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Currently, people who buy cryptocurrencies on Robinhood do not have a withdrawal function available, for instance to store them in a proprietary wallet.
This is also a feature common to other platforms that allow buying and selling cryptocurrencies, such as PayPal or Revolut.
It effectively means that on Robinhood the only thing you can do with the purchased cryptocurrencies is selling them. In other words, the app is mainly used for trading in fiat currency, or for investing in cryptocurrencies with the sole intention of selling them in the future.
This, however, could change.
This was revealed by the CEO of Robinhood, Vlad Tenev, on Twitter, confirming that the company is working on introducing cryptocurrency deposits and withdrawals.
We're working on deposits and withdrawals! Not just for DOGE, but for all coins on Robinhood Crypto. 💪 https://t.co/tphywDbRvc
— VLAD (@vladtenev) April 27, 2021
Robinhood ready to enable crypto withdrawals and deposits
The issue was raised by Mark Cuban in relation to Dogecoin. Cuban argues that DOGE is the only cryptocurrency that people actually use for transactions, and that the biggest constraint on its growth is the inability to spend the Dogecoin purchased on Robinhood.
Tenev responded to Cuban’s question by actually stating that the company intends to enable withdrawals not only for DOGE, but also for other cryptocurrencies that can be traded on Robinhood.
To tell the truth, it is legitimate to have some doubts about the accuracy of Cuban’s statements, also because the volume of transactions in Dogecoin to date is still very low. A little over 30,000 transactions are recorded every day, or about one every two and a half seconds, whereas bitcoin, for example, records almost ten times as many. Even Litecoin outperforms Dogecoin by at least three times in this respect.
Nevertheless, Cuban’s point is correct, because not being able to withdraw tokens from Robinhood has at least two unpleasant consequences.
The first is that, in this way, the only use of cryptocurrencies on Robinhood is in fact pure speculation.
The second is that, in the event of problems with Robinhood, users could lose control, or even possession, of their tokens, whereas, for example, storing them securely on a proprietary wallet would give them the certainty of not losing them.
Tenev’s promise reveals that the company is willing to solve this problem and indicates that perhaps in the future other similar platforms, such as PayPal, might also opt for a similar solution.