Polkadot is one of the most promising crypto projects right now. Because it is a new blockchain technology relative to Bitcoin, Litecoin, etc., it’s not widely available in different crypto exchanges and platforms.
You can’t buy, sell, or trade Polkadot on Robinhood. Even if you could, you should not do it on the Robinhood platform. There are multiple reasons, here are a few discussed below.
Robinhood has two subsidiaries.
- Robinhood Financial LLC.
- Robinhood Crypto LLC.
The Robinhood Financial LLC. is a SIPC and FINRA member. All the stock (Tesla, Apple, Google, Walmart, etc. ) tradings are done through this company. All of your stock investment (up to $500,000) is insured by either FDIC or SIPC. Therefore, even if Robinhood Financial LLC. goes bankrupt, your money is secured.
On the other hand, Robinhood Crypto LLC. is NOT a SIPC or FINRA member, and your money is not FDIC or SIPC insured. Therefore, if significant hacks occur at Robinhood Crypto LLC, you would lose all of your money. You have no protections.
Robinhood Crypto claims that you can buy and sell cryptocurrencies commission-free. But, if Robinhood Crypto is not charging you a commission, then how are they generating revenue? They are not a charity organization. If something is free, then you are the product.
Robinhood Crypto front runs your crypto trades. They don’t give the best market price.
For example, you want to buy 1 Bitcoin at Robinhood. If you place a limit buy order at $50,000, Robinhood will not give you the best market offer. Robinhood will charge you $50,000 for 1 Bitcoin, but in reality, Robinhood bought the Bitcoin from the open market at $49,800 and sold it to you at $50,000.
In case of a limit sell order, if you place an order to sell your 1 Bitcoin at $50,000, Robinhood would not execute your order until the price goes beyond a specific price, for example, $50,200. Then, Robinhood would buy your 1 Bitcoin at $50,000. Then they would sell it in the market for $50,200.
It’s why you would see that even though the price falls below your limit buy or rises above your limit sell price, your order is not executed. Robinhood waits to front run your order to profit off of your trades. However, Robinhood hides all these facts from customers.
Robinhood also doesn’t allow you to withdraw or transfer your coin to another wallet or into your Robinhood wallet. They don’t give you any access to your cryptos. Thus, the only way to move your cryptos to an external wallet is by selling your coin for USD and cash out. But, if you do it, your crypto profits will incur capital income tax from the IRS.
Cryptocurrencies are digital money. If you can’t use your crypto, what’s the point? It’s like having a bank account, but you can’t spend your money from your account. On the contrary, you can buy, sell, and transfer your coins without any problems in other online crypto-wallets.
Alternatives to Robinhood to purchase Polkadot (DOT):
In this article, we have discussed a few of the other platforms from where you can buy DOT.
Kraken is the best platform to buy and stake Polkadot. Except for Kraken, no other company gives a high return (up to 14%) on your staked DOT coin.