You may have heard that Robinhood is preparing to roll out a new feature: crypto wallets.
And if you haven’t heard, now you know!
In this article, we’ll be discussing what crypto wallets are and what it means for Robinhood users.
What Is a Crypto Wallet?
Robinhood has offered cryptocurrency investing for quite awhile now, so why is the rollout of their crypto wallet a big deal?
Well, to answer that question, we first have to understand what a crypto wallet is.
And to understand what a crypto wallet is, we have to understand the basics of blockchain technology.
Blockchain is a database that operates quite differently than the databases that we have been using for most of our lives.
Your typical database has physical servers that are kept in one location or a few locations, which leaves them exposed to harm through power outages, natural disasters, or tampering.
These databases also tend to store their data in a way that would allow a hacker to retroactively edit it, meaning that an experienced hacker could hack into a bank account, falsify transactions, steal information, and more.
But blockchain technology creates a much safer way to store information.
First of all, instead of having a bunch of server computers in one place, a blockchain connects to different users’ computers around the world, making it almost impossible to physically harm the stored information from the outside.
Additionally, a blockchain is structured in a way that makes it impossible for a hacker with bad intentions to go back in and change information.
As transactions are completed, they are verified by different users’ computers and then put into a “block.”
Each block has a certain amount of capacity, and once it’s full, it is locked and attached to the last completed block, forming a “chain” of blocks.
Transactions are secure (and decentralized) because they have to be verified by different users, and the information regarding past transactions is safe because past blocks are locked and timestamped.
In order to interact with a blockchain, you’ll need two pieces of code: your public key and your private key.
Your public key is a code that is visible to all users. Whenever you engage in a transaction that posts to the blockchain, your public key is attached to the transaction.
If you want to send Bitcoin or another coin to someone else, you’ll need their public key.
Your private key, on the other hand, is a piece of code that only you know.
It should never be shared with anyone and it allows you to access your cryptocurrency and other private information that is stored on the blockchain.
Think of your public key as a username and your private key as your password; anyone can interact with you using your username, but only you can access your private account information using your password.
Now that we understand the basics about blockchain and public and private keys, let’s get back to the crypto wallet!
The Robinhood Crypto Wallet
A crypto wallet is a system, either physical (like a USB device) or intangible (like a software program), that stores your public and private keys and allows you to easily interact with the blockchain to make transactions.
Having a crypto wallet with a crypto exchange can give you access to features such as buying and selling coins, sending and receiving coins to and from others, and token conversions.
In the past, Robinhood users could trade cryptocurrencies on the platform, but you couldn’t really access the coins you bought.
You would invest your money to buy a crypto like Bitcoin, and Robinhood would buy it on your behalf.
Then, Robinhood would keep your Bitcoin stored until you were ready to sell it.
You couldn’t send your Bitcoin to another person, receive crypto as payment for a transaction, or convert your Bitcoin into another crypto.
And THAT is where the new Robinhood crypto wallet comes in.
With a Robinhood crypto wallet, you can send and receive crypto as well as transfer in crypto from your other wallets to be traded on Robinhood.
Robinhood Crypto Wallets Costs
Robinhood has consistently been committed to bringing its users a commission-free investing experience.
Robinhood lets you send and receive crypto with your crypto wallet at no extra charge.
There is, however, a network fee that is usually charged when you transfer crypto.
This fee is charged by the network of the specific crypto you’re transferring, not by Robinhood.
How to Get a Robinhood Crypto Wallet
There is currently a waitlist to get your own crypto wallet from Robinhood.
To join the waitlist, you can open up your Robinhood app and navigate over to the cryptocurrency section.
There, you’ll see a notification about crypto wallets and you’ll be able to join the waitlist.
You’ll also want to go into your account settings and make sure you’ve verified your identity with Robinhood and enabled two-factor authentication for your account.
If you’ve already been trading cryptocurrency on Robinhood, then the crypto wallet will only add to your experience.
And if you’re just getting into the crypto game and you’re trying to figure out which exchange and wallet you should use, then the new Robinhood crypto wallet makes it an attractive choice!