will tell how the DCA system will work and engage with the masses.
At the end of the day everyone needs to do their own research and while I would love to say I am an expert who always gets it right, PLEASE DO NOT TAKE THIS AS FINANCIAL ADVICE! #DYOR
Hope you enjoyed the read, have a wonderful day.
Peace. CryptoGod-1.
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