Robinhood opens a slow and steady approach to crypto investing

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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 craft an investment strategy that’s right for you.

Robinhoods’ approach here is automatic investing, not trading. It won’t sell the crypto for you when an algorithm decides it makes financial sense to do so. Instead, it just gradually builds up your crypto portfolio.

A look at what recurring crypto investments look like.Image: Robinhood

Robinhood presents this as a way to average dollar costs, which is more or less financial. It’s about not caring what the market is doing and investing the same amount on a regular basis, letting the gains and losses kick in. In other words, you adhere to the financial maxim of time in the market beats the timing of the market. Of course in this case the market is not an index fund or anything like that; its cryptocurrencies, which have a reputation for 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 will sometimes encourage people to hold onto their stocks despite possible losses in the hopes of selling them at a profit in the future.

The Robinhoods approach is a traditional finance method applied to crypto

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 receive a reward.

However, Robinhoods’ 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, a major financial center in the United States. The company says the feature will be rolled out gradually to its users throughout the month.

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