Robinhood opens a slow and steady approach to crypto investing
Robinhood is rolling out a new feature that allows you to automatically invest in cryptocurrencies on a daily, weekly or monthly schedule. The investment app states that this service will allow you to automatically invest in things like Bitcoin, Ethereum, Dogecoin, and other supported cryptocurrencies with no commission fees.
Before we go any further, however, I must warn you that nothing in this article is qualified or expert financial advice. It’s probably wise to speak to an expert who can help you find an investment strategy that’s right for you.
Robinhood’s approach here is automatic investing, not trading. It will not sell the crypto for you when an algorithm decides that it would be financially wise to do so. Instead, it’s just a matter of regularly building your crypto portfolio.
Robinhood presents this as a way of doing an “average dollar cost”, which is more or less financial, so as not to worry about what the market is doing and instead invest the same amount regularly, letting the gains and losses come out. As things progress. In other words, you are adhering to the financial maxim “time in the market beats the pace of the market”. Of course, in this case the market is not an index fund or anything like that; these are cryptocurrencies, which have the reputation of being rather volatile. Whether the strategy works for Bitcoin et al. is probably a question for more finance-oriented publications and experts.
The concept of “HODLing”, or holding, has long been a meme in the crypto and WallStreetBets communities. They sometimes encourage people to hold their stocks despite possible losses in the hope of selling them at a profit in the future.
There are other cryptocurrencies that try to reward users for holding them in different ways. Coinbase has been giving users additional coins to hold certain cryptocurrencies since 2019. This type of system is actually the basis of an alternative mining system called proof of stake, which seeks to solve the energy needs of proof of stake. more traditional work. systems. In proof of stake systems, miners put their crypto as collateral for a chance to create a block, and if chosen, they will get a reward.
However, Robinhood’s approach is much more in the vein of traditional financial methods, simply applied to new technologies. So it’s somewhat ironic that the feature isn’t available to users in New York City, a major financial center in the United States. The company said the feature will be “gradually” rolled out to its users throughout the month.