Robinhood has launched a beta version of its crypto wallet service. Last September, the company announced plans to test a cryptocurrency wallet before opening a waiting list for users in the following weeks. Those who signed up for the waiting list can now sign up for the crypto wallet service. Currently there is over 1 million users on the waitlist.
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Robinhood has begun to roll out the beta version of its new cryptocurrency wallet service. The first 1,000 wallets were distributed to the first 1,000 people who signed up for the waiting list last year, but the company plans to expand the service to 10,000 people by March.
What is Cryptocurrency and the Blockchain?
Cryptocurrencies are digital assets that are produced using computer networking software and enable secure trading and ownership. They exist on the blockchain ecosystem .
For instance, Bitcoin and a large percentage of other cryptocurrencies are supported by blockchain technology, which keeps a tamper-resistant record of all transactions and tracks who owns what. Public blockchains are generally decentralized, which signifies they do not have no central authority like a bank or government.
The term cryptocurrency refers to the cryptographic processes that developers have implemented to prevent fraud. These innovations addressed a problem that previous attempts to create purely digital currencies had: how to prevent people from making duplicates of their coins or tokens and prevent them from spending the digital asset twice.
Individual cryptocurrency units can be referred to as coins or tokens, this depends on how they are being used. Some are intended to be units of exchange for goods and services, while others are value stores, and still others are primarily intended to aid in the operation of computer networks that carry out more complex financial transactions.
What are Crypto Wallets?
Crypto wallets (sometimes called Bitcoin wallets even if used for other cryptocurrencies) are a place to keep your crypto keys. Cryptocurrencies are encrypted using a public and private key pair (a bit like your bank account number and PIN). Many crypto enthusiasts believe that if you don’t control your keys, you don’t truly own your crypto.
This is important because many beginner crypto investors begin by “buying” their coins through third party exchanges such as Robinhood financial and Coinbase. So a crypto broker like Robinhood act as custodial wallets, meaning that they hold onto your keys for you. Custodial wallets do have advantages as you have access to your coins if you loose your password. With cryptocurrency wallets you are responsible for maintaining your password and key. If you do not have either of those you’re locked out of your wallet and crypto forever.
There are two types of crypto wallets, hardware and software wallets.
- A software wallet is a cryptocurrency wallet that is installed on your computer. You own your Bitcoin, but if your computer has an internet connection, you are still vulnerable to hacking.
- Hardware wallet: Storing your crypto on physical hardware (such as a portable hard drive) which virtually eliminates the risk of being hacked.
Why Would You Need Crypto Wallets?
Crypto wallets are essential if you want to maintain your own cryptocurrency, hold your crypto in the wallet for tax reasons, or buy or sell crypto to other wallet addresses. Moving your cryptocurrency into a wallet that you control has advantages. You’re less vulnerable if the cryptocurrency exchange you’re using is hacked. And if the exchange freezes your account for any reason, you will be unaffected. If you want to use your crypto assets to earn interest on one of the many defi applications available, such as Uniswap, or purchase a NFT, all you have to do is connect your wallet.
Do You Need a Crypto Wallet?
While third-party cryptocurrency wallets are not required, it is recommended that you set one up. While crypto-assets can be stored on an exchange, the owner loses control of their funds, leaving them at the mercy of the exchange’s security infrastructure.
It is worth mentioning that whoever controls the private keys controls the cryptocurrencies associated with those keys. As cryptocurrency trading becomes more ubiquitous and more alternative coins emerge external crypto wallets are essential for virtual currency trading on decentralized exchanges.
Keeping the cryptocurrencies on the exchanges may be the easier option, transferring them to a third-party wallet is the better option, particularly for those who do not intend to invest in a hardware wallet.
What is the Robinhood Crypto wallet?
Robinhood has begun to roll out the beta version of its new cryptocurrency wallet service. However it acts as a custodial wallet, meaning, that Robinhood holds the keys to the cryptocurrency that the user purchases on the cryptocurrency markets.
The first 1,000 wallets were distributed to the first 1,000 Robinhood account users who signed up for the waiting list last year, but the company plans to expand the service to 10,000 customers by March.
No date has been set for a full public launch.
The first 1,000 in the beta program will have a daily withdrawal limit of $2,999 and a daily total withdrawals limit of 10 transactions. Robinhood crypto wallets customers must enable two-factor authentication (2FA) to use the wallet service as well as verify your identity with a government issued identification. This wallet will allow customers to trade cryptocurrency commission.
The alpha test group was able to provide critical feedback as they were able to test core functionality. After the alpha test group, Robinhood was able to upgrade security to ensure stronger security, which led to the 2FA to ensure cybersecurity and safeguarding of coins.
What are the supported coins on the Robinhood Crypto Wallet?
Robinhood stated in a blog post announcing the launch that the wallet service would allow customers to transfer and receive cryptocurrencies such as Bitcoin, Ether, Dogecoin and Litecoin between Robinhood and other crypto wallets. This is good news for Robinhood crypto holders. As cryptocurrency becomes more common place and more venues begin to offer bitcoin and other blockchain coins as currency of goods, this may be a step to help customers by Robinhood financial.
When Will the Robinhood Crypto Wallet be open to everyone?
As the wallet is currently only being used by Beta testers, Robinhood has not announced when a full rollout of their wallet will be available to everyone. The most we know now is that the next rollout will be to 10,000 customers who signed up for the waiting list by March of 2022, but the 990,000 others who are on the waitlist? We are left to wait and see when the rollout will begin.
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